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Thursday, 12 September 2019
Page: 2754


Mr FALINSKI (Mackellar) (10:40): As part of this government's commitment to an inclusive and transparent financial system, we are putting super funds' members first by streamlining the process by which super contributions are made and supporting fairer taxes. Today, anyone working more than one job may unknowingly exceed the concessional cap for super contributions simply because all of their employers are paying super contributions. Anyone breaching the $25,000 cap can face a heavier tax burden, leaving hardworking Australians in multiple jobs worse off.

It is an anathema to the spirit of this country when bureaucratic superannuation tax law penalises people working hard to get ahead. It is the government's role to provide the financial infrastructure to enable Australians to provide for themselves and their families, not to create regulations that catch honest people out for working more than one job to make ends meet. The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 allows people with more than one employer to apply for an ATO exemption certificate provided super contributions are already being made. The certificate allows for their additional employers not to pay super contributions. Instead, the employee can receive a take-home wage in lieu of the foregone contribution. This puts money back into the pockets of mums and dads, which might otherwise have been taxed away. By empowering people working multiple jobs, we are bringing superannuation into the 21st century by recognising the rise of the gig economy.

With one in four Australians under the age of 30 now working multiple jobs, this bill is critical to reducing complexity and supporting the youth of this country. Superannuation remains a critical part of this country's financial and social health by providing people with the right to retire with dignity. This amendment will enhance superannuation to ensure that Australians can spend more time getting ahead, not getting caught up in legal tax minutiae. As part of the government's broad set of integrity measures, this bill is designed to strengthen our economy and keep accountability and transparency as the hallmarks of our financial system.

We are ensuring the consistency of the tax system through the non-arms-length income measure, otherwise known as NALI. Critical to this is treating non-arms-length expenditure at the full marginal rate rather than the concessional superannuation rate. By doing this, we are eliminating ill gained tax advantages and ensuring superannuation funds are not undermining the system by working around the contribution threshold. Healthy competition between superannuation funds ultimately creates the best outcomes for all Australians. However, fundamental to this endeavour, is a level playing field. This bill helps to eliminate practises which may create an unfair advantage. Current legislation taxes non-arms-length income, NALI, at the highest marginal income tax rate as opposed to the tax concessional superannuation rate. What current legislation fails to do is engage with non-arms-length expenses, which could be used to create tax advantages.

This bill similarly helps clamp down on any artificial financial arrangements that could inflate a super fund's actual performance. It will stop, for example, superannuation funds borrowing money from a member at a reduced rate or by purchasing an asset at below its market price from a related party and subsequently selling it at a market price. This sort of practice is blatantly unfair and ultimately undermines the system which so many Australians rely on for their retirement—the integrity of the super system on fair practice. More than anything else, this bill ensures that genuinely high-performing super funds stand out amongst their peers. Ultimately, superannuation funds should be judged on their overall performance, not on how well they game the system. This bill does not affect limited recourse borrowing arrangements by authorised deposit-taking institutions and other commercial lenders, nor should this bill affect related party LRBAs that currently meet ATO safe harbour provisions.

This government has zero tolerance for any institutional gaming of the superannuation system. The amendment combats this behaviour by preventing any workarounds for the $1.6 million limit on non-concessional contributions. It is critical to maintain the integrity of self-managed superannuation funds by protecting the rights of the members and the honesty of the superannuation system. Instances of using limited recourse borrowing arrangements by SMSFs to deliberately circumvent the contributions cap is a practice that this bill curtails. This amendment is about reinforcing the contributions cap, not about undermining self-managed super funds' capacity to borrow. Strong self-managed super funds are an important part of the superannuation industry and suit the financial needs of many Australians. We are focused on providing an equitable system which is about eliminating the misuse of limited recourse borrowing arrangements, not on banning them altogether.

This legislation is applicable only for arrangements between a self-managed super fund and a related party or those members who can make a tax-free lump sum withdrawal from their superannuation. By focusing on these groups, it will target specifically those who are engaging in gaming behaviour. Regardless of size, all super funds should be operating from a position of transparency, both for their members and for the integrity of the industry in which they operate. Because of the role that superannuation plays in our retirement savings, unlike many other financial services, the industry has a particularly important place in supporting healthy communities. It is critical that the trust the Australian people place in their super funds is respected by being transparent, operating with integrity and engaging in fair competition.

This industry cannot afford the trust deficit which has already opened when their members are relying on these institutions for their retirement. In an age of scepticism and doubt, when it comes to the financial industry at large, this bill is justifying the confidence that the Australian people should rightly have when it comes to their retirement savings. Putting the members of superannuation funds first and ensuring the integrity of the industry is the priority of this bill. It recognises how crucial superannuation is for maintaining the living standards of Australians into retirement, which ultimately contributes to healthier communities. We cannot afford to take shortcuts when it comes to the integrity of our financial markets or the institutions responsible for providing for the future of our citizens. For these reasons, I support this bill and highly commend it to the House.