Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

TAX LAWS AMENDMENT (FAIRER TAXATION OF EXCESS CONCESSIONAL CONTRIBUTIONS) BILL 2013

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.

SUPERANNUATION (EXCESS CONCESSIONAL CONTRIBUTIONS CHARGE) BILL 2013

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.

Debate adjourned.