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Senate

Superannuation Contributions Tax Imposition Bill 1997

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Superannuation Contributions Surcharge Imposition Bill

This Bill forms part of a package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners. The other components of the legislative package are: the Superannuation Contributions Surcharge (Assessment and Collection Bill) 1997, the Termination Payments (Assessment and Collection) Bill 1997, Termination Payments Surcharge Imposition Bill 1997, and the Superannuation Contributions Surcharge (Consequential Amendments) Bill 1997.

Date of effect: 20 August 1996

Proposal announced: The introduction of the superannuation contributions surcharge for high income earners was announced by the Government in the 1996-97 Budget and was incorporated in the Treasurer's Press Release No. 87 of 20 August 1996 entitled 'Superannuation Reform'.

Financial impact: It is estimated that the revenue impact of the package of legislation giving effect to the surcharge will be $480 million in 1997-98, $470 million in 1998-99 and $530 million in 1999-2000.

Compliance cost impact:

Full details of the compliance costs associated with the surcharge measures are contained in the compliance cost statement in the Explanatory Memorandum to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

Overview

1.1 This Bill imposes the superannuation contributions surcharge and declares the rate of surcharge. The assessment of the superannuation contributions surcharge is dealt with in the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

Explanation of the provisions

Title and commencement of the Act

1.2 When the Bill is enacted it will be called the Superannuation Contributions Surcharge Imposition Act 1997. [Clause 1]

1.3 The Act is to commence on the day it receives the Royal assent. [Clause 2]

Interpretation

1.4 Terms used in the Superannuation Contributions Surcharge Imposition Bill are defined in the Superannuation Contributions Surcharge (Assessment and Collection) Bill and are explained in the Explanatory Memorandum to that Bill. [Clause 3]

Imposition of surcharge

1.5 Clause 4 imposes a superannuation contributions surcharge on a member's surchargeable contributions for a financial year. The meaning of surchargeable contributions is discussed in paragraphs 2.4 - 2.10 of the Explanatory Memorandum to the Superannuation Contributions Surcharge (Assessment and Collection) Bill.

Rate of surcharge

1.6 If the member has surchargeable contributions and has quoted his or her tax file number to the superannuation provider, the rate of surcharge is determined by the member's adjusted taxable income (see paragraphs 2.12 - 2.13 of the Explanatory Memorandum to the Superannuation Contributions Surcharge (Assessment and Collection) Bill).

1.7 If, in the 1996-97 financial year, the member's adjusted taxable income is $70 000 or less, no surcharge is payable.

1.8 If the member's adjusted taxable income is in the range $70 001 to $84 999, the rate of surcharge is the percentage of his or her surchargeable contributions worked out using the formula:

Relevant adjusted taxable income - $70 000/$1000

Relevant adjusted taxable income - $70 000/$1000

[Subclause 5(1)]

Example

1.9 Reuban's adjusted taxable income for the 1996-97 financial year is $82 500. The rate of surcharge payable on Reuban's surchargeable contributions is:

$82 500 - $70 000/$1000

1.10 If the member's adjusted taxable income is $85 000 or more, the rate of surcharge is 15 per cent of his or her surchargeable contributions. [Subclause 5(2)] This amount is indexed by movements in full-time adult average weekly ordinary time earnings. [Clause 6]

1.11 If the member has not quoted his or her tax file number to the superannuation provider, the rate of surcharge is 15 per cent of his or her surchargeable contributions regardless of the amount of his or her adjusted taxable income. [Subclause 5(3)]

Application to the States

1.12 The Bill does not impose a tax on any property of a State or impose a superannuation contributions surcharge on a State where this would exceed the legislative power of the Commonwealth. [Clauses 7 and 8]


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