Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends various taxation laws to implement a range of improvements to Australia's tax laws.

The legislation we are introducing today will make the taxation of excess contributions fairer.

Currently, excess contributions above the concessional contributions cap generally are taxed at the top marginal tax rate—46.5 per cent—regardless of an individual's income. This is a severe penalty for low- and middle-income earners.

In contrast, individuals on the top marginal rate effectively face no penalty and benefit from being able to pay their tax on excess contributions later than normal income tax.

The changes contained in the legislation will enable excess concessional contributions to be included in an individual's taxable income and allow them to be taxed at the individual's marginal tax rate regardless of their income or the cause of the breach. A non-refundable tax offset of 15 per cent will be provided to individuals to account for the income tax paid by their fund.

The changes will apply to contributions made on and after 1 July 2013.

In addition, individuals will be allowed to withdraw any excess concessional contributions from their superannuation provider.

These changes will make the superannuation system fairer.

It is estimated that this reform will reduce the tax liability of around 40,000 low- and middle-income earners in 2013-14, by around $1,100 on average.

Full details of the measure are contained in the explanatory memorandum.

Ordered that the second reading be made an order of the day for the next sitting day.