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Tuesday, 19 October 2010
Page: 772

Mr SHORTEN (Assistant Treasurer and Minister for Financial Services and Superannuation) (9:13 PM) —in reply—Firstly, I would like to thank all those members who have contributed to this debate on the Superannuation Legislation Amendment Bill 2010. It is a good thing that the Minister for Immigration and Citizenship is at the table, because when he was minister for superannuation he contributed to a lot of the reforms which I am helping to implement now. I would also like to acknowledge the member for Oxley, whose work in terms of financial planning and other matters has added a lot to this debate.

The amendments contained in schedule 1 will allow both state and territory authorities and public sector superannuation schemes to transfer unclaimed superannuation to the Australian Tax Office. This will facilitate the centralisation of unclaimed superannuation administration with the ATO rather than with both the ATO and the numerous state authorities. Unclaimed superannuation typically arises when a fund cannot locate a member who has reached age-pension age and is entitled to a payment. Individuals will still be able to claim back their money from the ATO at any stage. The legislation will operate so that it only applies to those Commonwealth, state and territory schemes that are prescribed in the regulations. These amendments will also enable the ATO to subsequently pay out and apply the correct taxation treatment to amounts transferred to the states and territories and to Commonwealth public sector schemes.

These amendments will mean an ongoing gain to revenue estimated at $29.6 million over the forward estimates. The revenue gained from the measures will result from the transfer to the ATO of existing unclaimed superannuation held by the states and territories. The transfer does not in any way reduce an individual’s entitlement to that money; they will be able to claim their unclaimed superannuation back from the ATO at any time. Centralising administration in the ATO will mean that it will be easier for individuals to track down any unclaimed superannuation they may have.

Schedule 2 amends the tax laws to provide transitional relief to superannuation funds, enabling them to claim a broader deduction for total and permanent disability premiums—TPD premiums—for the income years 2004-05 to 2010-11. This amendment will allow lead time for arrangements to be put in place by the superannuation industry and enable funds to comply with the current law at the conclusion of the 2010-11 income year. Currently, superannuation funds can only claim a tax deduction for TPD premiums to the extent that their policies have the necessary connection to a liability of the fund for providing a disability superannuation benefit. The term ‘disability superannuation benefit’ only relates to a narrow range of TPD events. While the current law is consistent with the objectives of retirement income policy, it is misaligned with industry practice.

Both the term ‘disability superannuation benefit’ in the Income Tax Assessment Act 1997 and the term ‘death or disability benefits’ in the Income Tax Assessment Act 1936 are given a broader meaning under the transitional arrangements. Under the transitional arrangements, these terms relate to a greater number of TPD events, which will be described in regulations. The government has consulted with industry on the content of these regulations. This amendment will give certainty to the superannuation industry and facilitate compliance with the current law when the transitional arrangements cease.

Schedule 3 amends the Superannuation Industry (Supervision) Act 1993 to allow the trustee of a regulated superannuation fund to acquire an asset from a related party following the breakdown of their relationship. These amendments ensure that separating parties will be able to obtain a clean break from one another in terms of their superannuation matters. They also provide for equitable application of the in-house assets transitional arrangements. The amendments will remove potential discrimination and inconsistent treatment in the current application of the law.

The amendments contained in schedule 4 will allow individuals to provide deduction notices to a successor superannuation fund where they have made a contribution to an original superannuation fund. The amendments will also allow employers to claim a deduction for superannuation contributions made for former employees four months after the employee ceased employment and at any time where the contribution is made to a defined benefit fund. The legislation will provide clarification of the due date for the existing shortfall interest charge in relation to excess contributions tax and will allow the Commissioner of Taxation to exercise the discretion to disregard or reallocate contributions for the purposes of excess contributions tax without first issuing an excess contributions tax assessment.

The amendments will provide a regulation-making power to specify additional circumstances when a benefit from a public sector superannuation scheme has an untaxed element. The legislation will make a minor amendment to streamline references to the immigration secretary and immigration department. These amendments are necessary to ensure the continued smooth operation of the superannuation provisions of the income tax laws. This bill deserves the support of the parliament, and I commend it to the House.

Question agreed to.

Bill read a second time.