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Parliamentary Superannuation and Other Entitlements Legislation Amendment Bill 2004
Schedule 2 Salary sacrifice

   

Parliamentary Contributory Superannuation Act 1948

1  At the end of section 18

Add:

           (12)  For the purpose of references in this section to the rate of parliamentary allowance for the time being payable to a member, any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

2  After subsection 21B(3A)

Insert:

          (3B)  For the purpose of the reference in the formula in subsection (3A) to the annual rate of parliamentary allowance, any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

3  After subsection 22T(1)

Insert:

          (1A)  For the purpose of paragraph (1)(a), any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

Remuneration and Allowances Act 1990

4  Section 8

Omit “and allowances”, substitute “, allowances and contributions”.

5  Before clause 1 of Schedule 3

Insert:

Part 1 Annual salary

Division 1 Amount of annual salary

6  After clause 1 of Schedule 3

Insert:

Division 2 Salary sacrifice

1A   Definitions

                   In this Division:

administering authority means:

                     (a)  in relation to a person who is or will be a senator—the Clerk of the Senate; and

                     (b)  in relation to a person who is a member of the House of Representatives—the Clerk of the House of Representatives.

allowance by way of salary has the same meaning as in the Parliamentary Superannuation Act 2004 .

chosen basic contributions fund , in relation to a person, means the fund, scheme or account (if any) specified in a notice given by the person that is in force under Division 2 of Part 2 of the Parliamentary Superannuation Act 2004 .

complying superannuation fund has the meaning given by clause 1B.

default basic contributions fund means the fund or scheme that is the default fund under Division 3 of Part 2 of the Parliamentary Superannuation Act 2004 .

month means one of the 12 months of the year.

new scheme contribution period , in relation to a person, has the same meaning as in the Parliamentary Superannuation Act 2004 .

office holder has the same meaning as in the Parliamentary Superannuation Act 2004 .

parliamentary allowance means allowance payable under clause 1.

RSA has the same meaning as in the Retirement Savings Accounts Act 1997 .

salary , in relation to a Minister of State, does not include any allowance.

self managed superannuation fund has the same meaning as in the Superannuation Industry (Supervision) Act 1993 .

1B   Meaning of complying superannuation fund

             (1)  For the purposes of this Division, a fund or scheme is a complying superannuation fund at a particular time if, and only if:

                     (a)  the fund or scheme is a complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act 1936 in relation to the year of income in which the time occurs; and

                     (b)  the fund or scheme is a superannuation fund as defined by subsection 6(1) of the Income Tax Assessment Act 1936 .

             (2)  In applying paragraph (1)(a) in relation to a fund or scheme and a particular time, the following are to be disregarded:

                     (a)  any notice that is given after that time under section 40 of the Superannuation Industry (Supervision) Act 1993 and that relates to the fund or scheme and the year of income in which the time occurs;

                     (b)  any revocation or setting aside, after that time, of a notice given before that time under section 40 of the Superannuation Industry (Supervision) Act 1993 and that relates to the fund or scheme and the year of income in which the time occurs or an earlier year of income.

1C   When may a person elect to salary sacrifice?

                   A person (the member ) may make an election as described in clause 1D if, and only if:

                     (a)  the election is made during a new scheme contribution period of the person; or

                     (b)  the election is made before the start of a new scheme contribution period of the person and at a time when:

                              (i)  the person has been elected to the Senate, but his or her entitlement to parliamentary allowance as a senator has not yet commenced; or

                             (ii)  the person has been chosen or appointed to hold the place of a senator in accordance with section 15 of the Constitution, but his or her entitlement to parliamentary allowance as a senator has not yet commenced.

1D   The nature of the salary sacrifice election

             (1)  The member may elect to forgo a percentage or amount of the parliamentary allowance that he or she would otherwise expect to receive and instead have contributions (the additional contributions ) made to a specified fund, scheme or account (the additional contributions fund ).

Note:          An election can be varied or revoked (see clauses 1H and 1I).

             (2)  The specified fund, scheme or account must, at the time the election is made, be either:

                     (a)  a complying superannuation fund that is not a self managed superannuation fund; or

                     (b)  an RSA.

             (3)  There can only be one additional contributions fund at any particular time in relation to the member.

1E   How to make an election

             (1)  An election must be in writing and be signed by the member.

             (2)  The election must:

                     (a)  specify the percentage or amount (the specified salary sacrifice ) of parliamentary allowance that is forgone; and

                     (b)  specify the name of, and contact details for, the additional contributions fund; and

                     (c)  specify the date (the start date ) from which the election is to have effect, being a date:

                              (i)  that is the first day of the next month following the month in which the election is made, or the first day of a later month; and

                             (ii)  if the election is made before the start of a new scheme contribution period of the person as permitted by paragraph 1C(b)—that is not before the start of the new scheme contribution period; and

                     (d)  contain such other information (if any) as is required by the regulations.

             (3)  The specified salary sacrifice must be either:

                     (a)  a specified percentage of the monthly amount of parliamentary allowance; or

                     (b)  a specified amount per month.

Note:          In deciding what amount or percentage to specify, consideration should be given to the effect of subclause 1G(3).

             (4)  The election must be accompanied by evidence that the additional contributions fund will accept the additional contributions. However such evidence is not required if:

                     (a)  the additional contributions fund is the default basic contributions fund; or

                     (b)  the additional contributions fund is the chosen basic contributions fund of the member, and the evidence that accompanied the notice choosing that fund indicates that the fund will accept the additional contributions.

             (5)  The election must be given to the administering authority.

             (6)  For the purpose of subparagraph (2)(c)(i), the election is made when it is given to the administering authority.

1F   Duration of an election

                   An election comes into force on the start date for the election and remains in force until whichever of the following occurs first:

                     (a)  the contribution payable under this Division in respect of the month in which the member next ceases to be entitled to parliamentary allowance has been paid; or

                     (b)  a revocation of the election takes effect (see clause 1I).

1G   Effect of an election

             (1)  If the member makes an election in accordance with clauses 1C, 1D and 1E, then this clause has effect in relation to each month during the period when the election is in force.

             (2)  Subject to subclauses (3) and (5), the amount (the basic amount ) of parliamentary allowance to which the member would otherwise be entitled in respect of a month is reduced (but not below zero) by whichever of the following amounts (the reduction amount ) is applicable:

                     (a)  if the specified salary sacrifice is a percentage—the amount that is that percentage of the basic amount;

                     (b)  if the specified salary sacrifice is an amount—that amount.

             (3)  If the reduction amount for a month is greater than the amount (the maximum reduction ) that is 50% of the sum of:

                     (a)  the basic amount; and

                     (b)  the amount (if any) of salary to which the member is entitled because he or she was a Minister of State for some or all of the month; and

                     (c)  the amount (if any) of allowance by way of salary to which the member is entitled because he or she was an office holder for some or all of the month;

the basic amount for the month is instead reduced by the maximum reduction.

             (4)  Subject to subclause (5), the Commonwealth must, in respect of each month, make a contribution to the additional contributions fund, in respect of the member, of an amount equal to the amount by which the basic amount for the month is reduced under subclause (2) or (3).

             (5)  If either:

                     (a)  the additional contributions fund:

                              (i)  ceases to exist; or

                             (ii)  ceases to accept the additional contributions; or

                            (iii)  ceases to be a complying superannuation fund or an RSA; or

                            (iv)  becomes a self managed superannuation fund; or

                     (b)  the member dies;

before the Commonwealth makes a contribution as required by subclause (4) in respect of a month, then:

                     (c)  no reduction under subclause (2) or (3) is to be made in respect of that month; and

                     (d)  no contribution under subclause (4) is to be made in respect of that month.

1H   Variation of an election

             (1)  The member may vary an election he or she has made by notice in writing signed by the member and given to the administering authority.

             (2)  The only variations that are permitted are:

                     (a)  to change the additional contributions fund to another fund or scheme that is, at the time notice is given:

                              (i)  a complying superannuation fund that is not a self managed superannuation fund; or

                             (ii)  an RSA; or

                     (b)  to change the specified salary sacrifice to another specified percentage or amount that complies with subclause 1E(3); or

                     (c)  to change the start date to a later date (but only if the start date has not already occurred).

             (3)  The notice of variation must specify a date (the variation date ) from which the variation is to take effect, being a date that is the first day of the next month following the giving of the notice, or the first day of a later month.

             (4)  A notice of variation to change the additional contributions fund to another complying superannuation fund or RSA (the new fund ) must:

                     (a)  specify the name of, and contact details for, the new fund; and

                     (b)  be accompanied by evidence that the new fund will accept the additional contributions.

             (5)  However, evidence referred to in paragraph (4)(b) is not required if:

                     (a)  the new fund is the default basic contributions fund; or

                     (b)  the new fund is the chosen basic contributions fund of the member, and the evidence that accompanied the notice choosing that fund indicates that the fund will accept the additional contributions.

             (6)  If the notice of variation complies with this clause, it varies the election accordingly (subject to any later variations) in relation to months starting on or after the variation date.

1I   Revocation of an election

             (1)  The member may revoke an election he or she has made by notice in writing signed by the member and given to the administering authority.

             (2)  The notice of revocation must specify a date from which the revocation is to take effect, being a date that is the first day of the next month following the giving of the notice, or the first day of a later month.

             (3)  If the notice of revocation complies with this clause, the revocation takes effect on the specified date.

Part 2 Electorate and other allowances

 

 

 

[ Minister’s second reading speech made in—

House of Representatives on 1 April 2004

Senate on 13 May 2004 ]

(49/04)