House of Representatives

Financial Sector Reform (Amendments and Transitional Provisions) Bill (No. 1) 1999

Explanatory Memorandum

(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)

10 Schedule 7 - Consequential Amendments of Acts

The amendments in Schedule 7 amend references to 'friendly societies', 'credit unions' and 'building societies' in Commonwealth legislation where necessary and appropriate. The amendments in Schedule 7 are consequential to the amendments contained in this Bill and the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 which provide for the transfer of regulatory responsibility for friendly societies, credit unions and building societies from the States and Territories to the Commonwealth. These amendments contain no new policy and simply ensure that the Government's policy in relation to these financial institutions is implemented in other Commonwealth legislation.

This Schedule also provides 18 months for building societies, credit unions and friendly societies to obtain any necessary approvals under the Financial Sector (Shareholdings) Act 1998 .

Another matter addressed in this Schedule is the taxation treatment of friendly societies. Apart from changing the definition of 'friendly societies' in a manner consistent with the consequential amendments made in other Acts, amendments are being made to the Income Tax Assessment Acts 1936 and 1997 to achieve the following:

·
continue to apply Division 8A to the life insurance business of friendly societies; and
·
to provide appropriate tax treatment for RSA business of friendly societies (by becoming life insurance companies under the Life Insurance Act, friendly societies will be able to seek approval to be an RSA institution under the Retirement Savings Account Act 1997 ). The taxation rates for this business will be set in the accompanying Income Tax Rates Amendment (RSAs Provided by Registered Organizations) Bill 1999.

Commencement

10.1 Schedule 7 commences on the transfer date, as defined in clause 2 of this Bill, except as specified.

10.2 Items 43 and 44 of Schedule 7 commence either on the proclamation of Part IV of the Financial Corporations Act 1974 or the transfer date, whichever occurs later.

1 Item 118 of Schedule 7 commences either immediately prior to the commencement of section 17 of the proposed Life Insurance (Conduct and Disclosure) Act 1999 or the transfer date, whichever occurs later.

2 Item 206 of Schedule 7 will not commence if the proposed Assistance for Carers Legislation Amendment Act 1999 commences on or before the transfer date.

3 Items 205 and 207 of Schedule 7 commence either immediately after the commencement of the proposed Assistance for Carers Legislation Amendment Act 1999 or the transfer date, whichever occurs later.

References to 'building societies' and 'credit unions'

Items 1 -18, 22 - 41, 43, 44, 46 - 52, 54 - 58, 106, 107, 109, 110, 113, 116, 119 -121, 123 -146, 149 - 152, 154 - 233 and 236 - 247

4 The proposed consequential amendments contained in the above items delete or amend references to 'credit union' and 'building society' (or equivalent). In these circumstances, the references will be redundant once the transfer of regulatory responsibility for these financial institutions is complete, as credit unions and building societies (or equivalent) will be regulated under the Banking Act as ADIs rather than the State and Territory based FI Code. ADIs cover those institutions currently licensed as banks, any other body corporate that APRA licenses to take deposits; and upon agreement to their transfer, credit unions and building societies. It should be noted that these amendments have been made, where appropriate, to reflect that cooperative societies will continue to be subject to State and Territory legislation and will not be classified as ADIs.

References to 'friendly societies'

Items 19 -21, 42, 53, 108, 111, 112, 114, 115, 117, 118, 122, 147, 148, 153, 234 and 235

10.1 The proposed amendments contained in the above items delete or amend references to 'friendly society' where occurring. This is as a consequence of the new arrangements whereby friendly societies that conduct life insurance business will be regulated under the Life Insurance Act, rather than the State and Territory based FS Code.

Financial Sector (Shareholdings) Act 1998

10.2 The proposed amendments to the Financial Sector (Shareholdings) Act 1998 contained in item 45 will provide state regulated entities transferring to the Commonwealth regime that are in breach of that Act a period of 18 months to apply to the Treasurer for approval under that Act.

10.3 Proposed item 45 provides that where a transfer or engagements or a merger takes effect on a date after the transfer date in accordance with the FI Code or the FS Code of a State or Territory, and the transfer or merger would result in a person holding a stake exceeding 15 per cent in a particular financial sector company, then the Treasurer is taken to have given an approval under section 14 for the person to hold the same percentage stake in the company. The approval is taken to specify a period of 18 months from the date of effect during which it remains in force.

Taxation matters

Items 59 - 105

10.4 Appendix A to this schedule provides detailed notes on amendments to the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 .

Acts affected

10.5 This Bill will amend the following Acts to give effect to the second stage of the Government's Financial Sector Reform package as outlined above:

·
Bankruptcy Act 1966
·
Cheques Act 1986
·
Child Care Payments Act 1997
·
Child Support (Registration and Collection) Act 1988
·
Commonwealth Inscribed Stock Act 1911
·
Debits Tax Administration Act 1982
·
Defence Force Retirement and Death Benefits Act 1973
·
Employment Services Act 1994
·
Farm Household Support Act 1992
·
Financial Corporations Act 1974
·
Financial Sector (Shareholdings) Act 1998
·
Financial Transaction Reports Act 1988
·
Fringe Benefits Tax Assessment Act 1986
·
Health Insurance Act 1973
·
Income Tax Assessment Act 1936
·
Income Tax Assessment Act 1997
·
Insurance Act 1973
·
Insurance (Agents and Brokers) Act 1984
·
Insurance Contracts Act 1984
·
Life Insurance (Conduct and Disclosure) Act 1999
·
Military Superannuation and Benefits Act 1991
·
National Health Act 1953
·
Petroleum Resource Rent Tax Assessment Act 1987
·
Privacy Act 1988
·
Proceeds of Crime Act 1987
·
Retirement Savings Accounts Act 1997
·
Sales Tax Assessment Act 1992
·
Social Security Act 1991
·
State Grants (Housing) Act 1971
·
Superannuation Act 1976
·
Superannuation Act 1990
·
Superannuation Contributions Tax (Assessment and Collection) Act 1997
·
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997
·
Superannuation Guarantee (Administration) Act 1992
·
Taxation Administration Act 1953
·
Termination Payments Tax (Assessment and Collection) Act 1997
·
Veterans' Entitlements Act 1986
·
Wool Tax (Administration) Act 1964


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