Government agrees to alter surcharge, co-contribution measures
By Media Release dated 7 September 2003, the minister for Revenue and Assistant Treasurer advised that the Government negotiated an agreement with the Australian Democrats to secure the passage of the superannuation surcharge reduction and co-contribution measures. Under the agreement, the measures will operate as follows:
The Maximum surcharge rate will be reduced from 15% to 12.5% over three years. This is a smaller reduction than the Government's original proposal, which provided from a reduction from 15% to 10.5% over three years.
People on incomes of up to $27,500 (previously $20,000) who make superannuation contributions will have their contributions matched by the Government up to $1,000 annually. The upper income threshold for the co-contributions measure will be $40,000 (previously $32,500).
Both measures will now apply from 1 July 2003 (rather than 1 July 2002).
Passed by the Senate with amendments
On 7 October 2003, the senate passed the Superannuation (Surcharge Rate Reduction Amendment bill 2003 with 31 Government amendments and one Opposition amendment. (The Bill had previously been defeated in the Senate but was restored in September 2003, following an agreement between the Government and the Australian Democrats.)
The Government's amendments provide for the phased reduction in the maximum surcharge rates in the 2004 to 2006 income years. The amended maximum superannuation and termination payments surcharge rates are as follows:
- 14.5% for the 2004 income year;
- 13.5% for the 2005 income year; and
- 12.5% for the 2006 and subsequent income years.
These rates are to apply from 1 July 2003. Therefore, amendments have also been made to update both the lower and higher income amounts, to reflect the higher indexed figures for the 2004 income year.
The Opposition's amendment seeks to address 'discrimination' in the existing superannuation system in relation to same-sex couples. Under the amendment, new definitions of 'partner', 'dependant' and 'spouse' are inserted into the Superannuation Industry (Supervision) Act 1993.
Source: Web Martin Monthly Tax Briefing October 2003