House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

OUTLINE

This Bill will amend the Occupational Superannuation Standards Act 1987 and the Income Tax Assessment Act 1936. The amendments to the Occupational Superannuation Standards Act 1987 will introduce new arrangements for the administration of the reasonable benefit limits. The new arrangements will generally come into effect on 1 July 1990. The main provisions of the Bill are:

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to provide that regulations can be prescribed under the Occupational Superannuation Standards Act 1987 in relation to the method for determining the reasonable benefit limits and the method by which the Insurance and Superannuation Commissioner will determine whether a benefit received by a person is within or in excess of those limits.

This will in effect transfer the power for determining the reasonable benefit limits from the Insurance and Superannuation Commissioner to the Government of the day. The Government's proposals in this regard were announced in the Second Reading Speech of the Minister Assisting the Treasurer when introducing Taxation Laws Amendment Bill (No 4) 1987; and

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to establish arrangements whereby the Insurance and Superannuation Commissioner can administer those limits. These arrangements are as follows:

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to require superannuation funds, employers, life assurance companies and registered organisations to provide the Insurance and Superannuation Commissioner with information relating to eligible termination payments, superannuation pensions and annuities provided by them to members, depositors and employees;

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to require approved deposit funds, life assurance companies and registered organisations to provide the Commissioner with information on balances held in the approved deposit fund, or any deferred annuity fund conducted by the company or organisation as at 15 February 1990;

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to require the Insurance and Superannuation Commissioner to make a determination, or an interim determination where insufficient information has been provided, of the amount of the payment that is within or in excess of the reasonable benefit limits;

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to require the Insurance and Superannuation Commissioner to give a copy of the determination to the person receiving the payment and where requested, to the Commissioner of Taxation;

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to enable a payer to request a person to provide details of previous determinations made by the Commissioner in relation to the payment of an eligible termination payment and commencement of payment of a superannuation pension or annuity;

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to provide for a person to seek a review of a determination issued by the Insurance and Superannuation Commissioner;

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to provide the Insurance and Superannuation Commissioner with a discretion to treat the whole or a part of a benefit which is in excess of the reasonable benefit limits as if it were within the reasonable benefit limits where he is satisfied that special circumstances exist;

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to require a person who receives a payment of an eligible termination payment, superannuation pension or annuity to provide, on an optional basis, his or her tax file number to the Insurance and Superannuation Commissioner and to provide for the Commissioner to be subject to the requirements of the Privacy Act 1988 and guidelines issued by the Privacy Commissioner in relation to the receipt, storage and use of those tax file numbers. Where a person does not provide his or her tax file number to the Commissioner, the Bill prohibits the Commissioner from determining whether the benefit is within the reasonable benefit limits and requires the Commissioner to treat the whole of the benefit as in excess of the reasonable benefit limits;

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to require a person to advise the Insurance and Superannuation Commissioner when they have elected to roll over an eligible termination payment to an approved deposit fund, superannuation fund or deferred annuity after the provision of the payment to the person has been notified to the Commissioner;

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to provide the Insurance and Superannuation Commissioner with the power to require a superannuation fund, life assurance company or registered organisation which provides a pension or annuity to commute the excess part of the pension or annuity to an eligible termination payment; and

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to enable the Insurance and Superannuation Commissioner to publish statistical information concerning superannuation payments made to a person without identifying the person.

The Bill will also amend the Income Tax Assessment Act 1936:

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to provide that eligible termination payments received in excess of the reasonable benefit limits are taxed at marginal rates (proposal announced in the Economic Statement of 25 May 1988 and the 1989-90 Budget);

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to modify the existing taxation treatment of amounts transferred between superannuation funds and for amounts repaid to employers from superannuation funds (proposal announced on 15 August 1989); and

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to deny tax deductions for contributions made to more than two superannuation funds in respect of the one employee by the same or an associated employer (proposal announced on 15 August 1989).