Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello MP)

Chapter 7 Reporting of employer superannuation contributions by superannuation providers

Outline of chapter

7.1 Schedule 7 to this Bill amends the Superannuation Guarantee (Administration) Act 1992 to require superannuation providers to report details of superannuation contributions to the Australian Taxation Office (ATO).

7.2 This Schedule also amends the Superannuation Guarantee (Administration) Act 1992 to allow the Commissioner of Taxation (Commissioner) to impose administrative penalties on superannuation providers for failure to provide details of the contributions.

Context of amendments

7.3 The Superannuation Contributions Tax (Assessment and Collection) Act 1997 required superannuation providers to report, on an annual basis, information necessary for the Commissioner to determine superannuation surcharge liabilities. The specific information required is set out in the regulations to this Act.

7.4 This information is used by the ATO to monitor compliance with the superannuation guarantee arrangements.

7.5 Following the abolition of the surcharge, superannuation providers will not be required to report information relating to the 2005-06 and later income years. This information will therefore no longer be reported to the ATO.

Summary of new law

7.6 Schedule 7 allows the Commissioner to require superannuation providers to report prescribed information that is reasonably necessary to assist in the administration of the superannuation guarantee arrangements.

7.7 The information that superannuation providers will be required to report to the ATO are details of employer and total contributions. Where amounts are transferred between superannuation funds or retirement savings accounts (RSAs) the transferring superannuation provider must provide the receiving superannuation provider with equivalent information. Superannuation providers must report this information on a statement that is in the approved form.

Comparison of key features of new law and current law

Detailed explanation of new law

7.8 The legislation requires a superannuation fund or RSA provider to provide the Commissioner with a statement which sets out:

•

the total of all employer contributions made on behalf of an employee to the superannuation fund or RSA in a year; and

•

the total of all contributions made to the fund or RSA for the benefit of that employee in the year.

[Schedule 7, item 3, section 78]

7.9 Contributions include payments of superannuation guarantee shortfall components and payments from the Superannuation Holding Accounts Special Account into the superannuation fund or RSA.

7.10 'Superannuation provider' has the same meaning as that given in the Superannuation (Government Co-contributions for Low Income Earners) Act 2003 . This Act defines 'superannuation provider' to include:

•

the trustee of a complying superannuation fund;

•

the provider of an RSA; or

•

the trustee of a constitutionally protected fund.

7.11 The statement to be given by the superannuation provider to the Commissioner must be in the approved form. The definition of 'approved form' in the Superannuation Guarantee (Administration) Act 1992 is linked to the definition in section 388-50 in Schedule 1 to the Taxation Administration Act 1953 (TAA 1953). This ensures that, unless specifically excluded, the other provisions of the TAA 1953 relating to approved form apply to this statement. This includes the power to allow the Commissioner to extend the due date of lodgement of an approved form. [Schedule 7, item 3, paragraph 78(1)(c)]

7.12 A superannuation provider is only required to give the Commissioner a statement in the approved form in respect of employees who had a contribution made for their benefit in the year. This ensures a provider is not required to provide a statement in respect of a member who has not had contributions made for their benefit during the relevant year. [Schedule 7, item 3, paragraph 78(1)(b)]

7.13 When amounts are transferred between superannuation providers, the superannuation provider transferring these amounts must provide the superannuation provider to which these funds are transferred with a statement in the approved form, that sets out details of employer and total contributions transferred. This statement is required to be provided within 30 days after the day on which the amount is transferred. [Schedule 7, item 3, section 78A]

7.14 Regulations to the Superannuation Guarantee (Administration) Act 1992 will specify the type of information required and the date by which it is required.

7.15 To encourage compliance with these requirements, administrative penalties of 5 penalty points will be imposed upon superannuation providers that do not provide statements in the approved form within the time prescribed. The penalty will be imposed on a per member basis rather than a statement basis. That is, a superannuation provider will be liable to an administrative penalty of 5 penalty points for each relevant member in respect of whom the provider has not provided the Commissioner with a statement in the approved form and within the time prescribed.

7.16 Penalty provisions within the TAA 1953 have been amended to allow for the Commissioner to impose the administrative penalties in the Superannuation Guarantee (Administration) Act 1992 and also ensure that the Commissioner has the power to remit the new penalty where the Commissioner decides that the particular circumstances of the case warrant such a remission. [Schedule 7, items 4 and 5, paragraphs 298-5(b) and (c)]

Application and transitional provisions

7.17 These amendments will apply to income years from 1 July 2005. The amendments allow for regulations to take effect from this date. [Schedule 7, item 6]