Fringe Benefits Tax Assessment Act 1986

PART III - FRINGE BENEFITS  

Division 13 - Miscellaneous exempt benefits  

SECTION 58PB   MEANING OF APPROVED WORKER ENTITLEMENT FUNDS  

58PB(1)    
A fund is an approved worker entitlement fund if the fund:

(a) is established by or under a law of the Commonwealth, a State or a Territory for the purpose of ensuring that long service leave is paid; and

(b) is operating under that law.

Endorsed funds

58PB(2)    

A fund is also an approved worker entitlement fund if:

(a) the fund is endorsed as an approved worker entitlement fund under subsection (3); or

(b) the entity that operates the fund is endorsed for the operation of the fund under subsection (3A).

58PB(3)    

The Commissioner must endorse a fund as an approved worker entitlement fund if:

(a) the fund is entitled to be endorsed as an approved worker entitlement fund (see subsection (4)); and

(b) the fund has applied for the endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953 .

58PB(3A)    

The Commissioner must endorse an entity for the operation of a fund as an approved worker entitlement fund if:

(a) the entity is entitled to be endorsed for the operation of the fund as an approved worker entitlement fund (see subsection (4A)); and

(b) the entity has applied for the endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953 .

58PB(4)    

A fund is entitled to be endorsed as an approved worker entitlement fund if:

(a) the management of the fund (including the management of the investments of the fund) is carried out at arm ' s length from the contributors to the fund and their associates; and

(b) under the fund ' s constituting documents:

(i) no more than 5% of the total assets of the fund are to be invested in an entity controlled by a contributor or an associate of a contributor; and

(ii) the assets of the fund are not to be used to provide or facilitate any form of financial assistance, including a loan, to a contributor, a person in respect of whom contributions are made or an associate of a contributor or an associate of a person in respect of whom contributions are made; and

(c) under the fund ' s constituting documents, payments from contributions to the fund are to be made only for the following purposes:

(i) to pay worker entitlements to persons in respect of whom contributions are made, or to death benefits dependants (within the meaning of the Income Tax Assessment Act 1997 ) or legal personal representatives (within the meaning of that Act) of those persons;

(ii) to make investments to generate income from the assets of the fund;

(iii) to reimburse contributors who have paid entitlements directly to persons in respect of whom contributions are made;

(iv) to return contributions to contributors;

(v) to pay, for the benefit of a person in respect of whom contributions are made, an employment termination payment (within the meaning of the Income Tax Assessment Act 1997 ) into a complying superannuation fund (within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 ), a complying approved deposit fund (within the meaning of section 47 of the Superannuation Industry (Supervision) Act 1993 ) or a retirement savings account (within the meaning of the Retirement Savings Accounts Act 1997 );

(vi) to transfer contributions to another approved worker entitlement fund;

(vii) to pay the reasonable administrative expenses of the fund;

(viii) to pay amounts to a contributor ' s external administrator that would otherwise be payable as mentioned in subparagraph (iii) or (iv) to the contributor;

(ix) to pay interest on, or to repay, money lent to the fund; and

(d) under the fund ' s constituting documents, payments from the income of the fund are to be made only for the following purposes:

(i) a purpose mentioned in subparagraphs (c)(ii) to (ix);

(ii) to make payments to contributors to the fund;

(iii) to make payments to other persons where the payment is specified in subsection (5); and

(e) under the fund ' s constituting documents:

(i) an account must be kept for each person in respect of whom contributions to the fund are made; and

(ii) the account must be kept in a manner that enables entitlements in respect of the person to be calculated; and

(f) the fund, or the entity that operates the fund, has an ABN.

58PB(4A)    

An entity is entitled to be endorsed for the operation of a fund as an approved worker entitlement fund if the fund is entitled to be endorsed as an approved worker entitlement fund.

58PB(5)    
A payment made by a fund to a person in the following circumstances is specified for the purposes of subparagraph (4)(d)(iii):

(a) a contribution has been made to the fund in respect of the person; and

(b) the contribution would be an exempt benefit under section 58PA if the fund were an approved worker entitlement fund; and

(c) either:

(i) the payment is of a worker entitlement the contribution for which would be an exempt benefit under section 58PA if the fund were an approved worker entitlement fund; or

(ii) the payment is of some kind other than a worker entitlement.