Posted By Staff Reporter : www.pngfacts.com
THE six per cent of their pay people have to contribute to superannuation after income tax is too high, according to the Nambawan Super Ltd.
Chief executive officer Paul Sayer said most members would be paying at least 22 per cent income tax on their employee contribution.
He said it was unfair because some members would be paying up to 42 per cent tax on their gross income before making the six per cent employee contribution.
“Note that this tax is paid before the contribution is made to super,” Sayer said.
“Furthermore, the Internal Revenue Commission has taken steps to prevent members from simply salary sacrificing before-tax income into super, despite many organisation facilitating salary sacrifice for many other costs, like education and subscriptions, and it being legal for employers to pay up to 15 per cent super for employees before tax.
“This ruling is forcing members to negotiate new contracts, which makes it very hard for everyday Papua New Guineans to put a good savings practice in place for their future.
“Nambawan Super would like to see salary sacrifice available to all members to top up their employer contribution from 8.4 per cent up to as high as 15 per cent of their base salary.
“Nambawan Super would like to see earnings taxed less, as this will mean better returns for members, who typically are investing into PNG businesses who already have paid tax on their earnings before the Fund pays taxes on those earnings within the Fund.
“Through the Bank of PNG superannuation review, Nambawan Super will look to provide feedback on tax at all points for Fund members.”
Statement/TheNational/PNGfacts / PNG Business News
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