Bills Digest No. 179 2002-03
Superannuation
(Government Co-contribution for Low Income Earners)
(Consequential Amendments) Bill
2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Superannuation
(Government Co-contribtion for Low Income Earners) Bill
2003
Superannuation
(Government Co-contribution for Low Income Earners) (Consequential
Amendments) Bill 2003
Date Introduced: 29 May 2003
House: House of Representatives
Portfolio: Treasury
Commencement:
The Superannuation
(Government Co-contribution for Low Income Earners) Bill 2003
commences on Royal Assent. The Superannuation (Government
Co-contribution for Low Income Earners) (Consequential Amendments)
Bill 2003 commences on Royal Assent except for the amendments made
by items 16 and 17 of Schedule 1 which commence on the later of
Royal Assent, or immediately after the commencement of item 48 of
Schedule 1 to the proposed Superannuation Legislation (Commonwealth
Employment) Repeal and Amendment Act (now proposed to be on 1 July
2003).
The purpose of
the Superannuation (Government Co-contribution for Low Income
Earners) Bill 2003 (S(GCLIE) Bill 2003) is to provide for
superannuation contributions to be made by Government for the
benefit of low income earners.
The purpose of the Superannuation (Government
Co-contribution for Low Income Earners) (Consequential Amendments)
Bill 2003 (S(GCLIE)(CA) Bill 2003) is to make amendments
consequential to the S(GCLIE) Bill 2003.
General information on the Federal Government
s co-contribution for low income earners proposal was provided in
the Bills Digest for the original Bill for this measure, the
Superannuation
(Government Co-contribution for Low Income Earners) Bill 2002
(the S(GCLIE) Bill 2002).(1)
The S(GCLIE) Bill 2002 was introduced with the
Superannuation Legislation Amendment Bill 2002 (the
SLA Bill 2002) which included amendments consequential to
the S(GCLIE) Bill 2002 and the reduction in the superannuation
surcharge rate. These two bills were last debated in the Senate on
18 November 2002 in cognate debate.
To attempt to meet its 2001 Election
commitment to reduce the superannuation surcharge rate and
introduce the Government co-contribution for low income earners the
Government has split the SLA Bill 2002 into the Superannuation
(Surcharge Rate Reduction) Amendment Bill 2003 and the S(GCLIE)(CA)
Bill 2003. This will allow the S(GCLIE) Bill 2003 and the
S(GCLIE)(CA) Bill 2003 to be debated separately from the surcharge
rate reduction bill.
- The S(GCLIE) Bill 2003 introduces a Government
co-contribution that will replace the low income superannuation
rebate (the LISR). The LISR is:
- payable to an employee who receives any form of employer
superannuation support (but is not a 'self employed person')
- a tax rebate of up to $100 for personal contributions made to a
complying superannuation fund
- payable to employees who have assessable (i.e. gross) income
less than $31 000
- calculated as ten per cent of the lesser of:
- $1000 reduced by 25 cents for each dollar of the taxpayer's
assessable income over $27 000, or
- the contribution actually made.(2)
During the 2001 election campaign, the
Government released A Better Superannuation
System(3) policy containing 13 proposed reforms to
superannuation, including a promise to replace the LISR with a more
generous Government co-contribution for low income earners.
The 2002-03 Budget provided further details
about the implementation of these proposals. The following sections
are reproductions of the Budget announcements on the Government
co-contribution.
A Better Superannuation
System Government superannuation
co‑contributionfor low income
earners
Expenses ($m)
| |
2002‑03
|
2003‑04
|
2004‑05
|
2005‑06
|
|
Australian Taxation
Office
|
‑
|
95.0
|
100.0
|
105.0
|
Explanation
From 1 July 2002, a Government superannuation
co‑contribution will be introduced in place of the existing
rebate for personal superannuation contributions made by eligible
low income earners. The co‑contribution will match personal
undeducted contributions by low income earners made on or after
1 July 2002.
A maximum co‑contribution
of $1,000 will be payable in respect of individuals whose
assessable income and reportable fringe benefits do not exceed
$20,000 per annum. The maximum co‑contribution will
be reduced by 8 cents for each dollar of assessable income and
reportable fringe benefits over $20,000 (up to $32,500).
The co‑contribution will be treated as an undeducted
contribution for tax purposes.
To be eligible for the co‑contribution, an
individual must not be aged 71 or more and must be
ineligible to claim a tax deduction for their personal
contributions. Persons who receive spouse, but not employer,
superannuation support will be eligible for a tax deduction for
their personal contributions.
See the related expense measure titled A
Better Superannuation System Government superannuation
co‑contribution for low income earners
implementation and administration and also the related
revenue measure titled A Better Superannuation System
replacement of the rebate for personal superannuation
contributions in the Treasury portfolio.(4)
A
Better Superannuation System replacement of the rebate for personal
superannuation contributions
Revenue ($m)
| |
2002‑03
|
2003‑04
|
2004‑05
|
2005-06
|
|
Australian Taxation Office
|
-
|
10.0
|
10.0
|
10.0
|
Explanation
From 1 July 2002, the existing rebate
for personal undeducted superannuation contributions will be
replaced with a more generous Government co‑contribution. The
Government co‑contribution will match personal undeducted
superannuation contributions made by eligible low income earners up
to a maximum of $1,000 a year depending on the individual
s level of income and contributions.
Low income earners are currently entitled to a
maximum rebate of $100 in respect of personal undeducted
superannuation contributions. Eligible persons will still be able
to claim the rebate in respect of contributions made up to
30 June 2002.
See also the related expense measures titled A
Better Superannuation System Government superannuation
co‑contribution for low income earners and A Better
Superannuation System Government superannuation co-contribution for
low income earners implementation and administration in the
Treasury portfolio.(5)
The
Explanatory Memorandum for these Bills updates the figures included
in the 2002‑03 Budget Papers. The financial impact is now
expected to be a cost to revenue of $115 million in 2003-04,
$125 million in 2004-05 and $115 million in
2005-06.(6)
Superannuation expert Dr Vince FitzGerald has
proposed changes to the Government co‑contribution that may
increase its impact. Dr FitzGerald suggested that reducing the
Government co-contribution from a dollar for dollar basis to 50
cents for each dollar contributed could enable the level of income
earners targeted to increase the income range upward from the
Government's proposed $20 000 to $30 000.(7)
Under Dr FitzGerald's proposal, a woman
returning to the workforce at age 45, earning $35 000 a year, and
who works for 15 years until retirement at age 60 could improve her
retirement income from $15 681 a year (or 58.6 per cent of
pre-retirement consumption expenditure) to $17 371 a year (or 64.9
per cent of pre-retirement consumption expenditure) through 15
years of voluntary contributions at $1000 a year with a
co‑contribution of $500 a year. Dr FitzGerald also claims
that under his proposal, improved levels of adequacy could be
achieved for a cost not much higher than the estimated cost of the
co-contributions scheme in the 2002 Federal Budget. He claims that
a scheme offering $1 for $2 up to annual income of $30 000 would
cost $102 million a year for total extra contributions of $251
million a year. A scheme offering $1 for $2 up to annual income of
$40 000 would cost $158 million a year for total extra
contributions of $371 million a year.(8)
In February 2003 the Association of
Superannuation Funds of Australia (ASFA) included in its 2003-04
Pre-Budget Submission a recommendation that the Government s 2001
election promise to provide a co-contribution for low and middle
income earners be passed by the Parliament and extended to cover
more middle income earners.(9) ASFA s preferred option
involves extending the income range to $60 000 and placing a
cap of $1000 on the amount of contributions subject to a 50 cents
in the dollar co-contribution from the Government. ASFA estimated
that the cost to revenue would be $240 million and this could
be offset by scaling back the proposed reduction of the surcharge
rate.(10) This recommendation, along with other
suggested compromises included in ASFA s 2003‑04
Pre‑Budget Submission to progress the passage the Government
s other superannuation legislation awaiting debate in the Senate,
was rejected by the Government.(11)
The following arguments are based on the
assumption that a Government co-contribution is one possible method
of increasing the retirement savings of low income earners.
- Free money for low income earners. The
S(GCLIE) Bill 2003 will improve the retirement income of
lower income earners. Compulsory superannuation (in particular the
Superannuation Guarantee system) was designed to improve the
retirement income of people beyond what would be received on the
age pension alone. The S(GCLIE) Bill 2003 targets low
income earners, those persons most likely to receive an age
pension, and improves their retirement income.
- The S(GCLIE) Bill 2003 improves the vertical equity
in the superannuation system. It provides a targeted incentive for
lower income taxpayers, particularly those earning less than
$20 000 per year, who make personal superannuation
contributions. For every dollar up to $1000 they contribute to a
superannuation fund, the Government will provide a
co‑contribution on a dollar‑for‑dollar basis.
Persons earning up to $32 000 will also benefit.
- The S(GCLIE) Bill 2003 minimises the impact on
superannuation funds by largely using existing superannuation
reporting systems(12) to obtain the information required
to determine eligibility for a Government co-contribution.
- The S(GCLIE) Bill 2003 does not impose any additional
costs or burdens on low income earners as it uses existing
reporting systems to determine who is eligible for a Government
co‑contribution.
- The S(GCLIE) Bill 2003 narrows the tax base. It
abolishes a relatively inexpensive rebate (costing $10 million per
year) and replaces it with a Government superannuation
co‑contribution scheme initially costing $115 million in the
2003 04 year an increased outlay of $105 million.
- The S(GCLIE) Bill 2003 does not enhance horizontal
equity. Different taxpayers receive different relative advantages
by saving through superannuation. The Government's proposed major
superannuation reforms to date(13) have been the
superannuation surcharge (a tax on high income earners) and the
Government co-contribution (a hand-out for low income earners).
Superannuation policy has been based on a kind of 'Robin Hood'
principle (take from the rich and give to the poor) rather than
detailed economic arguments.
- The S(GCLIE) Bill 2003 entrenches aspects of the
superannuation surcharge by using its reporting system in the
collection of information for assessing entitlement to Government
co‑contribution. The superannuation surcharge has been
criticised for its complex administration, clumsy assessment
procedures and on-going administration costs that are borne not
just by high income earners, but all superannuation fund
members.(14) Basing the Government co-contribution
information provisions on the superannuation surcharge information
collection and reporting mechanisms entrenches a much maligned and
inefficient surcharge administration system.
- Additional costs on superannuation funds. Despite largely using
existing superannuation reporting systems, the
S(GCLIE) Bill 2003 will require superannuation funds to
change their systems to report personal superannuation
contributions to the Australian Taxation Office. Some defined
benefit superannuation funds will have to change their rules to
permit the acceptance of Government
co-contributions.(15)
The S(GCLIE) Bill 2003 is comprised
of nine parts, each of which is discussed below.
Proposed Part 2 of the
S(GCLIE) Bill 2003 sets out the details of who is
eligible for a Government co-contribution, and the amount of the
co-contribution.
Proposed subsection 6(1)
provides that a Government co-contribution is payable in respect of
a person if:
- the person makes an 'eligible personal superannuation
contribution' during an income year, and
- the person has
employer-supported superannuation for the income year, and
- the person's
'total income' for the income year is less than $32 500, and
- an income tax
return for the person has been lodged, and
- the person is less than 71 years old at the end of the income
year, and
- the person does not hold an eligible temporary resident visa at
any time during that year of income.
Proposed subsection 6(2)
defines when a person has employer-supported superannuation. A
person has employer-supported superannuation for a year of income
when they are not an eligible person as defined in section 82AAS(2)
of the Income Tax Assessment Act 1936 (ITAA 1936). The
definition of eligible person in section 82AAS of the ITAA 1936 is
being amended by the S(GCLIE)(CA) Bill 2003. (Refer to
the explanation of item 1 in the Superannuation
(Government Co-contribution Low Income Earners) (Consequential
Amendments) Bill 2003 section below for an explanation of the
amendment to the definition of an eligible person.)
Proposed section 7 defines
'eligible personal superannuation contribution' as a contribution
made after 1 July 2002 to a complying superannuation fund or
retirement savings account (RSA).
Proposed section 8 defines
'total income' as the sum of a person's assessable income and
reportable fringe benefits for the income year.
The result of the definitions in
proposed subsection 6(2) and section 7 will be
that for a year of income a person will be eligible to receive a
Government co‑contribution when this Bill is enacted only
when they meet the conditions in proposed subsection
6(1) including where:
- their employer has made a contribution on their behalf,
and
- they have also
made the personal contributions.
Proposed section 9
establishes a general rule that the Government co-contribution is
equal to the sum of the 'eligible personal superannuation
contributions' the person makes in an income year. This general
rule is subject to proposed sections 10,
11, 12, 21,
22 and 23.
Proposed section 10 sets the
maximum Government co-contribution at $1000 for total incomes of
$20 000 and less. For persons with total income between $20
000 and $32 500, the $1000 maximum is reduced by 8 cents for each
dollar by which the person's total income exceeds $20 000.
Proposed section 10 is subject to proposed
sections, 11, 12,
21, 22 and
23.
Proposed section 11 provides
that if the Government contribution calculated under
proposed section 9 and 10 is less
than $20, the amount of Government co-contribution is to be
increased to $20.
Proposed section 12 enables
the Government co-contribution to be increased by an interest
component if the Government co-contribution is paid late. The
interest is calculated on:
- the amount of Government co-contribution
- the period from the payment date for the Government
co-contribution until the day on which the Commissioner of Taxation
(the Commissioner) first makes a Government co-contribution
payment, and
- on a daily basis using a rate specified in the
regulations.
How the Commissioner determines whether a
Government co-contribution is payable to a person is covered by
proposed Part 3.
Proposed section 13 provides
that the Commissioner must determine that a Government
co‑contribution can be paid to a superannuation fund if the
person is entitled to a Government co-contribution. Regulations may
be made to prescribe the time in which such determinations are to
be made.
In deciding whether to make such a
determination, proposed section 14 requires that
the Commissioner have regard to the income tax return lodged for
the person for the income year and information about contributions
made to a complying superannuation fund or RSA under superannuation
surcharge legislation.(16) This enables the Commissioner
to determine whether the person has employer provided
superannuation support using the employer contributed amounts
reported by providers under those Acts. In essence, the Government
co-contribution 'piggy-backs' off the information provided under
surcharge legislation. In making a determination, the Commissioner
can also use information provided in statements given under
proposed sections 26, 30 and
31.
How a Government co-contribution is paid,
namely to whom and when it is to be paid, as well as the
information that will be given when a co-contribution is paid, is
covered by proposed Part 4.
Proposed section 15 provides
that where the Commissioner has determined that a Government
co‑contribution is to be paid, the Commissioner must
determine whether the co-contribution is to be paid to a member's
account in a complying superannuation fund, RSA, the Superannuation
Holding Accounts Reserve (SHAR), the person or their legal
representative. Proposed section 16 requires
superannuation fund trustees and RSA providers to repay Government
co-contributions to the Commonwealth (and provide the Commissioner
prescribed information) if the trustee or RSA provider is unable to
credit the member's account with the co-contribution. Failure to
comply is an offence of strict liability.
The Commissioner must also give information in
relation to the co-contribution at the time it is paid to the
trustee of a complying superannuation fund, RSA provider, the
person or their legal representative (proposed section
18).
Overpayments and underpayments of Government
co-contributions are covered by proposed Part 5 of
the S(GCLIE) Bill 2003.
In some instances, the Commissioner may make a
co-contribution less than the correct amount, that is, an
underpayment (proposed subsection 19(2)). If the
Commissioner is satisfied that there has been an underpayment, the
amount of underpayment must be determined and then paid to the
trustee of a complying superannuation fund, RSA provider, the
person or their legal representative, or SHAR (proposed
subsections 19(1) (3) and (4)). The
Commissioner must also determine which account the underpaid amount
is to be paid to (proposed subsection 19(5)).
Regulations may also prescribe the times within which the
determination is to be made (proposed subsection
19(8)).
Proposed section 20 requires
superannuation fund trustees and RSA providers to repay underpaid
amounts to the Commonwealth (and provide the Commissioner
prescribed information) if the trustee of RSA provider is unable to
credit the underpaid amount member's account. Failure to comply is
an offence of strict liability.
Proposed section 21 enables
the Government co-contribution to be increased by an interest
component if the underpaid amount is paid late. The interest is
calculated on:
- the underpaid amount that is not paid by its payment date
- the period from the payment date for the underpaid amount until
the day on which it is paid in full, and
- on a daily basis using a rate specified in the
regulations.
In some instances, the Commissioner may make a
co-contribution greater than the correct amount, or make a
co-contribution to a person not entitled to such a payment for that
income year. Such a payment is called an overpayment
(proposed subsection 24(2)). If the Commissioner
is satisfied that there has been an overpayment, the amount of
overpayment must be recovered by one of the following methods
(proposed subsection 24(3)):
- deducting the whole or part of the amount overpaid from any
Government co‑contribution
- debiting the whole or part of the amount overpaid from an
account of the person in the SHAR
- recovering the whole or part of the amount overpaid from a
superannuation fund or RSA provider, the person or their legal
representative as a debt due to the Commonwealth.
Proposed Part 6 covers the
Commissioner's gathering of information needed to make a decision
about Government co-contributions. Information gathering is an
essential part of the administration of the co-contribution
scheme.
This part obliges:
- superannuation funds and RSA providers to give statements to
the Commissioner (proposed section 26)
- superannuation funds and RSA providers to give statements to
other superannuation funds and RSA providers where contributed
amounts are transferred (proposed section 27)
- superannuation funds and RSA providers to give statements to
member on request (proposed section 28)
- superannuation
funds and RSA providers to provide information in a particular form
required by the Commissioner (proposed section
29)
- a member or their legal representatives to provide the
Commissioner with information (when requested to do so)
(proposed section 30)
- a superannuation provider to give the Commissioner information
(when required to do so) (proposed section 31),
and
- records to be kept and retained by the superannuation fund/RSA
provider (proposed section 32)
Proposed subsection 33(1) is
intended to provide that if the Commissioner has reasonable grounds
to believe a superannuation provider has committed certain
offences, an infringement notice may be served.
(17)However, there may be a conflicting use of
terminology in proposed subsection 33(1). The
first part of proposed subsection 33(1) actually
reads:
Subject to subsection (2), the Commissioner may
cause an infringement notice to be served on a superannuation
provider in accordance with this Division if the Commissioner
has reasonable grounds to believe that the provider has
committed an offence against [emphasis added].
The terms superannuation provider and provider
are separately defined in proposed section 56, the
dictionary. Proposed section 56 defines the terms
as:
provider of an RSA has
the same meaning as in the Retirement Savings Accounts Act
1997.
superannuation provider
means:
(a) the
trustee of a complying superannuation fund; or
(b)
the provider of an RSA; or
(c)
the trustee of a constitutionally protected fund.
The term provider in proposed
subsection 33(1) may need to be replaced with
superannuation provider so as to ensure consistent use of
terminology and so there is no confusion as to its meaning.
If an infringement notice has been served, it
has to contain certain information in relation to the person on
whom it is served and the various matters relating to the offence
(proposed section 34).
The other provisions relating to infringement
notices are:
- the process for withdrawing an infringement notice
(proposed section 35)
- the effect on the infringement notice if the penalty is paid
(proposed section 36)
- that no more
than one infringement notice can be served on a person for the same
offence (proposed section
37)
- what effect not
serving an infringement notice has on taking other action in
relation to an offence (proposed section
38), and
- that the
Commissioner can extend the period for payment of penalty under an
infringement notice (proposed section 39).
Proposed Division 3 allows
the Commissioner to appoint an authorised person (proposed
section 40) who may enter a premise after
obtaining court issued warrant under proposed section
44, or with the consent of the occupier of the premise
(proposed section 41) following the production of
an identity card that meets the requirements of proposed
section 45, to determine:
- whether a Government co-contribution is payable to a
person
- the amount payable to a person
- whether there has been an overpayment, or
- whether a
person has contravened the legislation.
Proposed Parts 7 to
9 provide details of various administrative and
other matters, including:
- the Commissioner having the general administration of the
legislation (proposed section 46)
- the review of decisions by the Commissioner (proposed
sections 49 to 51) and, if necessary, judicial review,
under the Administrative Decisions (Judicial Review) Act
1977 is also available, but not a formal review and appeal
process via the Administrative Appeals Tribunal or the
courts(18)
- secrecy provisions consistent with other Acts administered by
the Commissioner (proposed section 53)
- providing a regulation making power enabling the
Governor-General to make regulations (proposed section
55), and
-
a dictionary (explanation) of the terms that
are defined to have a particular meaning when used in this Bill
(proposed section 56).
Item 1 of Schedule 1 inserts
a new paragraph 82AAS(2)(b) into
the ITAA 1936. The existing definition of 'eligible person' in
section 82AAS of the ITAA 1936 is used in section 82AAT of the ITAA
1936 to determine who can receive a tax deduction for personal
contributions. The definition in subsection 82AAS(2) characterizes
who is an eligible person by actually defining who is not an
eligible person. It currently states that a person is an eligible
person unless they meet the conditions in paragraphs 82AAS(2)(a)
and (b). The conditions in those two paragraphs currently exclude
persons receiving superannuation support from a spouse, relative,
friend or employer from being an eligible person and receiving a
tax deduction for their personal contributions.
The Government's co-contribution is to be paid
to low income earners who also had employer superannuation support
during the year of income. One of the conditions that are required
to be met for the Government co-contribution to be payable is that
the person receiving the Government co-contribution is not an
eligible person under section 82AAS. Using the current definition
of 'eligible person' in section 82ASS would not only make the
co-contribution payable to a person with employer support, but also
a person who has received contributions from their spouse, a
relative or a friend.
To ensure that during a year of income the
people who receive the Government co‑contribution are people
who have had employer contributions made on their behalf and who
meet the other conditions in proposed section 6 of
the S(GCLIE) Bill 2003, section 82AAS needs to be amended
to narrow the definition of who IS NOT an eligible
person. The new definition of eligible person under section 82AAS
will result in a person who had contributions made on their behalf
in connection with their eligible employment (they were an employee
for the purposes of the Superannuation Guarantee
(Administration) Act 1992 (assuming subsection 12(11) of the
Act was not in force)) not being an eligible person and therefore
meeting the conditions to be eligible for the Government
co‑contribution.
A consequence of this amendment is that a
person will be entitled to a tax deduction for personal
contributions if they are the recipient of a spouse contribution,
or similar contribution made on their behalf by another person,
which is not in relation to any eligible employment, provided they
are the recipient of contributions during the year of income that
were in relation to eligible employment.
Item 3 repeals Subdivision
AAC of Division 17 of Part III of the ITAA 1936 and, therefore, the
low income superannuation rebate for personal superannuation
contributions by low income earners (the rebate being replaced by
the Government co-contribution).
Items 4 to 6
amend the ITAA 1936 to ensure that Government
co‑contributions are not included in the taxable income of
superannuation entities, nor subject to the superannuation
surcharge.
Items 7 and
8 amend the Income Tax Assessment Act
1997 to ensure that Government co‑contributions paid to
a person directly, their legal representatives or the
superannuation holding accounts reserve (SHAR) are exempt from
tax.
The rules of one of the two defence personnel
superannuation schemes (the Defence Force Retirement and Death
Benefits Scheme) prevent it from accepting Government
co‑contribution payments for its members. Item
9 amends the Military Superannuation and Benefits Act
1991 to authorise the Minister for Defence to authorise the
Military Superannuation Benefits Board to accept Government
co-contribution payments for members of the Defence Force
Retirement and Death Benefits Scheme.
Items 10 to 15 amend the
Small Superannuation Accounts Act 1995 to enable the SHAR
to hold Government co-contribution payments. The amendments
include:
- a definition of Government co-contribution (item
12)
- the circumstances in which the Commissioner can transfer a
person s SHAR balance (including Government co-contribution) to
another superannuation entity (item 14), and
- the handling
and crediting of deposits to, and withdrawals from, SHAR
(item 15).
Items 16 and
17 amend the Superannuation Act 1976 to
redefine the definition of 'transfer amount' to enable payment of
an individual member's Government co-contributions to the
Commonwealth Superannuation Scheme.
Items 18 to
21 amend the Superannuation Contributions Tax
(Assessment and Collection) Act 1997 and the
Superannuation Contributions Tax (Members of Constitutionally
Protected Superannuation Funds) Assessment and Collection Act
1997 to clarify that Government co-contributions do not form
part of the surchargable contributions of a defined benefit
superannuation scheme.
Items 22 and
23 amend the Superannuation (Resolution of
Complaints) Act 1993 to enable persons to complain to the
Superannuation Complaints Tribunal about Government
co‑contribution statements provided by superannuation
entities to the Commissioner.
Item 24 amends the
Taxation Administration Act 1953 to allow the Commissioner
to impose a general interest charge for the late payment of
repayment of overpaid amounts of Government co-contribution.
Item 25 provides that the
amendments made by Schedule 1 of the
S(GCLIE)(CA) Bill 2003 apply in relation to contributions
made to complying superannuation funds and retirement savings
accounts on or after 1 July 2002.
Low income earners are the beneficiary of the
S(GCLIE) Bill 2003. They will receive 'free money' in the
form of a deposit into their retirement savings held in their
superannuation fund or RSA. Over time, through additional
contributions and the compounding of interest, recipients will have
a higher retirement benefit than they would have without Government
contributions. If higher retirement incomes for low wage earners
are the goal, questions should arise over whether a Government
co-contribution, in the method proposed by this Bill is the best
method to achieve such a goal. The implementation mechanism should
prompt such inquiries: it uses the information collection mechanism
of the superannuation surcharge, a mechanism that has been derided
for its complex administration, clumsy assessment procedures and
on-going administration costs borne by all superannuation fund
members.
The amendments in the
S(GCLIE)(CA) Bill 2003 are dependant on the passage of
the S(GCLIE) Bill 2003 and contain a miscellany of
generally beneficial but minor consequential amendments. Most of
these amendments involve the treatment of Government
co-contributions under taxation and superannuation legislation.
- http://www.aph.gov.au/library/pubs/bd/2002-03/03bd032.pdf
.
- See Income Tax Assessment Act 1936, subdivision AAC of
Division 17 of Part III.
-
A Better Superannuation System , Press Release, the
Hon. John Howard, Prime Minister, Liberal Party of Australia, 5
November 2001.
- The Hon. Peter Costello, MP, Treasurer, Budget Paper No. 2:
Budget Measures 2002-03, p. 161.
- ibid., p. 15
- Explanatory Memorandum, p. 4.
- Barrie Dunstan, 'Charge of the light-on brigade,' The
Australian Financial Review, 7 August 2002.
-
Extending super co-contributions worthy of serious
consideration , Press Release, Investment and
Financial Services Association, 5 August 2002.
- 2003-04
Pre-Budget Submission, Association of Superannuation Funds
of Australia, February 2003, p.11.
- ibid., p.13.
-
Government Sticks to Election Promises , Press
Release, Senator the Hon. Helen Coonan, Minister for Revenue
and the Assistant Treasurer, 12 March 2003.
- That is, those reporting systems employed under the
Superannuation Contributions Tax (Assessment and Collection)
Act 1997 and the Superannuation Contributions Tax (Members
of Constitutionally Protected Superannuation Funds) Assessment and
Collection Act 1997.
- Except possibly, choice of superannuation fund. This was been
rejected by the previous Parliament and reintroduced in the
Superannuation Legislation Amendment (Choice of Superannuation
Funds) Bill 2002.
- See the 23rd report of the former Senate Select Committee on
Superannuation, Superannuation Surcharge Legislation,
especially Chapter 4: The Proposed Collection Mechanism.
- Explanatory Memorandum, p. 48.
- That is, the Superannuation Contributions Tax (Assessment
and Collection) Act 1997, and the Superannuation
Contributions Tax (Members of Constitutionally Protected
Superannuation Funds) Assessment and Collection Act 1997.
- An infringement notice may be served if the Commissioner of
Taxation is reasonable satisfied that an offence has been committed
under subsections 16(3), 20(3), 26(20, 26(3), 27(2), 28(2) and
29(7).
- Explanatory Memorandum, p. 34.
Graeme Selleck
19 June 2003
Bills Digest Service
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