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2002-2003
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SUPERANNUATION (SURCHARGE RATE REDUCTION) AMENDMENT BILL 2003
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by authority of the
Treasurer, the Hon Peter
Costello, MP)
Table of contents
General outline and financial impact
The amendments to the Superannuation (Surcharge Rate Reduction) Amendment Bill 2003 will give effect to alterations to the Government’s superannuation surcharge rate reduction measure.
Date of effect: The amendments will apply to surchargeable contributions made to complying superannuation funds and retirement savings accounts, and to retained eligible termination payments received, on or after 1 July 2003.
Proposal announced: The amendments were foreshadowed by Minister for Revenue and Assistant Treasurer’s Press Release No. C85/03 of 7 September 2003.
Financial impact: The financial impact of these amendments are estimated budgetary savings of $65 million in 2003-2004, $145 million in 2004-2005, and $205 million in 2005-2006. The total budgetary cost of the reduction in the surcharge rates is now estimated to be $25 million in 2004-2005, $85 million in 2005-2006, $165 million in 2006-2007 and $200 million in 2007-2008.
Compliance cost impact: There is no compliance cost impact as the amendments only reflect a delay in commencement and a smaller reduction in the maximum surcharge rates.
Chapter
1
Amendments to the
Superannuation (Surcharge Rate Reduction) Amendment Bill 2003
1.1 The Superannuation (Surcharge Rate Reduction) Amendment Bill 2003 will give effect to the Government’s superannuation surcharge rate reduction measure. The proposed amendments to the bill were foreshadowed on 7 September 2003, and reflect an agreement to progress this measure following the failure of the bill to obtain a second reading in the Senate on 24 June 2003.
1.2 The amendments reduce the maximum surcharge rates by 0.5% in the 2003-2004 financial year, and by a further 1% in each of the 2004-2005 and 2005-2006 financial years.
1.3 This amendment delays commencement of the measure to 1 July 2003. The delay is a result of the failure of the measure to achieve passage prior to 30 June 2003.
1.4 As a result of the delay in commencement, the lower income amounts and higher income amounts have been updated to reflect the higher indexed figures for the 2003-2004 financial year.
1.5 These amounts refer to the level of adjusted taxable income an individual receives before being liable for the superannuation contributions or termination payments surcharges, and the level of adjusted taxable income at which the maximum rate of surcharge applies.
1.6 These amendments provide for the phased reduction in the maximum surcharge rates in the 2003-2004 to 2005-2006 financial years. The new rates will be 14.5% for the 2003-2004 financial year, 13.5% for the 2004-2005 financial year, and 12.5% for the 2005-2006 and subsequent financial years.
1.7 These amendments also reflect the delay in commencement of the measure.
1.8 These amendments update references to the relevant financial years as a consequence of incorporating the 2003-2004 indexed figures for the higher income amount and lower income amount.
1.9 These amendments reflect the delay in commencement of the reduction in the superannuation contributions surcharge rate, and the smaller reductions now proposed.
1.10 These amendments to the application provisions reflect the delay in
commencement of the reduction in the superannuation contributions and
termination payments surcharge rates. Item 34 has been omitted, as the
provision to which it related commenced during the 2002-2003 year.