The Association of Superannuation Funds of Australia (ASFA) has called for smooth passage of the Bill to abolish the unpopular superannuation surcharge, which was introduced into Parliament yesterday, through both the lower and upper house.
“This has been an inequitable tax, and its removal should be supported by all the political parties,” said ASFA chief executive Philippa Smith.
Asked which particular party ASFA is concerned about, Smith said “there had been mumblings in the Australian Labor Party (ALP).”
Smith says the ALP might try to block the Bill as part of a blanket rejection of the Government’s proposed tax cuts, but said suspicions have also been raised by the fact that Labor tried to block previous Bills reducing the surcharge.
If the ALP or any other party tries to block the Bill, it will only delay it’s introduction as the Government will take full control of the senate on July 1.
“I think it’s probably more a nuisance factor but we certainly don’t want the changes bogged down in political game play because it’s such a positive thing to happen which really does help simplify super,” said Smith.
“The ALP sometimes argues [the surcharge] is just for the rich. It had a much more damaging effect than that.”
The surcharge, which was introduced by the Howard Government when it came to power in 1996, was scrapped as part of Peter Costello’s ninth budget, released on May 10.
It was intended to increase taxes for people on higher incomes. But many lower income earners who made large one-off payments to superannuation as they approached retirement also had to pay it.
According to Smith, reportable fringe benefits, certain long service leave entitlements and termination payments were also counted as income by the Government, so people facing redundancy were “often pushed into surcharge territory.”
“…many middle income earners were caught by the surcharge, including police and workers with shift allowances, or who had employer-provided accommodation.”
“Those with fluctuating incomes were also unfairly caught by this super tax, such as women or others with broken work patterns trying to catch up in their savings. Selling an investment property could also trigger the surcharge through inclusion of capital gains in taxable income,” she said.
According to AFSA, over 1 million Australians will be better off if the Bill passes.
