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Wednesday, 13 June 1984
Page: 2891

Senator HARRADINE(10.29) —I do not want to sit here, nor does the Committee, and be lectured by Senator Walsh. The last comment he made was gratuitous. I am perfectly aware of the situation in regard to pension or annuity payments, the amount of taxes applied to them and the amount of taxes applied to lump sum payments. I do not accept from Senator Walsh the continued snide comment about smart advice being given to people to avoid tax.

I gave the example of the widow of a superannuitant. My reading of clause 15 and of the explanatory memorandum indicates that a widow must make the election immediately her husband dies. She cannot leave it till later. The first thing she must do after her husband drops dead is to rush to the phone, get on to the superannuation fund or the employer and say that she wants the money in a lump sum. Under those circumstances the superannuation payment is exempted from the eligible termination payment provisions. Let us compare the situations of the widows of two superannuitants. One of the widows receives a lump sum payment which would be exempt from tax; it would not be an eligible termination payment. However, the other widow, being in a confused state, receives from the superannuation fund or the employer a direct payment for a period of, say, two, three or four weeks. She is not immediately concerned about questions of finance . If, after that period of two, three or four weeks, she decides that she wants to pay off the mortgage or something of that sort and seeks to have her pension commuted to a lump sum, then it is deemed for the purpose of the Act to be an eligible termination payment and is subject to tax. To my way of thinking, that is inconsistent with the view taken under the social security legislation. Even under that legislation a widow is given, I think, 12 weeks grace in which she receives both her husband's pension entitlement and her own. I think that period of grace is appropriate in this situation as well. I emphasise that this is a real, practical problem. I can think of at least one circumstance in which a period of grace could well have applied and the circumstances of that widow were such that she was far from well-heeled.