In the May 2005 Federal Budget it was flagged that the above surcharge would be abolished.
This has been one of the most unpopular taxes, and maybe remembered from ?the tax that isn?t a tax? political debate.
Recent government proposals were that the 15% surcharge on superannuation contributions would be phased out over the next few years. The Government with the full control of the Senate has now indicated that it will be abolished from 1 July 2005.
Political debate rages and whether it is passed is not definite, but we recommend that any tax planning around tax cuts and superannuation surcharge should be based on the likelihood that they will be abolished.
In the 2005 tax year the surcharge is payable where a defined term ?adjusted taxable income? exceeds $99,710 phasing up to maximum 12.5% surcharge once this figure reaches $121,075.
A simple technique such as requesting your employers to defer monthly contributions until post 1 July 2005 would be effective. Other techniques to defer income, bring forward expenses and tax advantaged investments will have even greater benefit than usual to taxpayers subject to superannuation surcharge.