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1996-97
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TERMINATION PAYMENTS SURCHARGE IMPOSITION BILL 1997
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Treasurer, the Hon Peter
Costello, MP)
80506 Cat. No. 96 5849 1 ISBN 0644 496320
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 Termination Payments Surcharge (Assessment and Collection) Bill 1997, the Superannuation Contributions Surcharge (Assessment and Collection Bill) 1997, the Superannuation Contributions 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 $434 million in 1997-98, $500 million in 1998-99 and $526 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.
1.1 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.
1.2 When the Bill is enacted it will be called the Termination Payments Surcharge Imposition Act 1997. [Clause 1]
1.3 The Act is to commence on the day it receives the Royal assent. [Clause 2]
1.4 Terms used in the Termination Payments Surcharge Imposition Bill are defined in the Termination Payments Surcharge (Assessment and Collection) Bill and are explained in the Explanatory Memorandum to that Bill. [Clause 3]
1.5 Clause 4 imposes a termination payments surcharge on a taxpayer's termination payment for a financial year. The meaning of termination payment is discussed in paragraph 2.4 -2.5 of the Explanatory Memorandum to the Termination Payments Surcharge (Assessment and Collection) Bill.
1.6 If the taxpayer has a termination payment, the rate of surcharge is determined by the taxpayer's adjusted taxable income (see paragraphs 2.8 -2.9 of the Explanatory Memorandum to the Termination Payments Surcharge (Assessment and Collection) Bill).
1.7 If, in the 1996-97 financial year, the taxpayer's adjusted taxable income is $70 000 or less, no surcharge is payable.
1.8 If the taxpayer's adjusted taxable income is in the range $70 001 to $84 999, the rate of surcharge is the percentage of his or her termination payment worked out using the formula:
[Subclause 5(1)]
Example
1.9 Mohan's adjusted taxable income for the 1996-97 financial year is $79 900. The rate of surcharge payable on Mohan's termination payment is:
1.10 If the taxpayer's adjusted taxable income is $85 000 or more, the rate of surcharge is 15 per cent of his or her termination payment. [Subclause 5(2)] This amount is indexed by movements in full-time adult average weekly ordinary time earnings. [Clause 6]