Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)General outline and financial impact
Schedule 1 - Removing the monthly minimum threshold for salary or wages to count towards the superannuation guarantee
Schedule 1 to the Bill amends the SGAA to remove the $450-a-month threshold before an employee's salary or wages count towards the Superannuation Guarantee.
Removing the $450-a-month threshold will expand the coverage of the Superannuation Guarantee to eligible employees earning salary or wages less than $450 in a calendar month from a single employer.
Date of effect: Schedule 1 to the Bill commences the day after Royal Assent and applies from 1 July 2022, however if Royal Assent is received after 1 July 2022 then the Schedule applies from the beginning of the next quarter after Royal Assent.
Proposal announced: Schedule 1 to the Bill fully implements the measure 'Removing the $450 per month threshold for superannuation guarantee eligibility' from the 2021-22 Budget.
Financial impact: Schedule 1 to the Bill is estimated to have the following impact on the underlying cash balance over the forward estimates period ($m):
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | - | - | -10.0 | -10.0 |
Human rights implications: Schedule 1 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Schedule 1 to the Bill is estimated to have a negligible impact on compliance cost.
Regulation impact statement: This measure has a minor regulatory impact.
Schedule 2 - First home super saver scheme maximum releasable amount
Schedule 2 to the Bill amends the TAA 1953 to increase the limit on the maximum amount of voluntary contributions made over multiple financial years that are eligible to be released under the First Home Super Saver Scheme from $30,000 to $50,000.
This amendment ensures that the First Home Super Saver Scheme continues to help first home buyers save more quickly for the purpose of purchasing or constructing their first home.
Date of effect: The amendments in Schedule 2 to the Bill apply to requests made on or after 1 July 2022 for the Commissioner to make a First Home Super Saver determination.
Proposal announced: Schedule 2 to the Bill implements the measure 'First Home Super Saver Scheme - increasing the maximum releasable amount to $50,000' announced on 8 May 2021 as part of the 2021-22 Budget.
Financial impact: As part of the 2021-22 Budget, Schedule 2 to the Bill is estimated to result in a decrease in receipts of $25.0 million over the forward estimates period.
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | -6.0 | -6.0 | -6.0 | -7.0 |
Human rights implications: Schedule 2 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Low.
Schedule 3 - Reduced eligibility age for downsizer contributions
Schedule 3 to the Bill amends the ITAA 1997 to allow individuals aged 60 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their home.
Date of effect: 1 July 2022.
Proposal announced: Schedule 3 to the Bill partially implements the measure Flexible Super - reducing the eligibility age for downsizer contributions from the 2021-22 Budget. Separate regulation amendments are also required to implement the measure.
Financial impact: Schedule 3 to the Bill is estimated to result in a negligible decrease in receipts over the forward estimates period.
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | - | .. | .. | .. |
.. negligible (close to zero but not zero impact)
Human rights implications: Schedule 3 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Low.
Schedule 4 - Work test reforms for superannuation contributions
Schedule 4 to the Bill amends the ITAA 1997 to apply the work test to individuals aged between 67 to 75 years who claim a deduction for personal superannuation contributions. This change facilitates the repeal of existing work test that applies to non-concessional and salary sacrifice contributions. Schedule 4 to the Bill also amends the ITAA 1997 to allow such individuals to make or receive non-concessional superannuation contributions under the bring forward rule.
Date of effect: 1 July 2022
Proposal announced: Schedule 4 to the Bill partially implements the measure Flexible Super - repealing the work test for voluntary superannuation contributions from the 2021-22 Budget.
Financial impact: As at the 2021-22 Budget, the measure Flexible Super - repealing the work test for voluntary superannuation contributions is estimated to result in a decrease in receipts of $30.0 million over the forward estimates period.
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | - | .. | -$10.0 | -$20.0 |
.. negligible (close to zero but not zero impact)
Human rights implications: Schedule 4 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: Low
Schedule 5 - Segregated current pension assets
Schedule 5 to the Bill amends the ITAA 1997 to allow superannuation trustees to choose their preferred method of calculating exempt current pension income when they have member interests in both accumulation and retirement phases for part, but not all, of the income year.
Date of effect: The amendments in Schedule 5 to the Bill commence on the first 1 January, 1 April, 1 July or 1 October to occur after this Bill receives Royal Assent.
Proposal announced: Schedule 5 to the Bill partially implements the measure Superannuation - reducing red tape for superannuation funds from the 2019-20 Budget.
Financial impact: Nil
Human rights implications: Schedule 5 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: There will be a minor saving for affected funds due to funds being able to choose a simpler method of calculating exempt current pension income.
Schedule 6 - Extension of temporary full expensing of depreciating assets
Schedule 6 to the Bill amends the income tax law to extend the temporary full expensing regime by 12 months, until 30 June 2023. The 12-month extension will provide eligible businesses with additional time to access the tax incentive.
Date of effect: The amendments in Schedule 6 to the Bill apply to depreciating assets that are first held, and first used or installed ready for use for a taxable purpose at or after the 2020 budget time.
Proposal announced: Schedule 6 to the Bill fully implements the measure Temporary full expensing extension from the 2021-22 Budget.
Financial impact: This measure is estimated to have the following receipts impacts over the forward estimates period ($m):
| 2021-22 | 2022-23 | 2023-24 | 2024-25 |
| - | -600.0 | -10,900.0 | -6,400.0 |
Human rights implications: Schedule 6 to the Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.
Compliance cost impact: An exemption from the Regulation Impact Statement requirements applies because this measure is covered by the Prime Minister's exemption for COVID-19 related measures.