Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 6 - Increase the amount of personal superannuation contributions that are fully deductible
Outline of chapter
6.1 Schedule 5 to this bill will amend the ITAA 1936 to increase the deduction available to the self-employed for personal superannuation contributions.
Context of amendments
6.2 This measure was foreshadowed in the Governments election policy statement A Better Superannuation System released on 5 November 2001, to improve the operation of the incentives scheme that supports the voluntary contribution pillar of the Governments retirement incomes policy. The Government announced the implementation of this commitment in the 2002-2003 Federal Budget.
Summary of new law
6.3 The measure will increase the fully tax deductible amount for eligible persons who make superannuation contributions, from $3,000 to $5,000. [Schedule 5, item 1, subparagraphs 82AAT(2)(a)(i) and (ii)]
6.4 The definition of eligible person in section 82AAS of the ITAA 1936 includes self-employed and substantially self-employed persons.
| New law | Current law |
|---|---|
| The new limit on the amount of contributions that are fully tax deductible to eligible persons will be $5,000. Contributions over $5,000 (if any) will be 75% deductible, up to a total deduction equal to the persons age based limit. | Currently, the limit on the amount of contributions that are fully tax deductible to an eligible person is $3,000. Contributions over $3,000 (if any) are 75% deductible, up to the persons age based limit. |
Application and transitional provisions
6.5 This amendment will apply from 1 July 2002.
Consequential amendments
6.6 There are no consequential amendments relating to this measure.