Senate

Supplementary Explanatory Memorandum

Circulated by the authority of the Treasurer, the Hon Wayne Swan MP

Glossary

The following abbreviations and acronyms are used throughout this supplementary explanatory memorandum.

General outline and financial impact

Temporary residents' unclaimed superannuation

Schedule 1 to this Bill requires superannuation providers to pay to the Commissioner of Taxation the unclaimed superannuation they hold for certain departed temporary residents by the due and payable date.

These amendments make changes to Schedule 1 to the Bill to allow regulations to be made to defer the due and payable date for a superannuation provider for such amounts in certain prescribed circumstances.

Proposal announced : These amendments have not previously been announced.

Financial impact : Not quantifiable. No material impact expected over the forward estimates.

Compliance cost impact : Negligible.

Chapter 1 Temporary residents' unclaimed superannuation

Amendment 1 - redundant definition

2.1 This amendment will remove a redundant definition from the Bill. The term 'terminal medical condition' is not used in the Bill.

Amendments 2, 3, 4, 5, 6 and 7 - when an amount is due and payable

2.2 A superannuation provider that has received a notice from the Commissioner of Taxation (Commissioner) under section 20C of the Bill (the section 20C notice) in connection with a person's superannuation interest, will be required to pay to the Commissioner any excess amount worked out under section 20F of the Bill by the due and payable date for such an amount. The due and payable date is set out under subsection 20F(1) of the Bill.

2.3 Without these amendments the due and payable date can be one of the following:

•

the next scheduled statement day after the day the section 20C notice was given; or

•

if the section 20C notice is given less than 28 days before the next scheduled statement day - the following scheduled statement day.

2.4 These amendments will allow regulations to be made to defer the due and payable date to a date later than either of those two dates for a superannuation provider. The amendments will allow, for example, regulations to be made to enable the Australian Prudential Regulation Authority (APRA) to provide a short-term deferral of a due and payable date for a superannuation provider in exceptional circumstances (eg, if payment would have a significant adverse effect on a superannuation fund's financial position, such as its ability to meet its other liabilities). This would be similar to an existing power provided to APRA under the Superannuation Industry (Supervision) Regulations 1994 to suspend requests for superannuation benefits transfers if the financial position of a fund would be significantly adversely affected.

2.5 It is not envisaged that the regulations would provide for any general deferral of due and payable dates for the superannuation industry. Superannuation providers should accordingly continue to make necessary preparations to be in a position to make payments to the Commissioner by the expected due and payable dates (first payments are anticipated to be required in April 2009). In this respect it is noted that superannuation providers are already required under the Superannuation Industry (Supervision) Act 1993 to have investment strategies in place that have regard to, among other matters, the anticipated liquidity requirements of the fund, and it is expected that a deferral of the due and payable date would generally only occur in exceptional circumstances.

Amendment 8 - revocation notice

2.6 This amendment makes a consequential amendment to paragraph 20J(6)(a) of the Bill to ensure consistent treatment of a revocation of a section 20C notice where there is a deferral of the due and payable date (which with these amendments may occur because of a deferral by the Commissioner under the Taxation Administration Act 1953 (TAA 1953) or a deferral under the regulations).

2.7 Without this amendment, a revocation by the Commissioner of a section 20C notice will have no effect if the revocation was given to the superannuation provider less than 28 days before the scheduled statement day and the provider has either given a statement or made a payment to the Commissioner purportedly because of the section 20C notice. This is the case despite the due and payable date having been deferred by the Commissioner under the TAA 1953. This amendment ensures that this will also be the case despite the due and payable date for the provider being deferred under the regulations.