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Tuesday, 30 October 2012
Page: 8451


Senator FEENEY (VictoriaParliamentary Secretary for Defence) (17:45): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

SUPERANNUATION LAWS AMENDMENT (CAPITAL GAINS TAX RELIEF AND OTHER EFFICIENCY MEASURES) BILL 2012

This Bill amends various superannuation laws to implement a range of improvements to Australia's superannuation laws.

Schedule 1 reinstates the temporary tax relief for merging superannuation funds with some modifications. The tax relief will permit eligible entities to roll-over unrealised gains or losses on revenue and capital assets and allow the transfer of realised revenue losses and capital losses. This will ensure that certain tax considerations are not an impediment to superannuation funds seeking to merge and consolidate in response to the Stronger Super reforms, which will deliver benefits to members from the efficiency generated by the reforms.

Schedule 2 amends the Superannuation Industry (Supervision) Act 1993 to introduce a registration regime for auditors of self managed superannuation funds.

It delivers on a key part of the Government's 23 June 2012 announcement of a new SMSF auditor registration framework.

The Government's Super System Review found that while some approved auditors are subject to minimum competency standards through their professional association, not all approved auditors are subject to the same minimum competency standards, nor are they subject to the same enforcement actions.

The Self managed Superannuation Fund (SMSF) sector is the largest sector in the superannuation industry at some $400billion. The members of these funds are advised by a range of experts including lawyers, financial planners and accountants.

A key role is played by the 11,000 or so SMSF auditors. They play a vital role in maintaining the integrity of a major sector of the superannuation system. Each year, SMSF trustees are required to appoint an approved auditor to audit the financial reports and the operations of the fund. The auditor is required to assess the fund's overall compliance with the law and the fund's financial statements.

The annual audit provides assurance to the Government and the general public that SMSFs are complying with the sole purpose test, something that is particularly important given the amount of retirement savings held in SMSFs.

The amendments will introduce a registration regime for SMSF auditors, where auditors will be required to meet initial and ongoing requirements relating to their qualifications, competency and independence.

Transitional arrangements are being developed as part of the Regulations to give recognition to highly experienced, competent auditors, including registered company auditors.

The Australian Securities and Investments Commission will be the registration body for SMSF auditors and will be responsible for setting competency standards and taking enforcement action against auditors who have not met their obligations. The Australian Taxation Office will monitor auditor's compliance with relevant standards and refer any non compliant auditors to Australian Securities and Investments Commission for consideration of enforcement action.

SMSF auditor registration will increase the assurance that can be placed in the SMSF audit by ensuring that SMSF auditors are competent to detect and report contraventions of the superannuation law.

The legislation has been put together in consultation with members of the Joint Accounting Bodies.

Schedule 3 amends the tax law to expand the existing reporting obligation for superannuation providers. Under the revised obligations, superannuation providers will be required to provide statements for all members who held an interest in the superannuation plan at any time during a reporting period, not just those for whom contributions are received as is presently the case.

These amendments will allow the ATO to display more comprehensive superannuation information to individuals and facilitate the consolidation of inactive accounts with a low balance. To the extent that this enables individuals to locate lost accounts, it will help improve individuals' retirement savings.

Schedule 4 of the Superannuation Legislation Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Retirement Savings Accounts Act 1997 (RSA Act) to improve the quality of information in the superannuation system, and facilitate fully effective e commerce.

As part of the Government's SuperStream package of reforms, a number of measures were announced to improve the efficiency of the superannuation system. The Government legislated standards for superannuation transactions in June this year, and this legislation will ensure the effectiveness of these standards.

It has been estimated that the Australian superannuation industry processes more than 100 million transactions annually. The potential gains to the system from effective e-commerce in superannuation are significant.

Currently poor member information quality leads to difficulties in allocating contributions, unnecessary duplicate accounts and a large amount of lost and unclaimed superannuation.

This legislation supports the industry in achieving the goals of effective e-commerce and improving information quality. The Commissioner of Taxation will provide two key services:

A central register containing accurate and secure details of superannuation funds which is critical to effective e commerce, and

A tax file number validation service which can be used by employers and trustees to ensure the information they hold for their employees and members is correct.

It is estimated that the SuperStream proposals could save the industry and, therefore, members of superannuation funds up to $1 billion per year. Much of the benefit of these savings should flow through to members in the form of lower fees and charges.

SUPERANNUATION AUDITOR REGISTRATION IMPOSITION BILL 2012

This bill provides for the imposition of fees relating to approved auditors of self managed superannuation funds.

In recognition of the important role self managed superannuation fund auditors play in the regulatory arrangements for self managed superannuation funds, the Government accepted the recommendation of the Super System Review to establish a registration regime for approved self managed superannuation fund auditors.

Self managed superannuation funds auditor registration will increase the assurance that can be placed in the self managed superannuation fund audit by ensuring that self managed superannuation fund auditors are competent to detect and report contraventions of the superannuation law.

This bill imposes some fees to help recover costs of establishing the self managed superannuation fund auditor registration regime.

Approved self managed superannuation fund auditors will be required to pay fees for certain things as part of the registration process. It is expected that applying for registration will cost $100, undertaking a competency exam will also cost $100 and submitting an annual statement to the Australian Securities and Investments Commission will cost $50. Approved self managed superannuation fund auditors will be liable for additional fees if they do not submit their annual statements on time or fail to notify the Australian Securities and Investments Commission of certain matters on time. The amount of these fees will depend on how late the statement or information is provided to the Australian Securities and Investments Commission.

Certain searches of the Register of Approved self managed superannuation fund Auditors and Register of Disqualified self managed superannuation fund Auditors that the Australian Securities and Investments Commission keeps may also be subject to fees. These fees are based on cost recovery and will depend on the resources required to find information for the requested search. However, online searches of the register will be free.

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