The legislation removes the surcharge by reducing the maximum rate of surcharge to nil. This means any surchargeable contributions (including superannuation guarantee, salary sacrifice and personal deductible contributions) made or received and employer termination payments cashed or rolled over from 1 July 2005 will not attract the surcharge.

This does not repeal the legislation – it simply reduces the tax applicable to nil. Can we expect it to be reintroduced within the next few years?

This move reaffirms that contributing to superannuation is a tax-effective savings vehicle for high income earners. End benefits will now improve for high income earners who may have been paying the extra 15% tax. And again there is incentive to take super with 15% tax compared to salary if taxed at 48.5%.