Explanatory Memorandum(Circulated by Authority of the Treasurer, The Hon. P.J. Keating, M.P.)
At the time of introduction of the new measures for taxing lump sum superannuation, termination of employment and kindred payments, it was estimated that $70m in additional revenue would be collected in 1984-85. That remains the estimate. The revenue gain is expected to rise steadily over the years as the proportion of future lump sum payments in respect of service after the transition date (30 June 1983) rises.
The measures contained in the Bill will, on the one hand, ensure that certain eligible termination payments do not attract a greater amount of tax than was originally intended. On the other hand, they will remove avenues for avoidance of tax by use of the existing law in relation to the truncation of eligible service periods and the commutation of deferred annuities. The extent to which those areas of the law may have already been exploited will not be known until after 1984-85 income tax returns have been scrutinised. However, the ongoing promotion to the public of facilities that offer tax savings by exploiting those provisions suggests that the remedial measures contained in the Bill will prevent the future loss of significant amounts of revenue.