Explanatory Memorandum
(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar)Chapter 5 - Interest on superannuation payments by the Commissioner of Taxation
Outline of chapter
5.1 Schedule 6 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to allow the Commissioner to pay interest on amounts held by the Commissioner that are proactively reunified with a person's active superannuation account under section 24NA of that Act.
5.2 Schedule 6 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe the rate of interest payable on inactive low balance accounts and amounts proactively reunified by the Commissioner.
Detailed explanation of new law
Amendments to the Superannuation (Unclaimed Money and Lost Members) Act 1999
5.3 Section 24NA of the Superannuation (Unclaimed Money and Lost Members) Act 1999 enables the Commissioner to proactively reunify amounts held by the Commissioner as unclaimed money, lost member accounts or inactive low balance accounts with a person's active superannuation account.
5.4 However, amendments made to the Superannuation (Unclaimed Money and Lost Members) Act 1999 by the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 did not correctly provide for interest to be paid by the Commissioner.
5.5 Schedule 6 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 in line with the original policy intent to provide that interest is payable on amounts proactively reunified with superannuation accounts at a rate prescribed in the regulations. [Schedule 6, item 1, subsection 24NA(4) and 24NA(5) of the Superannuation (Unclaimed Money and Lost Members) Act 1999]
5.6 No amounts have yet been paid and the first payments are due to be made later this year after the first scheduled statement date since section 24NA of the Superannuation (Unclaimed Money and Lost Members) Act 1999 took effect.
5.7 A consequential amendment is required to section 24NB of the Superannuation (Unclaimed Money and Lost Members) Act 1999 to require a superannuation provider to repay an amount of interest that was paid to the provider if it is not credited to an account. Section 24NB already requires the provider to repay an amount that has been proactively reunified by the Commissioner but has not been credited to a member's account. [Schedule 6, item 2, paragraph 24NB(1)(a) of the Superannuation (Unclaimed Money and Lost Members) Act 1999]
Amendments to the Superannuation (Unclaimed Money and Lost Members) Regulations 1999
5.8 Schedule 6 to the Bill also amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe the rate of interest payable on:
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- inactive low balance accounts being paid out by the Commissioner on the direction of the member or a member's beneficiary; or
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- amounts being proactively reunified with an active superannuation account on the Commissioner's own initiative.
[Schedule 6, items 3 to 12, regulation 4Fof the Superannuation (Unclaimed Money and Lost Members) Regulations 1999]
5.9 Schedule 6 to the Bill amends the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to amend existing regulation 4F which sets out the interest payable on unclaimed money and lost members accounts.
5.10 The interest payable is based on the Consumer Price Index.
5.11 The Regulations are time critical. The timetable for Executive Council consideration does not allow for the Regulations to be made by the required time.