The Government announced tonight that it will abolish the surcharge payable on individuals’ surchargeable superannuation contributions and relevant termination payments, with effect from the 2005-06 financial year.
Individuals who make or receive surchargeable superannuation contributions, or who receive employer termination payments from 1July2005, will benefit from this measure.
As a result of this measure, from 1July 2005, the surcharge will no longer apply in respect of superannuation benefits that accrue, contributions made or termination payments received from that date.
This measure, together with the co-contribution scheme announced in the 2004-05 Budget, demonstrates the Government’s commitment to encourage voluntary savings to boost retirement incomes.
The Government has been reducing the surcharge rate since the 2003-04 financial year. It had previously attempted to reduce the rates to 7.5 per cent for the 2006-07 and later financial years as part of the 2004-05 Budget. However the Senate would only pass reductions to 10 per cent for the 2005-06 and later financial years. Tonight’s announcement will reduce these rates to zero with effect from the 2005-06 financial year.
This measure fulfils the Government’s commitment in its 2004 election statement Super for all and Understanding Money to reduce further the maximum surcharge rates.
This measure will cost $2.5billion over the forward estimates period and will provide a significant boost to the superannuation savings of Australians currently affected by the surcharge.