House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 1 - Electronic portability form

Outline of chapter

1.1 Schedule 1 to this Bill amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Retirement Savings Accounts Act 1997 (RSA Act) to enable certain superannuation fund members to electronically request the consolidation of their superannuation benefits through the Australian Taxation Office (ATO). The scheme is referred to as the electronic portability form .

1.2 For the purposes of this chapter, references to a 'superannuation fund' or 'fund trustee', 'member' and 'benefits' also include a retirement savings account (RSA) provider, an RSA account holder and benefits held in RSA accounts.

1.3 This Schedule also:

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grants the Commissioner of Taxation (Commissioner) general administration of the scheme and related tax file number (TFN) provisions;

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amends the TFN provisions for the purposes of the scheme; and

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removes a redundant reference in relation to the division of general administration of the SIS Act.

Context of amendments

1.4 The current arrangements for the portability of superannuation allow members of certain superannuation funds to move their benefits between funds. Broadly, the member applies to their fund in writing and completes the required documentation. The transferring fund verifies the identity of the member, using certified member identity documents. The transferring fund must send the member's benefits to the receiving fund nominated by the member when all the requirements have been satisfied.

1.5 Some fund members may be unaware they have become 'lost'. A superannuation fund may report a member as 'lost' to the ATO, for example, when the fund cannot contact the member. The ATO records the account details of such 'lost' members on the lost members register. The primary aim of this register is to assist in reuniting lost members with their superannuation benefits. The Commissioner is required to keep the lost members register by the Superannuation (Unclaimed Money and Lost Members) Act 1999 .

1.6 Lost members may search for their superannuation accounts using SuperSeeker, an online tool on the ATO's website. SuperSeeker also allows individuals to search for unclaimed superannuation money and other superannuation amounts held by the ATO. If SuperSeeker matches the member's details with those stored on the lost members register, the member may either contact the fund trustee directly to update their details, or consolidate their accounts by transferring or rolling over their benefits under the current portability arrangements.

Electronic portability form

1.7 The proposed electronic portability form will provide certain members with a simplified and streamlined electronic method to facilitate consolidating their benefits.

1.8 Lost members, after first locating their benefits through SuperSeeker, may pre-fill a transfer request and submit it electronically to the ATO. The ATO will verify the identity of the member and match it to the recorded account, and will also verify the status of the nominated receiving fund. If the verification processes are successfully completed, the ATO will electronically transmit the transfer request to the fund that reported the member as lost (the transferring fund). The transferring fund will then be able to send the member's benefits to the nominated receiving fund under the current portability arrangements.

1.9 In some cases electronic submission of the transfer request is not available. Circumstances in which this may occur include:

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the member's account details are not recorded on the lost members register;

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insufficient member details are provided on the transfer request;

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details about the nominated receiving fund are not provided;

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the member has previously submitted a form electronically for the same account;

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the ATO cannot verify the member's identity;

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the ATO cannot verify the status of the receiving fund; or

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the transferring fund cannot receive electronic correspondence from the ATO.

1.10 In these circumstances, the member may print the transfer request and post it to their fund.

Summary of new law

1.11 This Schedule amends the SIS Act and the RSA Act to permit regulations to prescribe the operating details of the electronic portability form and to specify additional requirements.

1.12 This Schedule also grants the Commissioner general administration of the scheme and of related TFN provisions.

1.13 This Schedule amends the TFN provisions to permit the Commissioner to request a member's TFN and disclose it to a superannuation fund trustee for the purposes of the scheme, and to include the TFN on the transfer request.

1.14 This Schedule also makes a minor amendment by removing a redundant reference in relation to the division of general administration of the SIS Act.

Comparison of key features of new law and current law

Detailed explanation of new law

Regulations may prescribe a scheme

1.15 The regulations may prescribe a scheme that allows the Commissioner to receive requests from fund members for the roll-over or transfer of their superannuation benefits, and to forward those requests to the trustee of the member's superannuation fund. [Schedule 1, item 8, section 39A of the RSA Act; item 17, section 34A of the SIS Act]

1.16 These amendments allow the operating details of the scheme to be set out in the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Accounts Regulations 1997 . For example, the regulations may require such requests to be made in an approved form, including electronically.

1.17 The regulations may limit access to the scheme to individuals who have a superannuation interest that is recorded on the lost members register and able to be located through SuperSeeker or similar mechanism. The scheme may be extended to cover other superannuation accounts in the future as the Stronger Super reforms are progressively implemented. Current portability regulations may also need to be amended to implement the electronic portability form.

1.18 A number of headings are inserted as a consequence of the amendments made by items 8 and 17 of this Schedule. [Schedule 1, items 6, 7, 15 and 16 (new headings)]

1.19 As a consequence of the insertion of new headings, a reference to provisions in the RSA Act is also updated. [Schedule 1, item 1, subparagraph 3(1)(a)(ii) of the RSA Act]

General administration of the electronic portability form

1.20 The Commissioner will have general administration of the electronic portability form under the SIS Act and the RSA Act, and of new provisions relating to TFNs. [Schedule 1, item 3, paragraph 3(1)(e) of the RSA Act; item 13, paragraph 6(1)(g) of the SIS Act]

1.21 These amendments do not affect APRA's general administration of the current portability arrangements.

1.22 As a result of these amendments, the provisions relating to the form and TFNs are 'taxation laws', as defined in the Income Tax Assessment Act 1997 . Consequently, they are subject to administrative provisions of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) and offence provisions relating to taxation laws, including:

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confidentiality of taxpayer information (Division 355);

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penalties relating to false or misleading statements (Subdivision 284-B); and

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offences relating to TFNs (Part III, Division 2, Subdivision 2-BA).

1.23 The notes in subsection 3(1) of the RSA Act and in subsection 6(1) of the SIS Act are amended to clarify the provisions to which the confidentiality provisions in Division 355 in Schedule 1 to the TAA 1953 apply. Additionally, the note in subsection 6(1) of the SIS Act removes the reference to self managed superannuation funds. [Schedule 1, item 4, subsection 3(1)(note) of the RSA Act; item 14, subsection 6(1)(note) of the SIS Act]

1.24 As a consequence of these changes, references elsewhere in the SIS Act and the RSA Act are updated. [Schedule 1, item 2, subparagraph 3(1)(a)(iii) of the RSA Act; item 12, paragraph 6(1)(b) of the SIS Act]

1.25 Additionally, the Commissioner is included as a 'regulator' in the RSA Act. [Schedule 1, item 5, new paragraph 16(c) of the RSA Act]

Tax file numbers

1.26 The Commissioner may request a member's TFN for the purposes of administering the scheme [Schedule 1, item 9, subsection 138A(1) of the RSA Act; item 18, subsection 299NA(1) of the SIS Act] and may require the quotation of the member's TFN on the form [Schedule 1, item 10, subsection 144(2A) of the RSA Act; item 19, subsection 299U(2A) of the SIS Act] .

1.27 It is not compulsory for the member to quote their TFN on the transfer request. However, the regulations may specify that failure to quote the TFN may affect whether the Commissioner can pass on the member's request to the transferring fund's trustee. [Schedule 1, item 9, subsection 138A(2) of the RSA Act; item 18, subsection 299NA(2) of the SIS Act]

1.28 Members who do not wish to disclose their TFN on the transfer request may apply directly to their fund in writing to roll-over or transfer their benefits to another fund under the current portability requirements. The quotation of their TFN is not mandatory on the standard portability form in Schedule 2A to the Superannuation Industry (Supervision) Regulations 1994 or on the fund's transfer form.

1.29 The Commissioner may disclose the member's TFN to the trustee of the transferring fund for the purposes of the scheme. [Schedule 1, item 9, subsection 138A(3) of the RSA Act; item 18, subsection 299NA(3) of the SIS Act]

1.30 The Commissioner's disclosure of the member's TFN to the transferring fund's trustee would occur when the Commissioner electronically transmits the transfer request to the trustee.

1.31 If the Commissioner discloses the member's TFN to the transferring fund's trustee, the member is taken to have quoted their TFN to the trustee for the purposes of the superannuation legislation and at the time the Commissioner discloses the TFN to the trustee. [Schedule 1, item 9, subsection 138A(4) of the RSA Act; item 18, subsection 299NA(4) of the SIS Act]

1.32 These amendments to the TFN provisions will enhance the effective administration of the superannuation system by allowing the transferring fund to better match the transfer request to their member records. It also complements other TFN provisions that allow fund trustees to use TFNs to locate member accounts and to facilitate the consolidation of multiple member accounts.

1.33 TFN use by superannuation funds is governed by the Privacy Act 1988 and the TAA 1953 to ensure member privacy is protected and to prevent unauthorised use of TFNs.

Minor amendment

1.34 Subparagraph 6(1)(a)(xii) of the SIS Act is amended to remove the reference to Division 1. Division 1 is effectively excluded by the words of paragraph 6(1)(a) of the SIS Act, 'to the extent that administration of the provisions is not conferred on the Commissioner of Taxation'. [Schedule 1, item 11, subparagraph 6(1)(a)(xii) of the SIS Act]

Application provisions

1.35 These amendments apply to benefits rolled over or transferred using the electronic portability form from the day after Royal Assent.