The Parliament of the Commonwealth of Australia

Explanatory Memorandum

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

Chapter 4 - Amendments

Overview

4.1 Schedules 1, 2 and 3 to this Bill set out amendments to various Commonwealth legislation.

Purpose of the provisions

4.2 The purpose of the items of the Schedules is to ensure that Commonwealth legislation is amended as a consequence of the Superannuation (Unclaimed Money and Lost Members) Consequential and Transitional Act 1999 (the Act) and the consolidation of various provisions in Commonwealth legislation into the Superannuation (Unclaimed Money and Lost Members) Act 1999 (New Act) and to correct a drafting error.

Schedule 1 Amendments

4.3 Schedule 1 to this Bill amends 7 Acts as a consequence of the New Act.

Financial Transaction Reports Act 1988

4.4 Subsection 18(4B) of the Financial Transaction Reports Act 1988 is amended to update references to unclaimed money provisions of the Retirement Savings Accounts Act 1997 (the RSA Act) repealed by this Bill with references to the New Act. [Items 1 and 2]

Income Tax Assessment Act 1936

4.5 Section 27A of the Income Tax Assessment Act 1936 (ITAA 1936) provides interpretation provisions for the tax treatment of superannuation payments.

4.6 Subsections 27A(3B) and (3C) of the ITAA 1936 are amended to update references to unclaimed money provisions of the Superannuation Industry (Supervision) Act 1993 (the SIS Act) repealed by this Bill with references to the New Act and to include superannuation payments from State and Territory unclaimed money registers within the definition of eligible termination payment (in subsection 27A(1) of the ITAA 1936) consistent with the current inclusion in that definition of superannuation payments from the Commonwealth unclaimed money register [item 3] . This ensures that superannuation payments from State and Territory registers are subject to the same taxation arrangements applying to other superannuation payments from complying superannuation funds, retirement savings accounts and the Commonwealth unclaimed money register.

4.7 This Bill inserts new subsections 27A(3D) and (3E) into the ITAA 1936for the avoidance of doubt that the definition of eligible service period (in subsection 27A(1) of the ITAA 1936) of a person with unclaimed money does not include the period in which the money is held by an unclaimed money authority as unclaimed money. A persons eligible service period is relevant under the ITAA 1936 for the purpose of calculating a persons pre-July 1983 and post-June 1983 components which are used for the purpose of calculating tax in relation to eligible termination payments. [Item 4]

4.8 Section 27CC of the ITAA 1936 is amended by this Bill to update references to unclaimed money provisions of the SIS Act repealed by this Bill and the former administrator of those provisions the Insurance and Superannuation Commissioner, with references to the New Act and the administrator of that Act, the Commissioner of Taxation. The amendments also ensure that as with payments of unclaimed money to the Commonwealth unclaimed money register, payments of unclaimed money to State and Territory registers do not trigger tax consequences. [Items 5 and 6]

4.9 Sub-subparagraph 140M(1)(a)(i)(B) of the ITAA 1936 is amended to update references to unclaimed money provisions of the SIS Act repealed by this Bill and the former administrator of those provisions the Insurance and Superannuation Commissioner, with references to the New Act and the administrator of that Act, the Commissioner of Taxation. The amendments also ensure that as with payments of unclaimed money from the Commonwealth unclaimed money register, payments of unclaimed money of not more than $5,000 from State and Territory registers will not be required to be reported to the Commissioner of Taxation for reasonable benefit limits purposes. This is consistent with existing sub-subparagraph 140M(1)(a)(i)(B) of the ITAA 1936 and eases the administrative burden on State and Territory registers by recognising that the majority of payments from unclaimed money registers are small amounts. [Item 7]

4.10 Sections 202 and 202DH of the ITAA 1936 are amended to update references to unclaimed money provisions of the SIS Act and the RSA Act repealed by this Bill with references to the New Act. The amendments also extend the use of tax file numbers (TFNs) to the Commonwealth lost members register and unclaimed money paid to State and Territory unclaimed money registers. Part 25A of the SIS Act and Part 11 of the RSA Act currently authorise the Commonwealth unclaimed money register and superannuation providers to use TFNs for superannuation purposes. [Items 8 to 11]

Retirement Savings Accounts Act 1997

4.11 This Bill repeals Part 8 of the RSA Act (which deals with unclaimed money in retirement savings accounts) and makes consequential amendments as a result of the consolidation of the provisions of Part 8 into the New Act. [Items 12 to 35]

Small Superannuation Accounts Act 1995

4.12 This Bill amends the Small Superannuation Accounts Act 1995 to update references to unclaimed money provisions of the SIS Act repealed by this Bill and the former administrator of those provisions the Insurance and Superannuation Commissioner, with references to the New Act and the administrator of that Act, the Commissioner of Taxation. [Items 36 to 39]

Superannuation Act 1976 and Superannuation Act 1990

4.13 This Bill amends the Superannuation Act 1976 andthe Superannuation Act 1990 to recognise the consolidation of the provisions of Part 22 of the SIS Act into the New Act and to update references to section 225 of the SIS Act which is repealed by this Bill with references to the New Act. [Items 40 to 43]

Superannuation Industry (Supervision) Act 1993

4.14 This Bill repeals Part 22 of the SIS Act (which deals with unclaimed money in regulated superannuation funds and approved deposit funds) and makes consequential amendments as a result of the consolidation of the provisions of Part 22 into the New Act. [Items 44 to 74]

Taxation Administration Act 1953

4.15 This Bill amends sections 8WA and 8WB of the Taxation Administration Act 1953 (TAA 1953) as a consequence of amendments made by this Bill to section 202 of the ITAA 1936 to allow TFNs to be used for the purposes of the Commonwealth lost members register and unclaimed money paid to State and Territory unclaimed money registers. Whenever a new purpose is added to the purposes for which TFNs may be used (which are set out in section 202 of the ITAA 1936), consequential amendments are required to sections 8WA and 8WB of the TAA 1953 to make the use of TFNs for that purpose lawful. [Items 75 and 76]

Schedule 2 Amendments relating to the enactment of the Public Service Act 1999

4.16 Schedule 2 to this Bill makes consequential amendments to the New Act on the commencement of the Public Service Bill 1999 which replaces the Public Service Act 1922 by replacing references and the terminology of the Public Service Act 1922 with those of the Public Service Act 1999 . [Items 1 and 2]

Schedule 3 Other amendments

4.17 Schedule 3 to this Bill remedies a drafting error which resulted in the insertion of 2 paragraph (k) s into section 202 of the ITAA 1936. Consequential amendments are also made to sections 8WA and 8WB of the TAA 1953 as a result of the correction. [Items 1 to 6]

4.18 Schedule 3 repeals the first occurring paragraph (k) (which relates to sections 900AP and 900AQ of the Social Security Act 1991 ) as the paragraph is now redundant and renames the second occurring paragraph (k) (which relates to the Retirement Savings Accounts Act 1997 ) as paragraph (ka) to avoid confusion with the former 2 paragraph (k) s.

4.19 Schedule 3 has been divided into 2 Parts according to the relevant commencement time of the provisions. Part 1 contains provisions which commence at the same time as the Retirement Savings Account (Consequential Amendments) Act 1997 (the Act which on 2 June 1997 inserted the second occurring paragraph (k)). Part 2 contains provisions which commence on Royal Assent of this Bill.

4.20 The effect of Schedule 3 is to repeal the first occurring paragraph (k) with effect from Royal Assent of this Bill and correct the drafting error with effect from the date of the drafting error (2 June 1997).