Explanatory Memorandum
Circulated By the Authority of the Attorney-General, the Hon Robert Mcclelland MpSchedule 4 - Treasury amendments
219 This Schedule contains amendments to the Retirement Savings Accounts Act 1997 (RSA Act), Small Superannuation Accounts Act 1995 (SSA Act), Superannuation (Government Co-contribution for Low Income Earners) Act 2003 (Co-contribution Act), Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Income Tax (Transitional Provisions) Act 1997 .
220 Amendments contained in Part 1 of Schedule 4 to the Bill will provide members of same-sex couples and their children, with the same treatment under the superannuation regulatory framework as applies to opposite-sex de facto couples and their children. Amendments to definitions of ' spouse' and ' child' in a number of superannuation acts will ensure same-sex partners are treated the same as opposite-sex de facto couples, and children of same-sex couples are not disadvantaged.
221 Amendments contained in Part 2 of Schedule 4 will ensure same-sex partners and children of same-sex couples are treated as dependants for the purposes of the taxation of superannuation death benefits. The amendments insert transitional provisions relating to the taxation treatment of death benefit payments received by a member or a child of a same-sex couple.
Part 1-Superannuation law
Retirement Savings Accounts Act 1997
Item 1
222 This item amends the definition of ' spouse' in subsection 20(2) of the RSA Act.
223 Under this provision in its current form, a person can be considered to be a spouse if the person lives ' as the husband or wife of the person' . Currently, only a married or opposite-sex de facto spouse of a person can be considered to have a relationship as a husband or wife with the person, and therefore be eligible through this definition to receive superannuation benefits upon the death of their partner.
224 The amendment made by this item is intended to extend the existing concept of a spouse as used within the RSA Act, only so that a person in a same-sex relationship with an account holder will be eligible to the same entitlements and recognition provided to persons in an opposite-sex de facto relationship.
225 The phrase ' in a relationship as a couple' will incorporate relationships between persons of the same sex in specified circumstances as well as those relationships previously referred to as marital relationships. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship.
Item 2
226 This item repeals subsection 20(3) of the RSA Act and substitutes an amended definition of ' child' to include a child of a person's relationship with another person. The new definition expands the classes of children that may be taken to be a child of the person for the purposes of determining the person's dependants. If at any time the person was in a relationship as a couple, a child who is the product of that couple's relationship may be taken to be the person's child.
227 The current law does not recognise the child of a same-sex couple as the child of both members of the couple. While the child of a married couple or opposite-sex de facto couple is recognised as the child of both the birth mother and birth father, the status of a child of a same-sex couple is often uncertain. For example, while the current definition of a child recognises the child's relationship with the biological mother or father, it generally excludes the mother's or father's same-sex partner.
228 The amendments to the definition of ' child' in the RSA Act will ensure that where a deceased account holder was a member of a same-sex couple and had a child who was a product of that relationship, the child is able to receive the deceased account holder's death benefits as a dependant. The phrase ' relationship as a couple' has the same meaning as set out at Item 1 above.
229 Paragraph 3(b) of the definition of ' child' provides that a child can be considered to be a member's child where the child is the product of the person's relationship with their partner.
230 Subsection 20(3A) requires that the child is:
- -
- the biological child of at least one person in the relationship, i.e. is conceived utilising the gametes of one party to the relationship; or
- -
- the birth child of a woman in the relationship.
231 A child, who is the product of a person's previous relationship, and who is brought into the person's current relationship, is not a child of the person's current relationship.
232 Examples 1 and 2 below outline the circumstances where a child would meet the requirements of paragraph (b) of subsection 20(3) and subsection 20(3A) (which relies on the amended definition of ' child' in the RSA Act). The circumstances indicated in example 3 would not meet these requirements.
Example 1
J is an account holder and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using gametes from S and a donor. The procedure takes place and S gives birth to H. Whilst H is the biological child of S, he is not the biological child of J.
233 H can be considered J's child for the purposes of the definition of ' child' in the RSA Act. That is, H is the product of the relationship between J and S and is S's biological child. This would continue to be the case even if the relationship between J and S were to break down at a later time.
Example 2
J is an account holder and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using donated gametes. The procedure takes place and S gives birth to H. Whilst H is the birth child of S, he is not the biological child of either J or S.
234 H can be considered J's child for the purposes of the definition of ' child' in the RSA Act. That is, H is the product of the relationship between J and S and S is H's birth mother. This would continue to be the case even if the relationship between J and S were to break down at a later time.
Example 3
J is an account holder and forms a relationship as a couple with S. S has a child, H, from a previous relationship.
235 H cannot be considered J's child for the purposes of the definition of ' child' in the RSA Act. Whilst H is S's biological child who is in the relationship, H is not the product of a relationship between J and S. H's connection with J only arises because J commenced a relationship with S. It did not arise from any actions of the couple to add a child to their relationship and therefore is not a product of the person's relationship with that partner.
Item 3
236 This item provides that amendments to the RSA Act made by Schedule 4 to the Bill are to apply to the 2008-2009 year of income and later years.
Small Superannuation Accounts Act 1995
Item 4
237 This item inserts a definition of ' child' into the SSA Act. For the purposes of the SSA Act, the term ' child' has the same meaning as the definition of ' child' in the SIS Act.
238 Inserting a definition of ' child' into the SSA Act clarifies the nature of employer deposits that can be made to an individual's account in the Superannuation Holding Accounts Special Account. It reflects the definition in the SIS Act which will recognise children who are the product of a person's relationship with another person as a couple.
Item 5
239 This item amends the definition of ' spouse' in the SSA Act to include a person who is in a relationship with another person as a couple, whether or not the persons are of the same sex or different sexes.
240 Under this provision in its current form, a person can be considered to be a spouse if the person lives ' as the husband or wife of the person' . Currently, only an opposite-sex de facto or married spouse of a person can be considered to have a relationship as a husband or wife with the person.
241 The amendment made by this item extends the existing concept of a spouse as used within the SSA Act, only so that a person in a same-sex relationship with an account holder will be eligible to the same entitlements and recognition provided to persons in an opposite-sex de facto relationship. The amendments, other than extending to same-sex partners, should not be taken to cover any other type of relationship not already covered by the SSA Act.
242 The phrase ' in a relationship as a couple' will incorporate both relationships between persons of the same sex in specified circumstances as well as those relationships previously referred to as marital relationships. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship.
243 The amendment to the definition of ' spouse' in the SSA Act will ensure a partner in a same-sex relationship is recognised as a dependant of the account holder for the purposes of determining allowable employer deposits to the Superannuation Holding Accounts Special Account.
Item 6
244 This item provides that amendments to the SSA Act made by Schedule 4 to the Bill are to apply to the 2008-2009 year of income and later years.
Superannuation (Government Co-contribution for Low Income Earners) Act 2003
Item 7
245 This item amends the definition of ' spouse' in the Co-contribution Act to include a person who is in a relationship as a couple with a beneficiary of a Government co-contribution, whether the beneficiary and the person are different sexes or the same sex.
246 Under this provision in its current form, a person can be considered to be a spouse if the person lives ' as the beneficiary's husband or wife' . Currently, only an opposite-sex de facto or married spouse of a person can be considered to have a relationship as a husband or wife with the beneficiary.
247 The amendment made by this item is intended to extend the existing concept of a spouse as used within the Co-contribution Act, only so that a person in a same-sex relationship with a beneficiary will be eligible for the same recognition provided to persons in an opposite-sex de facto relationship.
248 The phrase ' in a relationship as a couple' will incorporate both relationships between persons of the same sex in specified circumstances as well as those relationships previously referred to as marital relationships. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship.
249 For the purpose of the Minister reporting to Parliament on the Government co-contribution for low income earners, the extended definition of ' spouse' in the Co-contribution Act recognises that a beneficiary of a Government co-contribution can have a same-sex de facto partner.
Item 8
250 This item provides that amendments to the Co-contribution Act made by this Schedule are to apply to the 2008-2009 year of income and later income years.
Superannuation Industry (Supervision) Act 1993
Item 9
251 This item amends the definition of ' child' in the SIS Act to include a child of a person's relationship as a couple. The new definition expands the classes of children that may be taken to be a child of the person for the purposes of determining the person's dependants. If at any time the person was in a relationship as a couple, a child who is the product of that couple's relationship may be taken to be the person's child.
252 The current law does not recognise the child of a same-sex couple as the child of both members of the couple. While the child of a married couple or opposite-sex de facto couple is recognised as the child of both the birth mother and birth father, the status of a child of a same-sex couple is often uncertain. For example, while the current definition of a child recognises the child's relationship with the biological mother or father, it generally excludes the mother's or father's same-sex partner.
253 The amendments to the definition of ' child' in the SIS Act will ensure that, where a fund member was a member of a same-sex couple and had a child who was a product of that relationship, the child is able to receive the deceased member's superannuation death benefits as a dependant. The phrase ' in a relationship as a couple' has the same meaning as set out at item 10 below.
254 Paragraph (b) of the definition of ' child' in subsection 10(1) inserted by item 11 provides that a child can be considered to be a member's child where the child is the product of the person's relationship with their partner.
255 Subsection 10(5) requires that the child is:
- -
- the biological child of at least one person in the relationship, i.e. is conceived utilising the gametes of one party to the relationship; or
- -
- the birth child of a woman in the relationship.
256 A child, who is the product of a person's previous relationship, and who is brought into the person's current relationship, is not a child of the person's current relationship.
257 Item 9 also inserts a note at the end of the new definition of ' child' , to identify that new subsection 10(5) of the SIS Act is relevant to working out when a child is a product of a relationship for the purposes of paragraph (b) of the definition of ' child' .
258 Examples 1 and 2 below outline the circumstances where a child would meet the requirements of paragraph (b) of the definition of ' child' in subsection 10(1) and subsection 10(5). The circumstances indicated in example 3 would not meet these requirements.
Example 1
J is a fund member and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using gametes from S and a donor. The procedure takes place and S gives birth to H. Whilst H is the biological child of S, he is not the biological child of J.
259 H can be considered J's child for the purposes of the definition of ' child' in the SIS Act. That is, H is the product of the relationship between J and S and is S's biological child. This would continue to be the case even if the relationship between J and S were to break down at a later time.
Example 2
J is a fund member and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using donated gametes. The procedure takes place and S gives birth to H. Whilst H is the birth child of S, he is not the biological child of either J or S.
260 H can be considered J's child for the purposes of the definition of ' child' in the SIS Act. That is, H is the product of the relationship between J and S and S is H's birth mother. This would continue to be the case even if the relationship between J and S were to break down at a later time.
Example 3
J is a fund member and forms a relationship as a couple with S. S has a child, H, from a previous relationship.
261 H cannot be considered J's child for the purposes of the definition of ' child' in the SIS Act. Whilst H is S's biological child who is in the relationship, H is not the product of a relationship between J and S. H's connection with J only arises because J commenced a relationship with S. It did not arise from any actions of the couple to add a child to their relationship and therefore is not a product of the person's relationship with that partner.
262 The amendments to the definition of ' child' in the SIS Act will ensure that a child who is a product of a same-sex relationship is able to receive superannuation death benefits as a dependant, upon the death of the fund member in the same-sex relationship.
Item 10
263 This item amends the definition of ' spouse' in the SIS Act to include a person who is in a relationship with another person as a couple, whether or not the persons are of the same sex or different sexes.
264 Under this provision in its current form, a person can be considered to be a spouse if the person lives ' as the husband or wife of the person' . Currently, only a married or opposite-sex de facto spouse of a person can be considered to have a relationship as a husband or wife with the person and therefore, for example, be eligible through this definition to receive superannuation benefits upon the death of their partner.
265 The amendment made by this item is intended to extend the existing concept of a spouse as used within the SIS Act, only so that a person in a same-sex relationship with a fund member will be eligible to the same entitlements and recognition provided to persons in an opposite-sex de facto relationship.
266 The phrase ' in a relationship as a couple' will incorporate relationships between persons of the same sex in specified circumstances as well as those relationships previously referred to as marital relationships. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship.
267 The amendments to the definitions of ' spouse' in the SIS Act will ensure a person in a same-sex relationship is able to receive their partner's superannuation benefits as a dependant, upon the death of their partner.
Item 11
268 This item inserts subsection 10(5) to provide that for the purposes of the SIS Act a child cannot be the product of a relationship, whether between same or opposite-sex partners, unless the child is the biological child of at least one person in the relationship or is born to a woman in the relationship. This is relevant to provisions, such as the new paragraph (b) of the definition of ' child' in subsection 10(1) being inserted by item 9 into the SIS Act.
Item 12
269 This item provides that amendments to the SIS Act made by Schedule 4 to the Bill are to apply to the 2008-2009 year of income and later years.
Part 2-Taxation law
Income Tax (Transitional Provisions) Act 1997
Item 13
270 The meaning of ' spouse' and ' child' in section 295-485 of the Income Tax Assessment Act 1997 (ITAA 97) will be modified by reference to amended definitions in the SIS Act. This amendment removes the differential treatment between opposite-sex couples and their children, and same-sex couples and their children, with regard to the ability of a trustee of a superannuation fund to increase the amount of a superannuation lump sum death benefit.
271 The modified meanings of ' spouse' and ' child' will ensure a trustee of a superannuation fund can claim a deduction, where the superannuation fund refunds tax paid on contributions made during the lifetime of the deceased member, to the member's same-sex partner, former same-sex partner or a child who is a product of the deceased member's relationship with another person.
272 The amendments to the definitions of ' spouse' and ' child' in the superannuation acts apply to the 2008-09 income year and later years. These amendments apply for the 2008-09 income year only.
273 A transitional provision is necessary for the taxation of superannuation as a consequence of the amendments to superannuation law applying from 2008-09. The removal of same-sex discrimination in tax law more generally is intended to apply for the 2009-10 income year and later years under the phased-in introduction of the relevant legislation to remove discrimination against same-sex couples.
Item 14
274 The definition of ' death benefits dependant' used in Subdivision 82-B of Division 82, Division 302 and section 303-5 of the ITAA 97, is modified by reference to the amended definitions of ' spouse' and ' child' in the SIS Act. These provisions in the ITAA 97 relate to the taxation of superannuation death benefit payments, superannuation death benefits paid in special circumstances and death benefit termination payments. These amendments remove the differential tax treatment of superannuation death benefit payments to members of same-sex couples and their children.
275 Under current income tax law, a member of a same-sex couple who receives his or her deceased partner's superannuation death benefits is taxed concessionally only where the person satisfies the criteria for an interdependency relationship with the deceased member. If the criteria cannot be satisfied, the person is unable to receive the deceased member's benefits as a reversionary pension, and will be taxed as a non-dependant on lump sum death benefit payments.
276 The modified meaning of ' death benefits dependant' ensures a member of a same-sex couple is taxed concessionally on the deceased member's death benefits, regardless of whether he or she satisfies the interdependency criteria. That is, the surviving member of the couple may receive the deceased member's superannuation benefits as a reversionary pension, or alternatively receive the superannuation death benefits as a lump sum tax-free.
277 Similarly, upon the death of a person in a same-sex relationship, a child of that relationship who is under 18 years of age is taxed concessionally on receipt of the deceased member's superannuation death benefits.
278 The amendments to the definitions of ' spouse' and ' child' in the superannuation acts apply to the 2008-09 year of income and later years.
279 The modified meaning of ' death benefits dependant' , ' spouse' and ' child' in the death benefit provisions of the ITAA 97 apply to the 2008-09 income year only. This transitional provision ensures that a member or a child of a same-sex couple who receives the deceased member's death benefits, is taxed concessionally on those benefits for the 2008-09 income year.
280 A transitional provision is necessary for the taxation of superannuation death benefits as a consequence of the amendments to superannuation law applying from 2008-09. The removal of same-sex discrimination in tax law more generally is intended to apply for the 2009-10 income year and later years under the phased-in introduction of the relevant legislation to remove discrimination against same-sex couples.