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Tuesday, 2 May 1961

Mr HAROLD HOLT (HigginsTreasurer) . - I move -

Omit sub-section (2.) of proposed section 112a, insert the following sub-sections: - " ' (2.) In the application of the last preceding sub-section, in relation to the year of income, in relation to a fund maintained by a life assurance company that has made an election that this subsection shall apply in relation to the company, being an election that has effect in relation to that year of income, the expressions " superannuation policies " and " policies " shall be taken not to include policies that are not Australian policies. " ' (3.) The last preceding sub-section does not apply in relation to a fund in relation to which the Commissioner is of opinion that less than onethird of the value of b, as ascertained for the purposes of sub-section (1.) of this section in relation to the year of income, is referable to Australian policies. " ' (4.) For the purposes of this section, a policy shall be taken to' be included in a fund if, in the opinion of the Commissioner, liabilities under that policy would be payable from that fund.'.".

This amendment also follows as the result of some further discussions which we have had with representatives of the life offices. In my second-reading speech I outlined the general principles of this legislation. Among these were provisions that superannuation income could be made tax free and that the present deductions under section 115 could be increased on a sliding scale based on the extent to which public authority securities were held in excess of what has been called the 30/20 per cent. ratio. The amendment to clause 7 will enable companies which do not set up separate superannuation funds to make a more accurate determination of the amount of income relating to their superannuation business in order to determine the amount of income which will be exempt from taxation.

Companies which set up separate superannuation statutory funds will be able to receive the fullest possible benefit from the revised section 115 by holding no more than the 30/20 per cent. ratio in their superannuation fund and applying additional holdings of public authority securities to their ordinary life statutory fund. Companies which do not decide to set up separate funds will have the adjustment to the section 115 deductions based on the proportion of their holdings of public authority securities to their total assets referable to their Australian business, including the assets held in relation to their superannuation business. The amendment to clause 9 - and I will come to that in a moment but I thought it might be convenient to forecast it now - is designed to allow those companies the same benefits in relation to their section 115 deductions for which they could qualify otherwise if they decide to set up a separate superannuation statutory fund. This will give all companies the maximum incentive to build up their holdings of public authority securities. The precise nature of both amendments is set out in the supplementary memorandum which has been circulated to honorable members.

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