Labor will Remedy Tax Hike for Military Super Members - 4 Sep 2007

Joint Media Release

ALAN GRIFFIN MP

SENATOR NICK SHERRY

A Rudd Labor Government will remedy tax hikes faced by Military Superannuation and Benefits Scheme (MSBS) members under the Howard Government’s new Simplified Superannuation laws.

The Government’s recent changes to the tax treatment of defence superannuation impose higher taxes on military members who retire earlier. The Military Super website currently states that where a member resigns after 22 years of service at the age of 45, and takes a lump sum, he or she must now pay $8,260 in tax, a 413% increase.

The Labor Party today criticised the Howard Government’s silence and inaction on defence superannuation since this issue was first raised in April 2007:

1. The Government refused to guarantee that members of both the Defence Force Retirement and Death Benefits Scheme (DFRDB) and MSBS will be protected from higher taxes imposed by the reforms.

2. The Government then refused to explain why it protected DFRDB members from the tax increase, but not MSBS members. MSBS is the larger scheme, with more than 46,400 contributing members.

3. The Government refused to allow the Military Super Review to consider the impact of the tax changes on defence superannuants.

In fact, the Government has known for months that the new Simpler Superannuation reforms will place an increased tax burden on the superannuation of defence personnel.

There have been recent reports that the Government may finally address this issue, but no clear and unequivocal guarantee has been given. Labor calls on the Government to clarify its intentions on military superannuation once and for all, to reassure defence personnel that they will not be disadvantaged by the new superannuation laws.

Defence personnel can now rest assured that a Rudd Labor Government will protect their superannuation from unnecessary and unfair tax increases.