Late Thursday night the Senate passed the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No. 2], though with a number of amendments – including retaining the current Super Guarantee rates and keeping the Low Income Superannuation Contribution (LISC). However the House of Representatives has refused to accept these amendments and, as the Senate has refused to pass the bill without them, the question of how long the LISC will remain and what the SG rate will be in future years will wait until at least August.
The Senate amendments to the bill kept a number of tax concessions, including:
- Currently legislated increases to the Superannuation Guarantee rate
- The Low Income Superannuation Contribution
- The Schoolkids Bonus
- The Income Support Bonus
Most parties had at least one amendment to the bill, including the Palmer United Party to keep the LISC, income support and Schoolkids bonus, Australian Greens to keep the LISC, DLP/Independents to keep the LISC and not change the SG rate, and the Opposition to keep all four measures.
The Government had also submitted an amendment on Monday to their own bill – to update the Super Guarantee rate to reflect what was announced in the 2014 Federal Budget. Prior to this the bill still contained the SG rates from the first attempt to repeal the MRRT, which the Senate rejected in March 2014.
The updated Explanatory Memorandum says that:
“Given that increases in the SG are funded largely from reductions in take home wages or business growth, postponing the pause in the SG could reduce economic activity in 2014-15 and 2015-16 and boost economic activity from 2017-18 to 2021-22 relative to the Government’s original policy.”
“Employer procedures should essentially remain the same. Under the preferred option employers will have to change the SG rate in their payroll systems six times, the same number as under the current policy. Hence, no additional compliance burden relative to the Government’s announced policy is anticipated. “
As noted in the supplementary EM previous consultation on the rate of the Super Guarantee had been split, with the Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry Group (AIG) opposing increasing the SG rate beyond its current levels, and the superannuation industry, including ASFA, the FSC, Industry Super Australia and AIST supporting the increase to 12% because of the “impact on retirement incomes.”
Senate Vote – Superannuation Guarantee
The Government’s amendment to change the bill to reflect the Super Guarantee rate announced in the budget failed – 36 to 30.
The Senate then voted to remove the original slower Super Guarantee changes from the bill, which passed 35 to 32. Had this amendment been accepted by the House of Reps this would have meant the currently legislated increases to Super Guarantee would continue.
Senate Vote – Low Income Superannuation Contribution
On Thursday the Senate voted 39 to 29 to remove the LISC repeal from the bill, if passed this would mean that the LISC would continue to be paid in 2014/15 and later financial years.
However, on Friday the House of Reps voted to send the bill back to the Senate, without the amendments. Then on Friday afternoon the Senate voted 37 for keeping the amendments and 29 against.
Treasurer Joe Hockey has said that:
“The Government will not accept amendments which support these unfunded spending measures remaining in place.”
With both houses not scheduled to sit again until the 26th of August there seems plenty of time for negotiations.
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