Miscellaneous 2003

The hidden costs of the Superannuation Surcharge Tax

Source: Australian Tax Research Foundation

Published Date: 1 Jan 2003


This study into the Superannuation Surcharge Tax or SST concludes that SST is inefficient, inequitable,has high compliance costs on the superannuation industry, significantly increases some taxpayers’ effective marginal income tax rates and lacks transparency within the overall tax system.

The SST is a hidden tax, with significant effects on the industry, many so-called higher income earners and, indirectly, on nearly all superannuation fund members. While it generated $699 million in revenue in 2000/01, tax compliance costs of the SST on the superannuation industry was around $76 million or 11% of SST tax revenue. The research found a significant impact on marginal income tax rates such as the case of taxpayers with high superannuation contributions where the rate went from 48.5% up to between 64.2% and 67.6% for taxable incomes between $65,720 and $79,802 in 2000/01.

A key finding is that SST is now impacting at relatively lower income levels than when first introduced, and close to the highest-rate threshold of $60,000 for certain taxpayers who have high superannuation contributions. In its survey of the superannuation industry the research found that around 80% of fund managers rated the abolition of SST as a high priority.

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Miscellaneous 2003

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