AUSTRALIA - The Association of Superannuation Funds Australia (ASFA) has called for a swift passage of the Bill abolishing the superannuation surcharge through both Houses of parliament.
The government this week introduced the Superannuation Laws Amendment (Abolition of Surcharge) Bill 2005, and the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005, which will remove the surcharge on super contributions and give effect to choice of fund, from July 1.
Philippa Smith, CEO of ASFA, called on all political parties to support the removal of the “inequitable tax” on contributions for a “swift and clean” passage through parliament.
The surcharge has falsely been described as a tax that applied only to the rich, when in fact many middle income earners were caught by the surcharge, including police and workers with shift allowances, or who had employer-provided accommodation, Smith said.
Shadow minister for finance and superannuation, Nick Sherry, previously denounced the Budget decision as an “exclusive tax cut” set to benefit less than 5% of the population. He said the move represented a tax cut for those earning a surchargeable tax income of more than AUS$99,700 a year, with the greatest benefit gained by those earning AUS$121,075 a year or more.
Smith added that the definition of income used to calculate surcharge eligibility included super contributions and also picked up reportable fringe benefits. Certain long service leave entitlements and termination payments were also counted, with those facing redundancy often pushed into surcharge territory.
Those with fluctuating incomes were also unfairly caught by this super tax, such as women or others with broken work patterns trying to catch up in their savings,” Smith said. “Selling an investment property could also trigger the surcharge through inclusion of capital gains in taxable income.”
ASFA estimates some 1m people will benefit from the removal of the tax.
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