Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)Chapter 4 - Other changes
Outline of chapter
4.1 This chapter outlines changes to assist in establishing a single access point for lost and unclaimed superannuation and a nationalised claims process.
4.2 It also outlines a new declaration that aims to ensure self-managed superannuation fund trustees, and directors of corporate trustees, understand their obligations and responsibilities as trustees under the superannuation laws and outlines some consequential changes to clarify collection arrangements for the self-managed superannuation fund supervisory levy.
4.3 Amendments to superannuation fund reporting requirements and indexation provisions and amendments to align the superannuation guarantee (SG) arrangements with provisions in bilateral social security agreements are also covered.
Unclaimed money
4.4 Sections 16 and 17 of the Superannuation (Unclaimed Money and Lost Members) Act 1999 currently require superannuation providers to give a half-yearly statement of unclaimed (superannuation) money to the Commissioner of Taxation (Commissioner). The monies are required to be paid to the Commissioner, at the end of each half-year. Section 18 of the Act relieves superannuation providers of their obligation to pay unclaimed money to the Commissioner where it is paid to a state or territory authority under legislation which satisfies the requirements in section 18.
4.5 Under the amendments private sector superannuation providers are no longer relieved of their obligation to pay unclaimed money to the Commissioner by paying it to a state or territory authority. Unclaimed money from these schemes is required to be paid to the Australian Government in accordance with sections 16 and 17 of the Act. Unclaimed money can only be paid to a state or territory authority if the money is from a state or territory public sector scheme and the relevant state or territory law complies with the requirements in section 18 of the Act. [Schedule 3, items 58 and 59]
4.6 The amendments apply to statements required to be given under section 16 of the Act in respect of the half-year ending on 30 June 2007 and later half-years. [Schedule 3, item 60]
Self-managed superannuation funds
Additions to the law created by the Tax Laws Amendment (Simplified Superannuation) Bill 2006 (main Bill)
4.7 A new declaration is introduced to ensure self-managed superannuation fund trustees, and directors of corporate trustees, understand their obligations and responsibilities as trustees under the superannuation laws.
4.8 An individual who becomes a trustee or a director of the corporate trustee of a self-managed superannuation fund after 30 June 2007 must sign a declaration in the approved form stating that they understand their duties as trustee of a self-managed superannuation fund. The declaration must be signed no later than 21 days after becoming a trustee or director. [Schedule 3, item 54, paragraphs 104A(1)(a) and 104A(2)(a) of the Superannuation Industry (Supervision) Act 1993]
4.9 Existing trustees or directors of a corporate trustee must ensure that any trustee or director appointed after 30 June 2007 signs the declaration no later than 21 days after becoming a trustee or director. [Schedule 3, item 54, paragraphs 104A(1)(b) and 104A(2)(b) of the Superannuation Industry (Supervision) Act 1993]
4.10 All trustees or directors of a corporate trustee (including existing trustees or directors and trustees or directors appointed after 30 June 2007) must also ensure that the declaration is retained for as long as it is relevant (and in any case for at least 10 years) and make it available to the 'Regulator' if required. [Schedule 3, item 54, paragraphs 104A(2)(c) and (d) of the Superannuation Industry (Supervision) Act 1993]
4.11 Contravention of this provision is an offence of strict liability, with a maximum penalty of 50 penalty units. This is consistent with other record-keeping requirements in the Superannuation Industry (Supervision) Act 1993 and reflects the importance of ensuring trustees clearly understand their obligations and responsibilities. [Schedule 3, item 54, subsection 104A(3) of the Superannuation Industry (Supervision) Act 1993]
4.12 An administrative penalty of 20 penalty units under section 288-25 of the Taxation Administration Act 1953 (TAA 1953) may also apply for a failure to keep the signed declaration.
4.13 Section 15DB of the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 specifies when the supervisory levy for self-managed superannuation funds is due and payable. A reference to this section is added to the table of tax-related liabilities imposed under other legislation in subsection 250-10(2) of the TAA 1953. [Schedule 1, item 385, item 67 in the table in subsection 250-10(2) of the TAA 1953]
4.14 Under Simplified Superannuation the collection and recovery provisions of the TAA 1953 apply to the self-managed superannuation fund supervisory levy. The amendments repeal sections 15DD and 15DE of the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 as these are duplicate provisions. [Schedule 3, items 55 and 56]
4.15 The amendments to the supervisory levy provisions apply for the 2007-08 income year and later income years. The repeal of sections 15DD and 15DE does not affect the Commissioner's ability to collect and recover the supervisory levy, and any penalty for the late payment of the levy, imposed under the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 in respect of the 2006-07 income year and earlier income years. [Schedule 3, item 57]
Reporting and indexation
Additions to the law created by the main Bill
4.16 The approved form for a roll-over superannuation benefit may require the tax file numbers (TFNs) of the first superannuation provider and superannuation plan. In addition, if the member in respect of whom contributions are made, has quoted their TFN to the first superannuation provider, the approved form may also require the TFN of the member. This also applies if an individual making contributions on the member's behalf has legally provided the member's TFN to the first superannuation provider. [Schedule 1, item 393]
4.17 A note is included at the end of the guide to superannuation reporting requirements directing readers to the payment summary requirements in relation to superannuation lump sums and employment termination payments contained in section 16-165 of the TAA 1953. [Schedule 1, item 392]
4.18 The definitions of 'indexation factor' and 'indexation number' in the Income Tax Assessment Act 1997 are amended to include a reference to the indexation provisions added to that Act as part of Simplified Superannuation . [Schedule 1, items 254 and 255]
4.19 To better clarify the policy intent, the superannuation indexation provisions are amended to refer to 'financial year' as well as 'income year', as the caps on superannuation contributions operate on a financial year basis. [Schedule 4, items 7 and 8]
4.20 A typographical error in an application provision of Division 298 of the TAA 1953 is corrected. [Schedule 4, item 12]
Superannuation double coverage
Additions to the law created by the main Bill
4.21 Australia has entered into a number of bilateral social security agreements with other countries, which include superannuation double coverage provisions. The aim of the superannuation provisions is to ensure that Australians sent to work temporarily overseas or non-residents sent to work temporarily in Australia are required to contribute (or have employer contributions made on their behalf) only to the pension/superannuation scheme in their home country.
4.22 The superannuation aspects of the agreements only operate when there is double coverage, that is, both countries must have compulsory contributory schemes that, without the Agreement, would both apply at the same time.
4.23 Broadly, the intent of the Agreements is that if an employee is sent from Australia to work temporarily (normally up to four years) in another country then the employee and their employer will be exempt from making contributions in the other country provided they remain covered by the SG law in Australia. To receive an exemption from the other country's system the employer must receive a certificate of coverage from the Australian Taxation Office (ATO).
4.24 In some circumstances the SG law may not actually require the employer to continue to make the SG contributions in Australia for the employee while they are working overseas. This may arise if the employee ceases to be an Australian resident (which may occur after a two-year period overseas) or if the employee is working overseas for a related employer rather than the Australian resident employer.
4.25 Where a certificate of coverage has been issued by the ATO then the employer to whom the certificate relates is legally obliged to make SG contributions in Australia. [Schedule 3, items 52 and 53]