House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Superannuation Contributions and Termination Payments Taxes Legislation Amendment Bill 1999

This Bill amends the Superannuation Contributions Tax (Assessment and Collection) Act 1997 to:

•

remove the requirement for the Commissioner of Taxation to determine an advance instalment of surcharge when an assessment of surcharge is made after 23 March 1999; and

•

provide for a self-assessment regime for certain superannuation providers.

This Bill also amends the Superannuation Contributions Tax (Assessment and Collection) Act 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 to settle a range of technical issues to clarify and simplify aspects of the legislation. [Item 1 of Schedules 1 and 2 provides an amended outline of the operation of the Acts]

Some of the amendments will apply retrospectively to ensure the surcharge measure applies equitably to both defined benefit fund members and to members of funds other than defined benefit funds.

The amendments are designed to clarify and simplify particular aspects of the existing law (for example, there has been some uncertainty whether superannuation funds on contributions holidays have to report surchargeable contributions given that no contributions are actually paid into a fund the effect of the amendments is that some funds will be required to resubmit reports to the Commissioner). Generally, the amendments will have a beneficial impact.

The Termination Payments Tax (Assessment and Collection) Act 1997 is also amended to maintain consistent application of assessment provisions across the surcharge Acts.

Consequential amendments are made to the Income Tax Assessment Act 1936 , the Superannuation Industry (Supervision) Act 1993 and the Taxation Laws Amendment Act (No. 3) 1997 .

Date of effect : This Act commences on the day on which it receives Royal Assent. Schedule 1 (other than items 43 to 45) is taken to have commenced on 5 June 1997. Schedule 2 (other than items 26 to 28) is taken to have commenced on 7 December 1997. Schedule 6 is taken to have commenced on 14 October 1997 immediately after the commencement of Schedule 1 to the Taxation Laws Amendment Act (No.3) 1997 .

Proposal announced : Assistant Treasurers Press Release No. 12 of 23 March 1999.

Financial impact: Defers the payment of $120 million for the 2000-2001 financial year and $10 million for later financial years by removing the requirement to determine an advance instalment. There is little, if any, financial impact from the other amendments.

Compliance cost impact: Compliance costs associated with the amendments are low.

Putting in place a self assessment regime for specified funds and removing the perceived complexity by clarifying and simplifying aspects of the legislation will aid compliance and reduce costs for superannuation providers.

The Office of Regulation Review has advised that a regulation impact statement is not required in relation to these measures.

Summary of regulation impact statement

Policy Objective

The policy objective is to enhance the overall operation and efficiency of the superannuation surcharge measure by removing the requirement for the Commissioner of Taxation to determine an advance instalment when an assessment of surcharge is made.

The amendments to remove the requirement to determine an advance instalment will benefit superannuation funds and the community and generally, reduce the administrative burden on superannuation funds.

Abbreviations

In this Explanatory Memorandum, the following terms are used:

Commissioner means the Commissioner of Taxation.

Assessment and Collection Acts means the Superannuation Contributions Tax (Assessment and Collection) Act 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 , respectively.

SCT(A & C) Act means the Superannuation Contributions Tax (Assessment and Collection) Act 1997 .

CP(A & C) Act means the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 .

TP(A & C) Act means the Termination Payments Tax (Assessment and Collection) Act 1997.

ITAA1936 means the Income Tax Assessment Act 1936.

ITAA1997 means the Income Tax Assessment Act 1997.

RSA has the same meaning as in the Retirement Savings Accounts Act1997.

ADF has the same meaning as Approved Deposit Fund in section 10 of the Superannuation Industry (Supervision) Act 1993 .

ETP has the same meaning as Eligible Termination Payment in Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act 1936 .

SCR 97/1 has the same meaning as in Item 40 of Schedule 1.