Second Reading Speech
Senator Heffernan (Parliamentary Secretary to Cabinet)I move:
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
Leave granted.
The speech reads as follows-
The Superannuation Contributions Taxes and Termination Payments Tax Legislation Amendment Bill 2001 will improve the overall equity of the termination payments surcharge and the superannuation contributions surcharge legislation.
The measures contained in this bill were announced by the Government on 22 May 2001 as part of the 2001-2002 Federal Budget.
The bill proposes three specific measures to improve the operation of the surcharge legislation as it applies to employer eligible termination payments.
First, the bill will ensure that only the post 20 August 1996 amount of an employer eligible termination payment taken as cash will be potentially surchargeable. The Termination Payments Tax (Administration and Collection) Act 1997 currently provides that after 19 August 2001, all of the retained amount of an employer eligible termination payment (including amounts relating to pre 20 August 1996 service) when taken as cash, is potentially surchargeable.
Secondly, the bill will provide that only a notional amount of an employer eligible termination payment is included in the calculation of the employee's adjusted taxable income for surcharge purposes. This will benefit certain individuals who would not normally be subject to the surcharge but could become liable to pay the surcharge in a given year as a consequence of receiving an employer eligible termination payment.
Finally, the bill will ensure that individuals will not have to pay an effective tax rate greater than the top marginal income tax rate plus Medicare Levy when taking their employer eligible termination payment as cash. Currently, certain individuals may face a higher effective tax rate due to the interaction of the termination payments surcharge and the reasonable benefits limit legislation.
I commend the bill to the Senate.
Debate (on motion by Senator Denman) adjourned.
Ordered that the bill be listed on the Notice Paper as a separate order of the day.