Senate

Supplementary Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)

General Outline and Financial Impact of the Amendments

The amendments will amend the Superannuation Guarantee (Administration) Bill 1992 ("the Bill") to:

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substitute new tables of charge percentages for the existing tables in the Bill. The new tables will specify lower charge percentages in certain years and include two additional years (ie. 2001-2002 and 2002-2003); [Amendments (10) and (11)]

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raise the annual national payroll threshold for an employer from $500,000 to $1,000,000. The employer's annual national payroll is used to determine the employer's charge percentage, eg. 3% or 4%/5% for 1992-93; [Amendments (10), (11) and (18)]

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lower the charge percentage for larger employers (ie. employers with an annual national payroll greater than $1 million) from 5% to 4% for the period 1 July 1992 to 31 December 1992 and then provide for a regulation to be made to increase the rate to 5% from 1 January 1993. (If this regulation is disallowed by either House of the Parliament the 4% rate will apply for the whole of the 1992-93 year); [Amendment (10)]

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change the contribution period (ie. the period for which superannuation support is measured) for the 1992-93 year from an annual period to two 6 month periods commencing on 1 July 1992 and 1 January 1993. (This change is required because of the change outlined in the paragraph above); [Amendments (1), (2), (6), (8) and (15)]

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change the contribution period in the 1993-94 and subsequent years from a monthly to a quarterly basis; [Amendments (1), (3), (7) and (9)]

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raise the level of salary and wages at which an employer need commence making superannuation contributions in respect of any employee from $250 to $450 a month. This means that an employer is not expected to provide superannuation support for an employee unless the employee earns $450 or more a month; [Amendment (17)]

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ensure that the period for which 'excluded salary and wages' are paid is not taken into account in the calculation of the reduction of the employer's charge percentage (under clauses 22 and 23). Excluded salary and wages means salary and wages which are generally not taken into account for superannuation guarantee purposes; [Amendment (16)]

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provide that payments made to a person who holds, or performs the duties of an appointment, office or position under the Constitution or under a law of the Commonwealth, of a State or a Territory (including members of the defence force or a police force), or to a person who is a member of a local government council, are only taken to be salary and wages for superannuation guarantee purposes if they constitute remuneration of that person; [Amendment (5)]

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ensure that contributions to a defined contribution superannuation fund are treated as having been paid to a complying superannuation fund, where there are reasonable grounds for believing the fund is a complying superannuation fund at the time the contributions are made; [Amendments (16), (20) and (21)]

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ensure that a benefit certificate relating to a defined benefit superannuation scheme is treated as effective for any part of the contribution period in which it is specified to have effect, if there are reasonable grounds (during the period) for believing that the scheme is a complying superannuation scheme; [Amendment (16)]

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allow a benefit certificate which is issued on or before 14 August in a year to have effect from the date specified on the certificate; that date may be as early as 1 July of the preceding year; [Amendment (4)]

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ensure that a reduction in the charge percentage for an employer in respect of an employee under clause 22 is only allowed in relation to that part of the contribution period in which a benefit certificate is effective; [Amendments (12), (13) and (14)]

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ensure that, in the event of a company going into liquidation, the superannuation guarantee charge has the same priority for payment as employee salary and wages in terms of paragraph 556(1)(e) of the Corporations Law; [Amendment (19)]

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impose certain conditions on company receivers including an obligation to retain sufficient assets to satisfy the payment of the superannuation guarantee charge. [Amendment (19)]

The amendments are not expected to have a significant impact on the revenue.