Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Yesterday in question time I had a question from Senator Murray on the government’s better superannuation reforms and undertook to provide further information. I would like to table further information provided in response to his questions and seek leave to have it incorporated in Hansard.

Leave granted.

The answer read as follows—

RESPONSE TO QUESTIONS RAISED SENATOR ANDREW MURRAY ON 19 June 2007

1.

Should tax-free super income be declared on annual tax returns?

The Government considers that providing tax free superannuation to those individuals who have already paid tax on their contributions and earnings throughout their working life is well deserved.

In particular, the reforms are targeted at boosting incentives to work by lowering tax on non-superannuation income and will increase the reward from making voluntary savings to superannuation.

2.

Will wealthier retirees be able to qualify for the low-income tax offset?

As a result of the 2007-08 Budget tax cuts, from 1 July 2007, some low income tax offset can be claimed up to an income of $48,750.

Tax free superannuation will not count in determining whether an individual can claim the low income tax offset. This will reduce tax paid on other income, including work income, increasing the incentive to undertake work while drawing down on superannuation.

This is consistent with the Government's policy of encouraging workforce participation by older workers to address the challenges of our ageing population.

3.

Can the minister confirm that the Medicare levy is not defined as income tax and therefore should not be included in tax-free super?

Tax free superannuation income will not be subject to the Medicare levy.

4.

Can the minister confirm that all retirees over 65, well off or not, will qualify for the concessional Commonwealth seniors health card?

The eligibility test for the Commonwealth Seniors Health Card has not been amended.

Tax free superannuation income will not count towards determining whether an individual is eligible for the Commonwealth Seniors Health Card.

5.

If that concession is available to all, does the government think that better-off retirees should pay the Medicare levy on their income?

The Government is of the view that imposing the Medicare levy on tax free super would maintain all of the current administrative requirements, such as requiring retirees only earning super income to lodge annual tax returns and requiring superannuation funds to withhold Medicare levy from super payments. The Government believes this would be an inefficient approach that would outweigh the benefits of collecting revenues in this way.