Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Extension of eligibility for Government co-contribution
Schedule 1 to this bill amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003, the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 to:
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- extend the Government co-contribution for low income earners to some employees who currently do not qualify; and
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- remove the taxation deduction available for personal superannuation contributions made by individuals who under this bill will now qualify for a Government co-contribution.
Date of effect: The co-contribution amendments will apply to determinations made for a person's 2003-2004 and subsequent income years. The deduction amendments will apply to assessments for the 2004-2005 and subsequent income years.
Proposal announced: This measure was announced in the Minister for Revenue and Assistant Treasurer's Press Release No. C013/04 of 14 March 2004.
Financial impact: This measure is expected to result in a budgetary cost of $45 million in 2004-2005, $50 million in 2005-2006, $50 million in 2006-2007 and $50 million in 2007-2008.
Compliance cost impact: Nil.
Administrative amendments to the Superannuation (Government Co-contribution for Low Income Earners) Act 2003
Schedule 2 to this bill amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 (Co-contribution Act) to:
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- specify an interest rate to be applied to late Government co-contribution payments;
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- require superannuation providers to repay Government co-contribution amounts which are not credited to the member's account within a specific time frame;
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- impose the general interest charge where a superannuation provider does not repay the Government co-contribution amount within a specific time frame;
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- further outline the requirements for reports by the Minister, to Parliament, under the Co-contribution Act; and
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- include a previously omitted definition.
Date of effect: All amendments will commence on the day this bill receives Royal Assent. The amendment to further outline the requirements for reports by the Minister, to Parliament, will only apply to reports for periods that begin on or after 1 July 2004.
Proposal announced: The Government co-contribution was foreshadowed in the Australian Government's policy statement A Better Superannuation System on 5 November 2001. The bill to give effect to this measure received Royal Assent on 12 November 2003. The amendments are administrative in nature and ensure that the Co-contribution Act operates effectively in accordance with the original intent.
Financial impact: Negligible.
Compliance cost impact: No estimates are available. These amendments are of minor or machinery of government nature and do not substantially alter existing arrangements.