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Thursday, 19 September 2019
Page: 2691


Senator PRATT (Western Australia) (12:49): Before the chamber today is the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019, with regard to superannuation and the taxation treatment of super. The bill does a number of things. The bill amends the Superannuation Guarantee (Administration) Act 1992, allowing individuals to avoid unintentionally breaching their concessional contribution caps. The concessional contribution caps, of course, relate to the concessional rates of tax that apply to employee contributions to their superannuation funds. Pretax contributions or eligible contributions attract the concessional taxation rate of 15 per cent on those contributions, generally up to $25,000 per annum, as opposed to the marginal rate of tax that would otherwise apply to that portion of the employee's income. An employee who has multiple engagements could, of course, unintentionally breach this concessional contributions cap. It doesn't apply to a large number of taxpayers, as we see. It kicks in at around $250,000 per annum. That is about the amount that an individual would have to be earning for their natural contributions to exceed that threshold of $25,000. There is only a small class of taxpayers who could obtain a compound annual salary of $250,000 per annum or more from working in a series of part-time jobs. This could include directors who serve on multiple boards, medical professionals who work in both private and public settings, or other highly paid professionals. Instead of receiving contributions into superannuation, under the legislation an employee may apply to the commissioner to opt out of the SG requirement in respect of an employer and negotiate with that employer to receive additional cash or non-cash remuneration.

The second part of the bill deals with non-arm's-length income rules for superannuation entities, which apply in situations where a superannuation entity incurs non-arm's-length expenses in gaining or producing that income. These non-arm's-length rules are designed to ensure that concessional tax arrangements for super funds are not abused. They aim to prevent a fund being used as a tax planning tool instead of how it was originally intended—as a means of saving a retirement income. The amendments seek to remove any ambiguity and ensure that superannuation entities cannot circumvent the provisions by entering into schemes with non-arm's-length expenditure.

Finally, schedule 3 of the bill addresses the limited resource borrowing arrangements. It amends the total superannuation balance rules to ensure that in circumstances involving the limited recourse borrowing arrangements the total value of the superannuation fund's assets are taken into account in working out an individual member's total balance.

We on this side of the chamber believe that all three parts of the bill are sensible adjustments to the superannuation system and we support it in its current form. We do note, however, that this is not the first time this bill has come before the parliament this year. There was a similar bill before the Senate in June last year. That version of the bill included an additional schedule that would have introduced a one-off superannuation guarantee amnesty for employers who had done the wrong thing in not complying with payments of superannuation guarantee to their employees. That is, they had not been paying their employees correctly. This schedule was not supported by Labor at the time, as it would have retrospectively legislated to legalise employers withholding an employee's entitlements. We assert that paying superannuation is not voluntary. Employees earn it as a matter of right and it should be paid along with any wages or entitlements owed by employers. It is estimated that in our nation nearly three million workers lose around $5.9 billion in unpaid superannuation a year. That is an extraordinary amount. These workers are often those who can least afford it: young or low-paid workers or those with little workplace bargaining power. So we very much welcome the removal of that schedule from this bill. However, we argue that there is a need for the government to act on what has been called 'superannuation theft'. The government should have attached to this bill an appropriate provision that deals with that matter. We support the amendments improving the circumstances of high-income earners, ensuring that they do not unintentionally breach the contributions cap. We'd like to see a lot more work done for average low-income workers, who are losing close to $6 billion a year in superannuation payments.