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The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

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  • Jun Feng

Abstract

type="main" xml:id="ecor12131-abs-0001"> In this study, we examine choices in voluntary superannuation contributions by Australian income earners. In particular, we focus on salary sacrifice contributions, which could attract a tax benefit of up to 30 percentage points. This study aims to evaluate how effective tax incentives are in stimulating salary sacrifice participation. Using a regression discontinuity framework, we measure the response of individuals to different levels of tax concessions on salary sacrifice contributions. Results indicate that current tax incentives have a limited effect, if any, on the decision to make salary sacrifice arrangements. This result is consistent with more recent empirical research from the Northern Hemisphere. It is likely that the lack of response is due to the complexity of the incentive schemes in Australia and competing vehicles for long-term savings.

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  • Jun Feng, 2014. "The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation," The Economic Record, The Economic Society of Australia, vol. 90, pages 59-73, June.
    • Handle: RePEc:bla:ecorec:v:90:y:2014:i::p:59-73
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-s1
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    Cited by:

    1. Carter Andrew Dudley, 2022. "Does the early release of retirement savings prolong labor market participation for workers approaching retirement? Evidence from Australia's “Transition to Retirement Income Streams” program," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-36, January.
    2. Antonia Settle, 2021. "'Don't play if you can't win': exploring household disengagement with the pension system through financial diaries data," Melbourne Institute Working Paper Series wp2021n29, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Jun Feng, 2018. "Voluntary Retirement Savings: The Case of Australia," Journal of Family and Economic Issues, Springer, vol. 39(1), pages 2-18, March.

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