Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 24 June 2010
Page: 6529


Mr BOWEN (Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services) (10:56 AM) —I move:

That this bill be now read a second time.

This bill amends superannuation and taxation laws to implement a range of improvements to Australia’s laws.

Schedule 1 to this bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999, and the Income Tax Assessment Act 1997 to facilitate the transfer of superannuation unclaimed moneys from state and territory authorities and public sector superannuation schemes to the Commissioner of Taxation. The amendments will also enable the commissioner to accept, and subsequently pay out amounts transferred by state and territory authorities and public sector superannuation schemes.

Currently, state and territory public sector funds typically report and pay unclaimed superannuation moneys to the relevant state or territory authority. In contrast, private sector superannuation funds are required to pay unclaimed superannuation to the Australian Taxation Office.

States and territories currently also hold a stock of private sector unclaimed superannuation which was paid to the states and territories prior to 1 July 2007. Since that date all private sector unclaimed superannuation has been payable to the ATO.

These amendments will allow both state and territory authorities and public sector superannuation schemes to transfer unclaimed superannuation, including unclaimed superannuation of former temporary residents and lost member accounts, to the ATO.

Individuals will still be able to claim back their money from the ATO at any time.

The legislation will operate so that it only applies to those Commonwealth, state and territory schemes that are prescribed in the regulations.

This schedule also contains amendments which will enable the ATO to subsequently pay out, and apply the correct taxation treatment to, amounts transferred from Commonwealth, state and territory public sector schemes.

These amendments will facilitate more uniform treatment of unclaimed money across the public and the private sectors and assist in the central administration of unclaimed superannuation moneys.

These amendments will have an ongoing gain to revenue, estimated to be $29.6 million over the forward estimates.

Schedule 2 to this bill provides transitional relief for income tax deductibility of total and permanent disability insurance premiums, known as TPD insurance premiums, paid by superannuation funds. To this end, the bill amends the Income Tax (Transitional Provisions) Act 1997, and the Income Tax Assessment Act 1997.

The transitional relief will broaden the application of the current law regarding deductibility of TPD insurance premiums for the 2004-05 to 2010-11 income years. It will allow complying superannuation funds to fully deduct TPD insurance premiums, regardless of the definition of TPD contained in the policy.

The provision of the transitional arrangements will minimise the disruption to the superannuation industry and will allow superannuation funds enough lead time to make the necessary administrative changes to apply the current law from 1 July 2011.

This is achieved by allowing, in the transitional period, broader definitions of ‘death or disability benefits’ in the Income Tax Assessment Act 1936 and ‘disability superannuation benefit’ in the Income Tax Assessment Act 1997 to the extent they relate to the deductibility of TPD insurance premiums. For the transitional relief to apply to a TPD insurance policy premium, the insured permanent disability must be one that is described in regulations made for the purposes of the transitional provisions. The content of these regulations is being developed in consultation with industry.

By way of background, superannuation funds commonly take out death and disability insurance policies to insure their risk for a liability they may incur to their members. Disability insurance taken out by superannuation funds includes TPD insurance. The current law allows superannuation funds to claim an income tax deduction for TPD insurance premiums to the extent that the policies have the necessary connection to a liability of the fund to provide disability superannuation benefits.

The amendments do not limit the operation of the current law. The current provisions of the Income Tax Assessment Act 1997 will apply throughout the transitional period. Funds who have claimed a narrower deduction pursuant to the current law will be able to choose whether to amend their assessments to claim a broader deduction.

This amendment will give certainty to the superannuation industry and allow lead time for arrangements to be put in place that will enable funds to comply with the current law upon the cessation of the transitional period. There is at least one insurance provider has developed products to meet the requirements of the law from 1 July 2011.

In addition, as announced as part of the 2010-11 budget, the government intends to introduce a tax deduction in relation to the provision of terminal medical condition benefits. This will be a new deduction which is consistent with retirement income policy objectives.

Schedule 3 to this bill amends the Superannuation Industry (Supervision) Act 1993 to allow the trustee of a regulated superannuation fund to acquire an asset in-specie from a related party of the fund, following the relationship breakdown of a member of the fund.

This schedule also amends subdivision D of division 1 of part 8 of the Superannuation Industry (Supervision) Act 1993 to ensure equitable application of the transitional arrangements in relation to in-house assets where an asset transfer occurs as the result of the relationship breakdown of a member of the fund. Relationship covers those in respect of marriage, and opposite sex and same-sex de facto relationships.

These amendments will ensure that section 66 is not an impediment to separating partners achieving a ‘clean break’ from each other in terms of their superannuation arrangements, and does not discriminate against opposite-sex and same-sex de facto relationships.

Schedule 4 to this bill makes a number of minor amendments which will:

  • allow an individual to give a notice of intent to deduct a contribution to a successor superannuation fund where the contribution was made to the original superannuation fund;
  • allow employers to claim a deduction for superannuation contributions made in respect of a former employee within four months of the employee ceasing employment and at any time after the employee ceases employment for contributions made to defined benefit interests;
  • clarify that the due date of the shortfall interest charge for the purposes of excess contributions tax is 21 days after the Commissioner of Taxation provides notice of the amount payable;
  • allow the Commissioner of Taxation to exercise discretion to disregard or allocate to another financial year all or part of a person’s contributions for the purposes of excess contributions tax before an assessment is issued;
  • provide a regulation making power to specify additional circumstances when a benefit from a public sector superannuation scheme will have an untaxed element; and
  • streamline references to the immigration secretary and the immigration department in relation to disclosure of migration and citizenship information for the legislated purposes.

These amendments will improve the operation of superannuation provisions of the income tax legislation.

Full details of the measures in this bill are contained in the explanatory memorandum.

Debate (on motion by Dr Southcott) adjourned.