Second Reading SpeechMr Bowen (Prospect) (Minister for Competition Policy and Consumer Affairs, and Assistant Treasurer)
That this bill be now read a second time.
The Temporary Residents' Superannuation Legislation Amendment Bill 2008 implements the government's measure to help reduce the number of lost accounts and unclaimed money in the superannuation system which can arise when temporary residents depart Australia without taking their superannuation with them.
The government is concerned by the growing amount of superannuation which has been identified as lost over the past decade. The Australian Taxation Office's 2006-07 annual report shows that the number of superannuation accounts reported on the Lost Members' Register grew from 5.7 million to 6.1 million in that income year. These inactive accounts total approximately $12 billion in assets.
While temporary residents who depart Australia are able to take their superannuation with them as a departing Australia superannuation payment, many do not do so. This contributes to the total amount of lost moneys in the system.
The amendments contained in this bill seek to address the lost account problem by requiring superannuation funds to pay the unclaimed superannuation of departed temporary residents to the Taxation Office.
The government has consulted on the measure by releasing a discussion paper in May of this year and engaging in consultation with key stakeholders on the draft legislation. The government's final policy reflects many of the suggestions made during the consultation process.
The amendments provide that the superannuation of a temporary resident will effectively become unclaimed and payable to the Taxation Office after the individual has ceased to be the holder of a temporary visa-that is, their temporary visa has been cancelled or has expired-and they have departed Australia and at least six months has passed and they have not claimed their superannuation.
Departed temporary residents will retain the ability to claim their superannuation benefits through the existing departing Australia superannuation payment process, before it becomes unclaimed.
Departed temporary residents who have not claimed their superannuation and have unclaimed superannuation paid to the Taxation Office, can claim back their money at any time. The individual-or, if they have died, their legal personal representative or beneficiary-can apply to the Taxation Office for the amount to be paid to them or to be transferred to a super fund in certain circumstances.
This provides consistent or better treatment to temporary residents compared to that in many other countries where temporary residents may be unable or limited in accessing compulsory social security contributions.
Generally, the amount that is claimed back from the Taxation Office will be subject to the departing Australia superannuation payment withholding tax. This is consistent with existing arrangements as the withholding tax already applies when a temporary resident claims their superannuation after departing Australia.
This measure will be administered by the Department of Immigration and Citizenship and the Taxation Office. The Department of Immigration and Citizenship will provide the Taxation Office with information to assist the Taxation Office in identifying departed temporary residents who have left unclaimed superannuation behind.
The Taxation Office will then issue notices to super funds identifying departed temporary residents. Funds which receive such notices will be required to report and pay any unclaimed superannuation they hold for a departed temporary resident to the Taxation Office by a certain day. The first notices are proposed to be issued in March 2009 requesting payments from funds by April 2009. In future, it is proposed that the Taxation Office will issue notices at least twice a year.
The Taxation Office will also have the ability to revoke a notice it has sent to a fund where it is appropriate in the circumstances to do so-for instance, if the individual returned to Australia on a new temporary visa prior to the six months lapsing.
The superannuation of Australian and New Zealand citizens, current holders of permanent or temporary visas, and those applying for permanent residency, will not be paid to the Taxation Office. Instead, their superannuation will remain in a super fund. Certain types of temporary visas can also be prescribed in the regulations to be excluded from the measure if it is appropriate in the circumstances to do so and to cater appropriately to any specific visa classes. For instance, retirement visa holders-subclasses 405 and 410-will be excluded from the measure so that their superannuation will remain in the fund and not be paid to the Taxation Office.
At this stage, state and territory public sector funds will not be captured by the measure although the Commonwealth will enter into discussions with state and territory governments to examine the scope to include such schemes in the future.
The Taxation Office will have the ability to refund overpayments that have been wrongly made by super funds. Individuals will also have review rights.
This measure will commence from a date to be fixed by proclamation. This will occur in sufficient time for the Taxation Office to send the first notices out to funds in March 2009 and to receive payments of unclaimed superannuation from funds in April 2009.
Full details of this measure are contained in the explanatory memorandum.
I commend the bill to the House.