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Wednesday, 27 June 2001
Page: 28643

Mr WILLIAMS (Attorney-General) (10:07 AM) —I move:

That the bill be now read a second time.

The Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Bill 2001 makes amendments to relevant tax legislation to ensure that appropriate tax treatment is applied to superannuation interests which will be split pursuant to the Family Law Legislation Amendment (Superannuation) Bill 2001. The Family Law Legislation Amendment (Superannuation) Bill 2001 is another landmark in the Howard government's ongoing reform of family law.

Under this bill, couples will for the first time be able to divide their superannuation interests on marriage breakdown in the same way as their other assets.

This consequential bill amends the Income Tax Assessment Act 1936 so that:

· the non-member's entitlement will be treated as a separate eligible termination payment;

· the undeducted contributions, concessional, post-June 1994 invalidity, CGT exempt components and the untaxed element of the post-June 1983 component will be split on a proportionate basis to the overall split; and

· the non-member spouse's benefit will be assessed separately against his or her own reasonable benefit limit.

The consequential bill also amends the Income Tax Assessment Act 1997 so that:

· capital gains or losses that may arise from the creation or forgoing of rights when spouses enter into a binding superannuation agreement or where the agreement comes to an end will be disregarded;

· the current CGT exemption for payments made from a superannuation fund or an approved deposit fund will be extended to non-member spouses; and

· CGT rollover relief will apply to in-specie transfers between funds with fewer than five members.

In addition, the consequential bill amends:

· the Small Superannuation Accounts Act 1995 to provide for accounts held within the Superannuation Holding Accounts Reserve (SHAR) to be split;

· the Superannuation Contributions Tax (Assessment and Collection) Act 1997 to ensure that, if a surcharge assessment is issued after a split but in respect of a period prior to the split, then the fund that holds those surchargeable contributions for the member spouse will be liable to pay the surcharge. If no fund holds those surchargeable contributions for the member spouse, then the member spouse will be liable to pay the surcharge;

· the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 to ensure that payments to a non-member spouse will trigger payment of the surcharge debt account by an unfunded defined benefit scheme (or the member in a constitutionally protected fund) if the benefit payment would have triggered payment of the debt account if made to the member spouse;

· the Superannuation (Unclaimed Money and Lost Members) Act 1999 to apply the same protection and rights to the non-member spouse that are currently given to the member spouse; and

· the Family Law Act 1975 to make some minor consequential amendments.

Full details of the measures in this bill are contained in the explanatory memorandum which I now present, and I commend the bill to the House.

Debate (on motion by Mr Horne) adjourned.