Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Imposition of taxation on superannuation payments made to certain persons who have permanently departed Australia
The Income Tax (Superannuation Payments Withholding Tax) Bill 2002 imposes tax on the different components of a departing Australia superannuation payment made to temporary residents permanently departing Australia.
Date of effect : The amendments will commence on the later of Royal Assent and Royal Assent of the related Taxation Laws Amendment (Superannuation) Bill (No. 1) 2002. The new tax will apply to payments made on or after 1 July 2002.
Proposal announced : The measure was foreshadowed in the Government's policy statement A Better Superannuation System on 5 November 2001, and clarified in Minister for Revenue and Assistant Treasurer's Press Release No. C301 of 27 December 2001.
Financial impact : This bill and the related Taxation Laws Amendment (Superannuation) Bill (No. 1) 2002 are expected to result in increased revenue of $70 million in 2002-2003, $110 million in 2003-2004 and $75 million in 2004-2005.
Compliance cost impact : The related amendments in the Taxation Laws Amendment (Superannuation) (No. 1) Bill 2002 will require superannuation funds to ensure the correct tax is withheld from departing Australia superannuation payments.
Summary of regulation impact statement
Impact : In conjunction with amendments to the Superannuation Industry Supervision Regulations and Retirement Savings Account Regulations the measure will reduce ongoing administrative and compliance costs for superannuation funds in maintaining accounts for temporary resident members. Superannuation funds will have to ensure the correct tax is applied to the payments.
Main points :
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- Superannuation benefits accessed under the new conditions will be subject to a special tax, which would be withheld by the superannuation fund and remitted to the Australian Taxation Office.
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- Superannuation funds will face initial compliance costs associated with updating computer systems to reflect the new condition of release and to withhold the special tax levied on superannuation benefits accessed by departed temporary residents.