Further Supplementary Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello MP)
Explanation of amendments
1.1 The amendments extend the fringe benefits tax (FBT) exemption provided under the transitional arrangements to certain contributions made to existing worker entitlement funds during the FBT year beginning on 1 April 2005.
1.2 Contributions to an existing worker entitlement fund or an approved worker entitlement fund during the FBT year beginning on 1 April 2005 will be exempt from FBT.
1.3 Contributions to an existing worker entitlement fund are exempt when they are made in accordance with existing industrial practice, and the contributions are made for either the purposes of ensuring that an obligation to make leave payments (including payments in lieu of leave) or payments when an employee ceases employment is met, or for the reasonable administrative costs of the fund.
1.4 The purpose of the extension of the transitional arrangements is to provide certainty to employers making certain contributions to existing worker entitlement funds while they put in place new arrangements to comply with the requirements of the FBT exemption.