Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)General outline and financial impact
Choice of superannuation funds
Schedule 1 amends the Small Superannuation Accounts Act 1995, the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Industry (Supervision) Act 1993 to:
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- impose a penalty on employers who recoup from employees the costs from complying with their choice of fund requirements
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- specify circumstances where an employer does not have to provide employees with a standard choice form
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- clarify a number of matters, including the test for whether a defined benefit fund is in surplus, the obligation on the employer to contribute to the fund specified as the default fund on the standard choice form, that a fund chosen by an employee prior to 1 July 2005 is taken to be a chosen fund, and also a clarification of the penalty provisions
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- specify that the Australian Securities and Investment Commission will administer the 'no employer kick back' provision in the Superannuation Industry (Supervision) Act 1993
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- allow the Superannuation Holding Accounts Special Account to be an eligible choice fund for employers until 30 June 2006
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- close the Superannuation Holding Accounts Special Account to new employer deposits from 1 July 2006.
Date of effect: Items 1 and 4 commence on 1 July 2005. Items 2 and 3 and 5 to 14 commence immediately after the commencement of Schedule 1 of the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004.
Proposal announced: These measures were announced in the Minister for Revenue and Assistant Treasurer's Press Release No. 003 of 19 January 2005 and Press Release No. 016 of 14 March 2005.
Financial impact: Allowing employers to use the Superannuation Holding Accounts Special Account to meet their choice of fund obligations until 30 June 2006 will result in a non-tax revenue loss estimated at $1 million.
Compliance cost impact: Nil.
Retirement savings accounts
Schedule 2 amends the Retirement Savings Accounts Act 1997 to add a regulation making power to the 'no employer kick back' provision.
Date of effect: 1 July 2005.
Proposal announced: This measure was announced in the Minister for Revenue and Assistant Treasurer's Press Release No. 016 of 14 March 2005.
Financial impact: Nil.
Compliance cost impact: Nil.