NO.041

ABOLISHING THE SUPERANNUATION SURCHARGE

The Government announced tonight that it will abolish the surcharge payable

on individuals’ surchargeable superannuation contributions and relevant

termination payments, with effect from the 2005-06 financial year.

Individuals who make or receive surchargeable superannuation contributions,

or who receive employer termination payments from 1July2005, will benefit

from this measure.

As a result of this measure, from 1July 2005, the surcharge will no longer

apply in respect of superannuation benefits that accrue, contributions made

or termination payments received from that date.

This measure, together with the co-contribution scheme announced in the 2004-05

Budget, demonstrates the Government’s commitment to encourage voluntary

savings to boost retirement incomes.

The Government has been reducing the surcharge rate since the 2003-04 financial

year. It had previously attempted to reduce the rates to 7.5 per cent for the

2006-07 and later financial years as part of the 2004-05 Budget. However the

Senate would only pass reductions to 10 per cent for the 2005-06 and later financial

years. Tonight’s announcement will reduce these rates to zero with effect

from the 2005-06 financial year.

This measure fulfils the Government’s commitment in its 2004 election

statement Super for all and Understanding Money to reduce further the

maximum surcharge rates.

This measure will cost $2.5billion over the forward estimates period and will

provide a significant boost to the superannuation savings of Australians currently

affected by the surcharge.

Contact: David Alexander

(02) 6277 7340