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 will make the taxation of excess contributions fairer and make some common sense changes to the Costello excess contributions tax arrangements.

The bill will enable excess concessional contributions made from 1 July 2013 to be taxed at an individual's marginal tax rate regardless of the individual's income or the cause of the breach.

Excess contributions above the concessional contributions cap are currently taxed at the top marginal tax rate—46.5 per cent—regardless of an individual's income.

The bill will allow those who exceed the concessional contributions cap to choose to withdraw the excess contribution without penalty should they wish.

This bill will impose a new interest charge—the excess concessional contributions charge—to individuals who exceed their concessional cap.

This charge is designed to account for the income tax that would otherwise have been paid earlier on these amounts had they been taken as salary, wages or profits.

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.

This will make the taxation of excess contributions fairer.

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.