Second Reading SpeechMr Shorten (Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations)
That this bill be now read a second time.
This bill amends various superannuation laws to implement a range of improvements to Australia's superannuation laws. Schedule 1 reinstates the temporary tax relief for merging superannuation funds, with some modifications. The tax relief will permit eligible entities to roll over unrealised gains or losses on revenue and capital assets and allow the transfer of realised revenue losses and capital losses. This will ensure that certain tax considerations are not an impediment to superannuation funds seeking to merge and consolidate in response to the Stronger Super reforms, which will deliver benefits to members from the efficiency generated by the reforms.
Schedule 2 amends the Superannuation Industry (Supervision) Act 1993 to introduce a registration regime for auditors of self-managed superannuation funds.
It delivers on a key part of the government's 23 June 2012 announcement of a new SMSF auditor registration framework.
The Government's Super System Review found that, while some approved auditors are subject to minimum competency standards through their professional association, not all approved auditors are subject to the same minimum competency standards, nor are they subject to the same enforcement actions.
Self-managed superannuation funds-SMSF sector-are the largest sector in the superannuation industry, at some $400 billion. The members of these funds are advised by a range of experts including lawyers, financial planners and accountants. A key role is played by the 11,000 or so SMSF auditors. They play a vital role in maintaining the integrity of a major sector of the superannuation system. Each year, SMSF trustees are required to appoint an approved auditor to audit the financial reports and the operations of the fund. The audit is required to assess the fund's overall compliance with the law and the fund's financial statements. The annual audit provides assurance to the government and the general public that SMSFs are complying with the sole purpose test, something that is particularly important given the amount of retirement savings held in SMSFs.
The amendments will introduce a registration regime for SMSF auditors, where auditors will be required to meet initial and ongoing requirements relating to their qualifications, competency and independence. Transitional arrangements are being developed as part of the regulations to give recognition to highly experienced, competent auditors, including registered company auditors.
The Australian Securities and Investments Commission will be the registration body for SMSF auditors and will be responsible for setting competency standards and taking enforcement action against auditors who have not met their obligations. The Australian Taxation Office will monitor auditors' compliance with relevant standards and refer any non-compliant auditors to the Australian Securities and Investments Commission for consideration of enforcement action. SMSF auditor registration will increase the assurance that can be placed on the SMSF audit by ensuring that SMSF auditors are competent to detect and report contraventions of the superannuation law. The legislation has been put together in consultation with members of the joint accounting bodies.
Schedule 3 amends the tax law to expand the existing reporting obligation for superannuation providers. Under the revised obligations, superannuation providers will be required to provide statements for all members who held an interest in the superannuation plan at any time during the reporting period, not just those for whom contributions are received, as is presently the case. The amendments will allow the ATO to display more comprehensive superannuation information to individuals and to facilitate the consolidation of inactive accounts with a low balance. To the extent this enables individuals to locate lost accounts, it will help improve individuals' retirement savings.
Schedule 4 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 amends the Superannuation Industry (Supervision) Act 1993, the SI(S) Act, and the Retirement Savings Accounts Act 1997, the RSA Act, to improve the quality of information in the superannuation system and to facilitate fully effective e-commerce.
As part of the government's SuperStream package of reforms, a number of measures were announced to improve the efficiency of the superannuation system. The government legislated standards for superannuation transactions in June this year, and this legislation will ensure the effectiveness of these standards. It has been estimated that the Australian superannuation industry processes more than 100 million transactions annually. The potential gains to the system from effective e-commerce and superannuation are truly significant.
Currently, poor-quality information on members leads to difficulties in allocating contributions, unnecessary duplicate accounts and a large amount of lost and unclaimed superannuation. This legislation supports the industry in achieving the goals of effective e-commerce and improving information quality.
The Commissioner of Taxation will provide two key services:
- a central register containing accurate and secure details of superannuation funds, which is critical to effective e-commerce, and
- a tax file number validation service which can be used by employers and trustees to ensure the information they hold for their employees and members is correct.
It is estimated that the SuperStream proposals could save the industry and therefore members of superannuation funds up to $1 billion per year. Much of the benefit of these savings should flow through to members in the form of lower fees and charges.
Further details are contained in the explanatory memorandum. I commend this bill to the House.