Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Extension of the Government's superannuation co-contribution
Schedule 1 to this bill will:
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- increase the level of Government matching of personal superannuation contributions to 150%;
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- increase the maximum amount of Government contribution available to $1,500;
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- increase the income level up to which the maximum co-contribution applies to $28,000; and
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- reduce the rate by which the maximum co-contribution phases out to 5 cents for each additional dollar of income. Consequently, the co-contribution will phase out completely at $58,000.
Date of effect: This measure will take effect from 1 July 2004.
Proposal announced: This measure was announced in the 2004-2005 Budget.
Financial impact: This measure is expected to result in a budgetary cost of $595 million in 2005-2006, $730 million in 2006-2007, and $790 million in 2007-2008.
Compliance cost impact: There is expected to be a negligible increase in compliance costs. Some superannuation schemes may incur minor additional costs in processing/allocating a higher volume of co-contributions.
Reduction in the surcharge rates
This measure will reduce the maximum surcharge rates from their current levels to 12.5% for 2004-2005, 10.0% for 2005-2006, and 7.5% for 2006-2007 and subsequent years.
Date of effect: This measure will take effect from 1 July 2004.
Proposal announced: This measure was announced in the 2004-2005 Budget.
Financial impact: This measure is expected to result in a revenue cost of $55 million in 2005-2006, $170 million in 2006-2007, and $385 million in 2007-2008.
Compliance cost impact: Some public sector superannuation schemes may have additional reporting obligations as a result of the surcharge rate reduction.