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Tuesday, 30 November 1965


Mr BOWEN (Parramatta) .- I move -

Before paragraph (a), insert the following paragraph - " (aa) by omitting from sub-paragraph (i) of paragraph(ja) the words ' dependants of members' and inserting in their stead the words ' a spouse, child or dependant of a member'.".

This clause seeks to amend section 23 of the principal Act. As honorable members will recall, section 23 is the provision which exempts various types of income, and para- graph (jaa) exempts the income of certain superannuation funds. The purpose of my amendment is to make it clear that, when reference is made to the dependants of employees, a wife or child will fall within the class of dependants whether or not they are in fact and in law dependent. That is to say, anyone other than the wife or child would have to prove that they were in fact dependent upon the employee if they were taking his benefits from the fund, but in the case of a wife or child this should not be necessary. The amendment incorporates a provision that makes it clear. It uses the word "spouse" to cover, in effect, a widow or widower. It makes it clear that the spouse or child is within the ambit of the Act and is the dependant of an employee. I commend the amendment.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 8 agreed to.

Clause 9.

Section 23f of the Principal Act is repealed and the following section inserted in its stead - "23f.- (1.) In this section- employee ', in relation to a company, includes a director of the company; person' includes a partnership; superannuation fund' means a provident, benefit, superannuation or retirement fund; transaction ' includes a series of transactions. " (2.) Subject to the succeeding provisions of this section, this section applies, in relation to a year of income, to a superannuation fund, not being a fund of a kind referred to in paragraph (jaa) of section twenty-three of this Act, if the Commissioner is satisfied that -

(a)   the fund is an indefinitely continuing fund established and maintained solely for either or both of the following purposes: -

(i)   the provision of superannuation benefits for employees in the event of their retirement or in other circumstances of a kind approved by the Commissioner; and

(ii)   the provision of superannuation benefits for dependants of employees in the event of the death of the employees;

(b)   an employer of each employee who has, or whose dependants have, a right to receive benefits from the fund contributed to the fund during theyear of income in respect of that employee;

(e)   the right of each employee and his dependants to receive benefits from the fund is defined by the terms and conditions applicable to the fund and was communicated in writing to the employee either before, or at the time when, contributions were first paid to the fund in respect of the employee or of his dependants or before such later date as the Commissioner approves in relation to the employee;

(f)   where a right of an employee or of the dependants of an employee to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was appropriated for the provision of benefits for the employee or his dependants - the amount of the benefits the right to receive which has so ceased is applied in the year of income or in the period of two months after the year of income, or will be applied after the year of income in accordance with an undertaking by the trustee of the fund given to, and approved by, the Commissioner, being an undertaking that has effect in relation to the year of income. for all or any of the following purposes: -

(i)   the provision of the benefits that other employees or their dependants have rights to receive from the fund;

(ii)   the provision for other employees or their dependants who have rights to receive benefits from the fund of additional benefits on a basis that is reasonable, having regard to all the circumstances; and

(iii)   any other purposes approved by the Commissioner;

(g)   where a right of an employee or of the dependants of an employee to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was not appropriated for the provision of benefits for the employee or his dependants - any additional benefits that have been, or will be, provided from the fund for other employees or their dependants by reason of the cessation of the right have been, or will be, provided on a basis that is reasonable, having regard to all the circumstances;

(h)   the benefits that any employee has, or the dependants of any employee have, the right to receive from the fund are not excessive in amount having regard to -

(i)   the remuneration paid to the employee for services rendered by him to his employer;

(ii)   the period of the service rendered by the employee to his employer;

(iii)   the benefits, pensions and allowances that have been, are being or may be provided from any other fund for the employee or his dependants; and

(iv)   any other matters that the Commissioner considers relevant; and

(i)   the amount of the fund is not substantially in excess of the amount that is necessary for the purpose of providing benefits that employees and their dependants have rights to receive from the fund having regard to the contributions that are expected to be made to the fund in succeeding years of income in relation to those employees and their dependants and to the income that is expected to be derived by the fund in succeeding years of income. " (6.) Where, in relation to a superannuation fund, the Commissioner is not satisfied as to a matter referred to in sub-section (2.) of this section but the trustee of the fund satisfies the Commissioner that, by reason of special circumstances that existed in relation to the fund during the year of income, it would be reasonable for this section to have effect as if the Commissioner were satisfied as to that matter, this section has effect as if the Commissioner were satisfied as to that matter. " (10.) Subject to the next succeeding sub-section, where the Commissioner is not satisfied that an undertaking approved by him in relation to a superannuation fund for the purposes of paragraph (f) of sub-section (2.) of this section was complied with during a year of income of the fund in relation to which it had effect -

(a)   the Commissioner shall inform the trustee of the fund, by notice in writing given for the purposes of this sub-section, that he is not so satisfied;

(b)   for the purposes of sub-section (13.) of this section and of this Act other than this section, this section shall be deemed not to have applied to the fund in relation to that year of income of the fund; and

(c)   the undertaking does not have effect, and shall be deemed not to have had effect, in relation to any succeeding year of income of the fund. " (14.) A dividend paid to a superannuation fund by a company that is a private company in relation to the year of income of the company in which the dividend was paid is not exempt from income tax by virtue of the last preceding sub-section unless the Commissioner is of the opinion that it would be reasonable to exempt the dividend from income tax, having regard to-

(e)   whether any shares have been issued by the company to the fund in satisfaction of, or of a part of, a dividend paid by the company and, if so, the circumstances of the issue of those shares; and (0 any other matters that the Commissioner considers relevant. " (15.) For the purposes of the last preceding sub-section, income that, in the opinion of the Commissioner, was derived by a superannuation fund indirectly from a dividend paid by a company, being a private company in relation to the year of income of the company in which the dividend was paid, shall be deemed to have been a dividend paid to the fund by the company. "(16.) Income (other than a dividend to which sub-section (14.) of this section applies) derived by a superannuation fund from a transaction is not exempt from income tax by virtue of sub-section (13.) of this section if the Commissioner is satisfied that the parties to the transaction were not dealing with each other al arm's length in relation to the transaction and that that income is greater than the income that might have been expected to have been derived by the fund from the transaction if those parties had been dealing with each other at arm's length in relation to the transaction.".







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