Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 25 March 1997
Page: 2450


Senator CAMPBELL (Parliamentary Secretary to the Treasurer)(11.22 p.m.) —I table revised explanatory memoranda relating to six of the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard .

Leave granted.

The speeches read as follows—

SUPERANNUATION CONTRIBUTIONS SURCHARGE (ASSESSMENT AND COLLECTION) BILL 1997

This bill forms part of a complete 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 which I will also introduce to the Senate today include: the Superannuation Contributions Surcharge Imposition Bill 1997, the Termination Payments Surcharge (Assessment and Collection) Bill 1997, the Termination Payments Surcharge Imposition Bill 1997, the Superannuation Contributions Surcharge (Consequential Amendments) Bill 1997, the Superannuation Contribution Surcharge (Application to the Commonwealth) Bill 1997, and the Superannuation Contribution Surcharge (Application to the Commonwealth—Reduction of Benefits) Bill 1997.

The superannuation system has been inequitably biased in favour of high income earners. Those high income earners have been benefiting from the concessional taxation treatment of superannuation to a much greater extent than low income earners.

The introduction of the Superannuation Contributions Surcharge for High Income Earners is this Government's response to ensure that the superannuation system is more equitable for all Australians, while also ensuring that superannuation remains an attractive savings option.

From Budget night 1996 all employer and deductible personal superannuation contributions made by, or for, high income earners are now subject to a surcharge of up to 15 per cent. The surcharge only applies to contributions made after the Budget announcement.

The surcharge will be phased in over the income levels of $70 000 to $85 000 with the surcharge effectively increasing by 1 per cent for each additional $1 000 of income above the $70 000 threshold. The $70 000 and $85 000 thresholds will be indexed from 1997-98 to the increase in full time adult average weekly ordinary times earnings (AWOTE). This indexation is to ensure that low and middle income earners are not affected by the surcharge.

Income for the purposes of the surcharge is defined in the legislation to mean taxable income plus all employer and tax deductible personal superannuation contributions.

Subject to data limitations, the Retirement Income Modelling Task Force estimates that about 355 000 taxpayers will be affected by the surcharge.

Collection Mechanism

Superannuation providers will be required to send to the Australian Taxation Office (ATO) details of contributions received in relation to each member. The reporting date will be 31 October each year. For the 1996-97 year the date is extended to 15 December 1997 to allow superannuation providers additional time to collect information.

As members lodge their income tax returns, the ATO will match details of their taxable income with the information supplied by superannuation providers. Where, as a result of the level of a member's adjusted taxable income, a surcharge liability arises the ATO will assess the amount of surcharge and will periodically send assessments to the provider who holds the member's contributions.

The superannuation provider will then debit the member's superannuation account with the surcharge liability and will remit that amount to the ATO within one month of the assessment.

From 1998 an advance instalment of surcharge will be payable on 15 June. The advance instalment will be 50 per cent of the surcharge assessed in the previous year.

Alternative measures of collecting the surcharge have been put to the Government. The Government has given careful consideration to those suggestions.

The alternatives suggested all involve an unacceptable increase in compliance costs for employers, small business and all Australians.

A number of these alternatives involve transferring the reporting obligation from superannuation funds to the significantly larger number of employers. The Government believes this would represent a substantial increase in the compliance burden of small business.

Significantly, the administrative requirements on superannuation funds under the Government's approach are essentially similar to the processes that superannuation funds already undertake as part of their normal business operations.

Against this background the Government has decided not to depart from the broad approach to collection of the surcharge outlined on Budget night.

Unfunded defined benefits schemes

As unfunded defined benefits schemes are not funded until the benefit is paid the surcharge cannot be collected from these schemes each year as the liability is assessed.

Rather the surcharge liability is to be accumulated and will be payable at the time the affected member's benefit commences to be paid.

To prevent unfunded defined benefits schemes being advantaged by this deferral of the surcharge, interest will be payable on the accumulated debt.

Financial implications

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

I commend the bill to the Senate and present the explanatory memorandum.

SUPERANNUATION CONTRIBUTIONS SURCHARGE IMPOSITION BILL 1997

This bill forms part of a complete package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners.

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.

Financial implications

The estimated revenue impact of the package of surcharge legislation is set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

TERMINATION PAYMENTS SURCHARGE (ASSESSMENT AND COLLECTION) BILL 1997

This bill forms part of a complete package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners.

The bill ensures that the surcharge will also apply to individual's who receive `golden handshakes'. `Golden handshakes' are termination payments that are funded by an employer rather than through the superannuation system.

To avoid any retrospective application of the surcharge to `golden handshakes' a transitional measure will apply to `golden handshakes' received within 5 years of the 1996-97 Budget announcement (ie; payments received prior to 20 August 2001). The surchargeable portion is only that part of the `golden handshake' which relates to the employee's post-20 August 1996 service with the particular employer.

'Golden handshake' payments made after 20 August 2001 will only be subject to this transitional rule if the payments were made under the terms of a written agreement between the employer and the employee that was in existence prior to 20 August 1996.

Financial implications

The estimated revenue impact of the package of surcharge legislation is set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

TERMINATION PAYMENTS SURCHARGE IMPOSITION BILL 1997

This bill forms part of a complete package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners.

This bill imposes the termination payments surcharge and declares the rate of surcharge. The assessment of the termination payments surcharge is dealt with in the Termination Payments Surcharge (Assessment and Collection) Bill 1997.

Financial implications

The estimated revenue impact of the package of surcharge legislation is set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

SUPERANNUATION CONTRIBUTIONS SURCHARGE (CONSEQUENTIAL AMENDMENTS) BILL 1997

This bill forms part of a complete package of legislation designed to give a legislative framework for the introduction of a superannuation contributions surcharge for high income earners.

This bill makes a number of consequential amendments to the Income Tax Assessment Act 1936, the Retirement Savings Accounts Act 1997, the Superannuation Industry (Supervision) Act 1993, the Superannuation (Resolution of Complaints) Act 1993 and the Taxation (Interest on Overpayments and Early Payments) Act 1983. These changes are required to give effect to the 1996-97 Budget announcement, on 20 August 1996, of the introduction of a superannuation contributions surcharge for high income earners.

Financial implications

The financial impact of this bill is considered to be negligible. The estimated revenue impact of the package of surcharge legislation is set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

SUPERANNUATION CONTRIBUTIONS SURCHARGE (APPLICATION TO THE COMMONWEALTH) BILL 1997

This bill together with the Superannuation Contributions Surcharge (Application to the Commonwealth—Reduction of Benefits) Bill 1997, forms a further component of the 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 package; the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997, the Superannuation Contributions Surcharge Imposition Bill 1997; the Termination Payments Surcharge (Assessment and Collection) Bill 1997, the Termination Payments Surcharge Imposition Bill 1997 and the Superannuation Contributions Surcharge (Consequential Amendments) Bill 1997 were introduced to the House on 13 February 1997.

This bill ensures that the Superannuation Contributions Surcharge applies to all non-contributory superannuation schemes operated by the Commonwealth (essentially the judicial arrangements).

The bill provides that the trustee of such a scheme is not to be taken to be an officer, authority or agent of the Commonwealth.

This bill also provides that the Minister for Finance may give directions in relation to the discharge of superannuation contributions surcharge liability of the trustee of certain Commonwealth unfunded defined benefit superannuation scheme.

The bill further provides that compliance with a direction by the Minister for Finance in relation to the discharge of superannuation contributions surcharge liability of the trustee of certain Commonwealth unfunded defined benefit superannuation schemes is taken to be a payment of surcharge by the trustee.

Recovery of surcharge liability is governed by provisions contained in the Superannuation Contributions Surcharge (Application to the Commonwealth—Reduction of Benefits Bill) 1997. These provisions ensure that the application of the surcharge does not result in a contravention of the Constitution.

Financial implications

The financial impact of this bill is considered to be negligible. The estimated revenue impact of the package of surcharge legislation was set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

SUPERANNUATION CONTRIBUTIONS SURCHARGE (APPLICATION TO THE COMMONWEALTH—REDUCTION OF BENEFITS) BILL 1997

This bill together with the Superannuation Contributions Surcharge (Application to the Commonwealth) Bill 1997, forms a further component of the 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 package; the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997, the Superannuation Contributions Surcharge Imposition Bill 1997; the Termination Payments Surcharge (Assessment and Collection) Bill 1997, the Termination Payments Surcharge Imposition Bill 1997 and the Superannuation Contributions Surcharge (Consequential Amendments) Bill 1997 were introduced to the House on 13 February 1997.

The bill provides that the trustee of a Commonwealth non-contributory unfunded defined benefits superannuation scheme (essentially the judicial arrangements) may reduce a member's benefits to pay a superannuation contributions surcharge liability. The remuneration of a current judge is protected under the Constitution from reduction during his or her continuation in office. This bill ensures that new appointees are subject to the surcharge.

Financial implications

The financial impact of this bill is considered to be negligible. The estimated revenue impact of the package of surcharge legislation was set out in the Second Reading Speech to the Superannuation Contributions Surcharge (Assessment and Collection) Bill 1997.

I commend the bill to the Senate and present the explanatory memorandum.

Debate (on motion by Senator Chris Evans) adjourned.