Senate

Supplementary Explanatory Memorandum

Circulated by the authority of the Attorney-General, the Honourable Robert McClelland MP

NOTES ON AMENDMENTS

Amendment 1

36 This amendment inserts Table Item 3A into Clause 2 of the Superannuation Bill. Table Item 3A provides that Part 3 of Schedule 2 to the Superannuation Bill commences on the day on which the Bill receives Royal Assent. Part 3 is inserted by these Parliamentary amendments and provides a power for the Governor-General to make regulations prescribing matters of a transitional nature relating to amendments made by the Bill. Because this power deals with transitional provisions it is desirable for it to commence as soon as possible.

37 Other amendments to Clause 2 of the Superannuation Bill are made as a consequence of the insertion of Table Item 3A.

Amendment 2

38 This amendment inserts Table Item 4A into Clause 2 of the Superannuation Bill. Table Item 4A provides that Part 3 of Schedule 4 to the Superannuation Bill commences on the day on which this Act receives the Royal Assent. Part 3 is inserted by these Parliamentary amendments and provides application provisions to allow the amendments to the concept of 'child' in the Family Law Act which will be made by the Family Law Amendment Bill and supporting regulations to apply from 1 July 2008.

39 Table Item 4 of Clause 2 of the Superannuation Bill is amended as a consequence of the insertion of Table Item 4A.

Amendment 3

Schedule 1-Finance and Deregulation amendments

40 Amendment 3 omits previous Schedule 1 to the Superannuation Bill (Finance and Deregulation amendments) and replaces it with a new Schedule 1. These amendments relate to the Parliamentary Contributory Superannuation Act 1948 , the Superannuation Act 1922 and the Superannuation Act 1976 . The amendments effected by the insertion of the new Schedule 1 are described below.

Items 1, 2, 5, 8, 11, 12, 13, 19, 20, 21, 25, 28, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 47, 48, 49 and 51

41 These items reflect the decision to refer to a 'marital or couple relationship' rather than a 'couple relationship'. The use of the term 'marital or couple relationship' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 6, 7, 26 and 27

42 These items adopt the term 'husband or wife or partner', as described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 9 and 29

43 These items replace references to regulations made under the Judges' Pensions Act to prescribe which registers and relationships will be recognised with references to regulations made under the Acts Interpretation Act for that purpose as a consequence of the insertion of a definition of 'de facto partner' into the Acts Interpretation Act. The definition of 'de facto partner' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 10, 12, 13, 14, 18, 30, 42 and 47

44 These items remove references to the 'product of the relationship' definition of child and instead refer to a child within the meaning of the Family Law Act. This change in approach to the definition of 'child' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

45 Items 5, 14, 16, 26, 46, 52 of Schedule 1 to the Superannuation Bill as introduced are no longer required as a consequence of the new approach to the definition of child, and do not have equivalents in the amended Schedule 1.

Item 24

46 This item will insert a definition of 'stepchild' into subsection 3(1) of the Superannuation Act 1976. This will extend the range of persons who can be considered to be a person's stepchild in the Superannuation Act 1976 to include someone who would be considered the stepchild of a person but for the fact that the person and the other member of a de facto relationship are not married. A description of the key definition of a 'stepchild' can be found in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 3, 4, 15, 16, 17, 22, 23, 50 and 52

47 The amendments made by these items are the same in substance as the amendments contained in Schedule 1 to the Superannuation Bill as introduced.

Amendment 4

Schedule 2-Attorney-General's amendments

48 Amendment 4 omits previous Schedule 2 (Attorney-General's amendments) and replaces it with a new Schedule 2. These amendments relate to the Acts Interpretation Act 1901 , the Federal Magistrates Act 1999 , the Judges' Pensions Act 1968 and the Law Officers Act 1964 . The amendments effected by the insertion of the new Schedule 2 (Attorney-General's amendments) are described below.

Item 1

49 This item inserts new sections 22A, 22B and 22C into the Acts Interpretation Act. Section 22A introduces the key definition of 'de facto partner' which refers to the associated definitions of 'registered relationships' (defined by section 22B) and 'de facto relationships' (defined by section 22C). The definition of 'de facto partner' is described in the Key Concepts and Definitions Section of this Supplementary Explanatory Memorandum.

Items 2, 5, 6, 8, 13, 15, 19, 21, 24 and 25

50 These items reflect the decision to refer to a 'marital or couple relationship' rather than a 'couple relationship'. The use of the term 'marital or couple relationship' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 7 and 20

51 These items adopt the term 'husband or wife or partner', as described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 9 and 22

52 These items replace references to regulations made under the Judges' Pensions Act to prescribe which registers and relationships will be recognised with references to regulations made under the Acts Interpretation Act for that purpose as a consequence of the insertion of a definition of 'de facto partner' into the Acts Interpretation Act. The definition of 'de facto partner' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 10, 11, 13, 18 and 23

53 These items remove references to the 'product of the relationship' definition of child and instead refer to a child within the meaning of the Family Law Act. This change in approach to the definition of 'child' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

54 Items 1, 5, 19, 20 and 29 of Schedule 2 to the Superannuation Bill as introduced are no longer required as a consequence of the amendments to adopt the new approach to the definition of child, and do not have equivalents in the amended Schedule 2.

Item 29

55 This item inserts a power for the Governor-General to make regulations of a transitional nature that relate to amendments made by this Schedule or any other Schedule to the Act.

Items 3, 4, 12, 14, 16, 17, 26, 27 and 28

56 The amendments made by these items are the same in substance as the amendments contained in Schedule 2 to the Superannuation Bill as introduced.

Amendment 5

Schedule 3-Defence amendments

57 Amendment 5 replaces Items 1 to 17 of previous Schedule 3 to the Superannuation Bill (Defence amendments). These amendments relate to the Defence Force Retirement and Death Benefits Act 1973 . Amendment 5 does not affect Items 18 to 27 of previous Schedule 3. The amendments effected by the insertion of the new Schedule 3 as it applies to Items 1 to 17 are described below.

Items 5, 9, 12, 15 and 16

58 These items reflect the decision to refer to a 'marital or couple relationship' rather than a 'couple relationship'. The use of the term 'marital or couple relationship' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 10 and 11

59 These items adopt the term 'husband or wife or partner', as described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Item 13

60 This item replaces a reference to regulations made under the Judges' Pensions Act to prescribe which registers and relationships will be recognised with a reference to regulations made under the Acts Interpretation Act for that purpose as a consequence of the insertion of a definition of 'de facto partner' into the Acts Interpretation Act. The definition of 'de facto partner' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 2, 3 and 14

61 These items remove references to the 'product of the relationship' definition of child and instead refer to a child within the meaning of the Family Law Act. This change in approach to the definition of 'child' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Item 2

62 Item 2 also provides that a 'child' for the purposes of the Defence Force Retirement and Death Benefits Act includes a 'stepchild'. This will extend the range of persons who can be considered to be a person's child in the Defence Force Retirement and Death Benefits Act to include someone who would be considered the stepchild of a person but for the fact that the person and the other member of a de facto relationship are not married. A description of the key definition of a 'stepchild' can be found in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 1, 4, 6, 7 and 8

63 The amendments made by these items are the same in substance as the amendments contained in Schedule 3 to the Superannuation Bill as introduced.

Amendment 6

Schedule 4-Treasury amendments

64 Amendment 6 omits previous Schedule 4 (Treasury amendments) and replaces it with a new Schedule 4. These amendments relate to the Retirement Savings Accounts Act 1997 (the RSA Act), the Small Superannuation Accounts Act 1995 , the Superannuation (Government Co-contribution for Lao Income Earners) Act 2003 , the Superannuation Industry (Supervision) Act 1993 (the SIS Act), and the Income Tax (Transitional Provisions) Act 1997 . The amendments effected by the insertion of the new Schedule 4 (Treasury amendments) are described below.

Items 1, 4, 6, 10

65 These items harmonise the approach to the definition of 'spouse' in the Superannuation Bill with the General Law Reform Bill.

66 Items 1, 4, 6 and 10 will repeal the definitions of 'spouse' in relevant Acts to be amended and substitute a new definition. The new definition expands the ordinary meaning of 'spouse' in the amended Acts to include:

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another person (whether of the same sex or a different sex) with whom the person is in a relationship that is registered under a law of a State or Territory prescribed for the purposes of section 22B of the Acts Interpretation Act as a kind of a relationship prescribed for the purposes of that section, and

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another person who, although not legally married to the person, lives with the person on a genuine domestic basis in a relationship as a couple.

67 This definition will extend to married couples, and to same-sex and opposite-sex de facto couples. The amendment will recognise registration of a relationship with a State or Territory relationship register as conclusive proof of the existence of the relationship, and is similar to the new definition of 'spouse' which will be inserted into section 995-1(1) of the Income Tax Assessment Act 1997 by the General Law Reform Bill. This definition will incorporate elements of the Acts Interpretation Act definition of 'de facto partner', which is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Items 1 and 8

68 These items remove references to the 'product of the relationship' definition of child and instead refer to a child with in the meaning of the Family Law Act. This change in approach to the definition of 'child' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

69 The amended definition of 'child' in these items will also extend the definition of 'child' to include 'a child of the person's spouse' in order to recognise stepchildren in these Acts. The amendments that will be made by the Superannuation Bill will define 'spouse' to include a person with whom another person is in a de facto relationship or a registered relationship. These amendments are consistent with the approach to the recognition of children in these circumstances in the amendments to the definition of 'child' in subsection 995-1(1) of the Income Tax Assessment Act which will be made by the General Law Reform Bill. The approaches to recognition of 'stepchildren' in these amendments are described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

70 Item 11 of Schedule 4 to the Superannuation Bill as introduced is no longer required as a consequence of the new approach to the definition of child, and does not have an equivalent in the amended Schedule 4.

Items 9, 11, 12, 13, 14, 15

71 These items will insert the new approach to recognition of family relationships developed for the General Law Reform Bill into the SIS Act. Definitions of 'relative' and a tracing rule (as described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum) are inserted to ensure that relationships traced through the definition of 'child' are recognised.

72 Item 9 will insert a definition of 'relative' into subsection 10(1) of the SIS Act. This definition of 'relative' provides that a relative of an individual means the following:

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a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the superannuation member, or of his or her spouse, and

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a spouse of the individual or of any of the individual referred to in paragraph (a).

73 Item 11 will inserts a new subsection 10(5) at the end of section 10 of the SIS Act. This new subsection will provide a tracing rule in order to recognise certain family relationships. The subsection will provide that if one individual is the child of another individual because of the definition of 'child' in subsection 10(1), relationships traced to, from or through that individual are to be determined in the same way as if the individual were the natural child of the other individual. This is consistent with the approach adopted in the General Law Reform Bill.

74 Item 12 will amend subsection 17A(9) of the SIS Act, which defines 'relative' for the purposes of section 17A of that Act. Item 12 will repeal paragraphs (b) and (c) of subsection 17A and substitute a new paragraph (b). Subsection 17A(9) as amended by Item 12 will provide that in section 17 of the SIS Act a relative in relation to a person means:

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a parent, child, grandparent, grandchild, sibling, aunt, uncle, great-aunt, great-uncle, niece, nephew, first cousin or second cousin of the individual or of his or her spouse or former spouse; or

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a spouse or former spouse of the individual, or of an individual referred to in paragraph (a).

75 Item 13 will insert a new subsection 17A(9A) into the SIS Act. This new subsection will provide a tracing rule in order to recognise certain family relationships. The subsection will provide that if one individual is the child of another individual because of the definition of 'child' in subsection 17A(9), relationships traced to, from or through that individual are to be determined in the same way as if the individual were the natural child of the other individual. This is consistent with the approach adopted in the General Law Reform Bill.

76 Items 14 and 15 will repeal, respectively, subsection 65(6) of the SIS Act and the definition of 'relative' provided in 70E(4) of that Act as a consequence of the insertion of a general definition of 'relative' for the SIS Act by Item 11.

Item 16

77 This item will insert application provisions in relation to the amendments to the SIS Act.

78 Subitem (1) of the application provision provides that amendments to the SIS Act made by Schedule 4 are to apply to the 2008-09 year of income and later years, subject to subitems (2) and (3).

79 Subitem (2) of the application provision relates to amendments to section 65 of the SIS Act. Section 65 broadly prohibits a trustee of a regulated superannuation fund, including a self managed superannuation fund, from lending money to, or providing financial assistance using fund resources to, a fund member or to a member's spouse or relatives.

80 Similarly, subitem (3) relates to amendments to section 66 of the SIS Act. This section broadly prohibits a regulated superannuation fund, including a self managed superannuation fund, from acquiring certain assets from the fund's members, their spouses or their relatives. Sections 65 and 66 are generally known as investment rules.

81 For example, a trustee of a self managed superannuation fund may currently enter into a transaction with a same-sex spouse of a fund member or the spouse's relatives, and not contravene the investment rules, because neither the member's same-sex spouse nor the spouse's relatives are considered to be the member's spouse or relative.

82 The amendments to the SIS Act made by Schedule 4 have the effect that the same-sex spouse of a fund member and the spouse's relatives are recognised as the member's spouse and relatives.

83 The application provisions will ensure that a trustee of a regulated superannuation fund who entered into a transaction with a same-sex spouse of a fund member or with the spouse's relative before Royal Assent, will not be adversely affected under section 65 or 66 of the SIS Act by the amended definitions of 'spouse' and 'relative'. Such transactions entered into before Royal Assent (including after the commencement of the 2008-09 income year) will not be considered to be contraventions of section 65 or 66 of the SIS Act.

84 Transactions entered into on or after Royal Assent in breach of section 65 or 66 of the SIS Act will be considered to be contraventions of the SIS Act.

Item 17

85 This item inserts a transitional provision in relation to Part 8 of the SIS Act

86 Part 8 of the SIS Act deals with in-house assets of regulated superannuation funds. An in-house asset is broadly a loan to, an investment in, or a lease to a Part 8 associate of the fund. A Part 8 associate includes members of a self managed superannuation fund and their spouses and relatives. Part 8 of the SIS Act limits the fund's in-house assets to a maximum of 5 per cent of the market value of the fund's total assets.

87 Currently, a trustee of a regulated superannuation fund may make a loan to, an investment in, or lease a fund asset to, a same-sex spouse of a fund member or the spouse's relative, and not contravene the in-house asset rules, because neither the member's same-sex spouse nor the spouse's relatives are considered to be Part 8 associates.

88 The amendments to the SIS Act made by Schedule 4 have the effect that a same-sex spouse of a fund member and the spouse's relatives are recognised as Part 8 associates.

89 Subitem (1) of the transitional provision provides that:

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where a loan or an investment was made, a contract entered into, or an asset became subject to a lease arrangement, before Royal Assent; and

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apart from this item, the asset would be an in-house asset of the fund after Royal Assent, only because of the amendments made by Schedule 4; then

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the asset is not considered to be an in-house asset of the fund.

90 Subitem (2) of the transitional provision provides that where a lease or lease arrangement in respect of a fund asset was entered into before Royal Assent, but came into force on or after Royal Assent, the asset is considered to have become subject to the lease or lease arrangement before Royal Assent.

91 The intention of the transitional provision is to ensure that a trustee of a regulated superannuation fund who made a loan to, an investment in, or leased a fund asset to, a Part 8 associate before Royal Assent is not adversely affected by the amended definitions of 'spouse' and 'relative'. Such transactions entered into before Royal Assent will not be considered to be a contravention of the in-house asset rules of the SIS Act.

92 Transactions under a contract entered into before Royal Assent, but which came into force after Royal Assent, will also not be considered to be a contravention of the in-house rules of the SIS Act.

Item 20

93 This item inserts an application provision relating to the commencement of amendments to the Family Law Act being made by the Family Law Amendment Bill. This will allow the new definitions in the Family Law Act to apply for the purposes of amendments made by this Schedule which refer to the Family Law Act.

94 Paragraph (a) provides that the amendments made to the definition of a child are taken to commence on 1 July 2008.

95 Paragraph (b) provides that regulations made regarding a child born to a woman as a result of an artificial conception procedure are taken to commence on 1 July 2008.

96 Paragraph (c) provides that regulations made regarding a child born under surrogacy arrangements are taken to commence on 1 July 2008.

97 The effect of this application provision is to align the commencement dates of Family Law Amendment Bill and its regulations with the commencement dates of this Schedule, and ensure that a child of a person will not be adversely affected by the delayed commencement of that Act or the regulations.

Items 2, 3, 5, 7, 18, 19

98 The amendments made by these items are the same in substance as the amendments contained in Schedule 4 to the Superannuation Bill as introduced.

Amendment 7

Schedule 5-Prime Minister and Cabinet amendments

99 Amendment 7 omits previous Schedule 5 to the Superannuation Bill (Prime Minister and Cabinet amendments) and replaces it with a new Schedule 5. These amendments relate to the Governor-General Act 1974 . The amendments effected by the insertion of the new Schedule 5 are described below.

Items 1, 3 and 8

100 These items reflect the decision to refer to a 'marital or couple relationship' rather than a 'couple relationship'. The use of the term 'marital or couple relationship' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Item 4

101 This item adopts the term 'husband or wife or partner', as described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Item 5

102 This item replaces a reference to regulations made under the Judges' Pensions Act to prescribe which registers and relationships will be recognised with a reference to regulations made under the Acts Interpretation Act for that purpose as a consequence of the insertion of a definition of 'de facto partner' into the Acts Interpretation Act. The definition of 'de facto partner' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum.

Item 6 and 7

103 Item 6 removes a reference to the 'product of the relationship' definition of child and instead refer to a child within the meaning of the Family Law Act. This change in approach to the definition of 'child' is described in the Key Concepts and Definitions section of this Supplementary Explanatory Memorandum

104 Item 7 removes a reference to the 'product of the relationship' but ensures that a partner of a person can be of the same or opposite sex.

Items 2 and 9

105 The amendments made by these items are the same in substance as the amendments contained in Schedule 5 to the Superannuation Bill as introduced.