Supplementary Explanatory Memorandum(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)
General Outline and Financial Impact
The amendments will amend the Superannuation Guarantee (Consequential Amendments) Bill 1992 to:
- amend various Tax Acts in order to update the list of prescribed tax contained in each of those Acts to include the superannuation guarantee charge. The list of prescribed tax is used when a company is placed in liquidation or receivership to determine the entitlement of the Commissioner as an ordinary creditor to be paid out of the assets of the company available for the payment of ordinary debts. This amendment is consequential upon the proposed enactment of clause 48B of the Superannuation Guarantee (Administration) Bill 1992.
- amend the Occupational Superannuation Standards Act 1987 ("the OSS Act"):
- to change the secrecy provisions so that the Insurance and Superannuation Commissioner may give information to the public about the compliance status of funds;
- to allow the Insurance and Superannuation Commissioner to disregard a breach of the superannuation fund conditions under the OSS Act in certain limited circumstances. For example, if the breach is rectified by the trustees within 30 days of the breach being identified (provided certain notifications are given) the fund would still be complying.
- amend the Industrial Relations Act 1988 to require the Australian Industrial Relations Commission, in making a National Wage Case decision, to have regard to the superannuation contributions contemplated by the superannuation guarantee scheme.
The amendments will not have a significant impact on the revenue.
- Fringe Benefits Tax Assessment Act 1986; section 96
- Income Tax Assessment Act 1936; section 215
- Pay-roll Tax (Territories) Assessment Act 1971; section 30
- Petroleum Resource Rent Tax Assessment Act 1987; section 88
- Sales Tax Assessment Act (No l) 1930; section 32
- Tobacco Charges Assessment Act 1955; section 27
- Training Guarantee (Administration) Act 1990; section 78
- Wool Tax (Administration Act 1964; section 47
The amendments proposed by clause 48B of the Superannuation Guarantee (Administration) Bill 1992 impose certain obligations on a company receiver or receiver and manager, including an obligation to set aside assets of the company to pay the company's superannuation guarantee charge which is or may be owing. In working out the amount of assets that need to be set aside, regard is to be had to other taxes and charges that the company may owe. These are those taxes and charges which are payable by the company to the Commissioner of Taxation under the Acts listed above, ie:
- fringe benefits tax;
- income tax;
- unpaid company tax;
- trust recoupment tax;
- sales tax;
- territories pay-roll tax;
- petroleum resource rent tax;
- tobacco charge;
- training guarantee charge; and
- wool tax.
Often a company which is in receivership will have insufficient assets to meet all of its debts. Accordingly, proposed clause 48B contains a formula for calculating the pro-rata entitlement of the Commissioner as an ordinary creditor in respect of the superannuation guarantee charge to be paid out of the assets available for the payment of ordinary debts. Assets to this value are then required to be set aside by the receiver for the Commissioner.
Each of the Tax Acts listed above contains a similar provision to proposed clause 48B of the Superannuation Guarantee (Administration) Bill 1992. Each time a new Act which introduces a new tax or charge is passed, the list of taxes (prescribed taxes) in each of these Tax Acts needs to be extended. With the introduction of the superannuation guarantee charge, the section in each Tax Act which lists the prescribed taxes which are to be taken into account in determining the Commissioner's entitlement as an ordinary creditor in respect of prescribed taxes, is amended to include the superannuation guarantee charge. These amendments are consequential on the proposed enactment of clause 48B of the Bill.
Breach of the superannuation fund conditions - new subsection 12(3A)
Subsection 12(3A) requires that, in determining whether a fund is a complying superannuation fund, the Insurance and Superannuation Commissioner shall disregard a breach of a superannuation fund condition by a fund if:
- the trustees of the fund notify the Commissioner, and all employer sponsors contributing to the fund, as soon as the breach occurs; and
- the breach is rectified within a period of 30 days (or later if approved by the Commissioner).
Where the fund is unable to correct the breach, loss of compliance status may be avoided by transfer of all member benefits to another complying superannuation fund. That is, if the benefits are transferred, the first fund may still be recognised as a complying superannuation fund for income taxation purposes for that particular year of income.
Secrecy provisions - new subsection 18(2A)
The secrecy provisions currently prohibit unauthorised communication by superannuation standards officers of any protected information acquired in the course of their duties as a superannuation standards officer. The amendment to the secrecy provisions will ensure that the Insurance and Superannuation Commissioner is not prevented from making available a list (or disclosing by any other means) incorporating the most recent information available to the Commissioner about the complying status of funds.
This amendment will allow those employers and members of the public who wish to contribute to complying superannuation funds for purposes of the superannuation guarantee scheme to have access to relevant details regarding a particular fund to enable such a person to contact the fund direct.
Information to be given to Insurance and Superannuation Commissioner - section 10
The final amendments will make some minor changes to section 10 to provide that a superannuation fund established on or after 1 July 1992 must provide certain information to be prescribed by regulation to the Insurance and Superannuation Commissioner. The amendment will also allow the Insurance and Superannuation Commissioner to require different prescribed information to be provided by approved deposit funds from that required by superannuation funds.
A new section 90A will be inserted in the Act under which the Australian Industrial Relations Commission (the Commission) will, in making a decision in a National Wage Case, be required to have regard to the operation of the Superannuation Guarantee (Administration) Bill 1992 and the Superannuation Guarantee Charge Bill 1992.
The purpose of this amendment is to provide for due consideration to be given by the Commission to the superannuation contributions that must be made by employers to avoid liability for the superannuation guarantee charge.
The provision does not require the Commission to exercise its discretion in any particular way. The Commission must, however, consider whether the level of superannuation support which will result from the operation of the superannuation guarantee scheme needs to be taken into account in arriving at a decision in a National Wage Case.
The amendments will take effect on 1 July 1992.