The Government will amend the superannuation surcharge legislation so as to reduce the superannuation contributions and termination payments surcharge rates by one tenth of their current levels for each of the next three income years, commencing on 1 July 2002. As a result, the maximum surcharge rates will be reduced to 13½ per cent in 2002-03, 12 per cent in 2003-04 and 10½ per cent in 2004-05 and succeeding years.
This measure was first announced on 5 November 2001 in the policy document A Better Superannuation System.
The reduction in the superannuation contributions and termination payments surcharge rates will reduce the impact on surchargeable Australians by $50 million in 2003-04, $120 million in 2004-05 and $200 million in 2005-06.
The reduction in the surcharge rates, combined with the Government's other initiatives will encourage increased saving and self-reliance in retirement. This measure will ensure that superannuation remains attractive and encourages all employees to save for their retirement.
The Government will also review the surcharge arrangements after three years to determine whether any further changes are required.