The Government today introduced minor amendments to clarify the operation of the superannuation choice legislation, and increase the Medicare levy low income thresholds in line with increases in the Consumer Price Index.
Key features of the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005, announced by the Government in January, include:
- Ensuring employers can not charge an employee for the costs of complying with the choice obligations;
- specifying additional circumstances where employers do not have to provide employees with a standard choice form. For example, if an employee has already chosen a fund before 1 July 2005, this choice will be treated as meeting the choice of fund rules if the employer placed no restrictions on the funds that could be chosen. In other words, the employer has already met their obligations and will not have to hand out the standard choice form to these employees;
- providing employers with a 12 month transitional period for the Superannuation Holding Accounts Special Account (SHASA). Employer contributions made into SHASA will comply with the choice of fund legislation until 30 June 2006. SHASA will then be closed to new employer deposits.
"This legislation provides certainty for the superannuation industry, employers and employees. It strikes a balance between upholding the fundamental principals of choice, and ensuring the transition for employers is as smooth as possible," Federal Assistant Treasurer, Mal Brough, said today.
The Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2005 also honours the Government's 2005-06 Budget commitment to:
- increase the Medicare levy low income thresholds in line with increases in the Consumer Price Index
- increase the Medicare levy low income threshold applicable to pensioners below age pension age so they do not have a Medicare levy liability where they do not have an income tax liability.
The Medicare levy low income threshold will increase to $15,902 for individuals and $26,834 for families. The additional amount of threshold for each dependant child or student will also be increased to $2,464. The Medicare levy threshold for pensioners below age pension age will be lifted to $19,252. These increases in thresholds will apply from the 2004‑05 year.