Bills Digest no. 95 2006–07
Superannuation Legislation Amendment (Simplification)
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Legislation Amendment (Simplification) Bill
7 February 2007
House: House of
either with Royal Assent,
on 1 July 2007 or immediately after the commencement of other
Acts to which this Bill relates. These Acts are:
- Tax Laws Amendment (Simplified Superannuation) Act 2007 (for
changes in Schedule 1)
- Tax Laws Amendment (2006 Measures No. 7) Act 2007 (for changes
in Schedules 2 and 4)
- Bankruptcy Legislation Amendment (Superannuation Contributions)
Act 2007 (for changes in Schedule 3).
The Bills on which the latter three Acts are
based are currently before Parliament.
The changes in
this Bill are related to the proposed changes in the Tax Laws
Amendment (Simplified Superannuation) Bill 2006 (Main Bill).
This Bill seeks to simplify the current raft
of complex tax arrangements and remove restrictions that apply to
superannuation benefits. The aim of these changes is to provide
retirees with greater flexibility as to how and when they draw down
their superannuation benefits.
This Bill also rewrites superannuation
taxation provisions from the Income Tax Assessment Act
1936 (ITAA36) into the Income Tax Assessment Act 1997
(ITAA97). These changes will consolidate the main provisions of the
superannuation legislation into one place and redraft existing
provisions into a contemporary and consistent style.
This Bill makes:
- consequential amendments necessary due to the rewrite of
superannuation taxation law
- minor additions to the laws giving effect to the Simplified
Superannuation reforms, and
- amendments to enable future flows of unclaimed superannuation
monies to be paid to the Australian Government.(1)
This Bill amends a significant number of other
Acts in support of these objectives. It repeals the Income Tax
(Superannuation Payments Withholding Tax) Act 2002.
The changes made by these Bills are
consequential ones flowing from the passage of the Tax Laws
Amendment (Simplified Superannuation) Bill 2006 (Main Bill) now
before Parliament. As such, the background to these changes is set
out in the Library s Bills Digest on the Tax Laws Amendment
(Simplified Superannuation) Act 2006 and the Bankruptcy Legislation
Amendment (Superannuation Contributions) Act
These changes were first announced in the
Budget speech for the 2006 07 budget.(3) Since then the
Government has made significant changes to the first announced
proposals in response to consultation with both industry and the
wider public. The announcement of these later changes was given in
a series of press releases from the Treasurer and Assistant
Treasurer and Minister for Revenue during the latter half of
These comments are set out Library s Bills
Digest on the Tax Laws Amendment (Simplified Superannuation) Bill
2006 and the Bankruptcy Legislation Amendment (Superannuation
Contributions) Bill 2007.(5)
Arguments for and against the provisions of
the overall superannuation simplification package are set out
Library s Bills Digest on the Tax Laws Amendment (Simplified
Superannuation) Bill 2006.(6)
Political comments on the overall
superannuation simplification package are set out in Library s
Bills Digest on the Tax Laws Amendment (Simplified Superannuation)
There are no financial implications arising
from this particular Bill. The financial implications of the
overall superannuation simplification package are discussed in the
Library s Bills Digest on the Tax Laws Amendment (Simplified
Superannuation) Act 2006.(8)
The overwhelming majority of the provisions of
this Bill are either:
- integrity measures to ensure the effectiveness of the provision
of the Tax Laws Amendment (Simplified Superannuation) Bill 2006
(currently before Parliament)
- corrections of drafting errors in the above Bill and in current
- useful, but very minor, changes to current superannuation
legislation or the provisions of the main Bill.
Accordingly, few of the provisions in this
Bill enact new policy (for a new policy item, see the discussion in
relation to Schedule 3 under Main Provisions below). The
Explanatory Memorandum provides sufficient comment on these
The Main Bill contains provisions that require a
superannuation fund member, or their employer, to quote the member
s tax file number to that member s superannuation fund
(item 27, Schedule 1, Main
Item 117, Schedule
1 of this Bill changes new section 202DHA
to ensure that the ability of an employer to quote a tax file
number to a superannuation provider is not retrospective, that is
this provision does not apply tax file numbers given to an employer
before 1 July 2007.
This change may require all current employees
to either again quote their tax file numbers to their employer
after 1 July 2007 or authorise an employer to quote their tax file
numbers to the superannuation provider. Such a procedure could bee
seen as clumsy and inefficient.
Schedule 3 of this Bill contains
provisions that enact significant new policy items.
Item 54 of this Bill requires
that a person, who becomes a trustee of a Self Managed
Superannuation Fund (SMSF) on or after 1 July 2007, must sign a
deceleration that they understand the duties of this position.
This is a new requirement for SMSF trustees.
Significant penalties apply if they fail to meet this requirement
no later than 21 days after becoming a SMSF trustee. Further,
significant penalties also apply if they fail to retain such a
declaration for at least 10 years.
Currently, the number of SMSFs is growing at
an extremely fast rate. Press comment suggests that this is due to
the generous transitional provisions applying to superannuation
contributions in the Main Bill.(9) Further, The
Australian Taxation Office has expressed concern about the level of
experience that SMSF trustees have before taking up their
Many SMSFs are set up with the assistance of
specialised financial planners or accountants. Often these
advisers/accountants will undertake most if not all the
administrative tasks and investment decision making in return for a
fee. However, they are not responsible for the decisions made, the
trustees are. Requiring new SMSF trustees to sign such a
declaration sheets home the responsibilities of being a SMSF
trustee. Further, it potentially removes the defence of ignorance
from the trustee if the administration or investment decisions of
the SMSF cuts across the legal requirements applying to such
Items 58 and
59 of Schedule 3 of this Bill
amend section 18 of the Superannuation
(Unclaimed Money and Lost Members) Act 1999. The effect of
these items is that the ability for a superannuation fund provider
to pay lost or unclaimed superannuation monies to a State based
authority (i.e. a State Receiver of unclaimed Monies) is restricted
only to a State of Territory government superannuation provider.
All private sector superannuation providers will have to pay any
lost or unclaimed superannuation money, in their keeping on or
after 1 July 2007, to the Commonwealth.
The Hon. Peter Costello MP, Treasurer, Explanatory Memorandum to
the Superannuation Legislation Amendment (Simplification) Bill
2007, the Income Tax Amendment Bill 2007, the Income Tax (Former
Complying Superannuation Funds) Amendment Bill 2007, the Income Tax
(Former Non-Resident Superannuation Funds) Amendment Bill 2007 and
the Income Tax Rates Amendment (Superannuation) Bill 2007, 7
February 2007, p. 3. This document hereafter known as the EM.
Leslie Nielson, Tax Laws Amendment (Simplified Superannuation)
Bill 2006 Bills Digest, no. 65, Parliamentary Library,
Canberra, 2006 07. and Bankruptcy Legislation Amendment
(Superannuation Contributions) Bill 2007 , Bills Digest,
no. 91, Parliamentary Library, Canberra, 2006 07.
The Hon. Peter Costello MP, Treasurer, Second Reading Speech,
Appropriation Bill No. 1 2006 07, House of Representatives,
Debates, 9 May 2006, p. 57.
Treasury, A Plan to Simplify and Streamline Superannuation -
Detailed Outline, 9 May 2006, A Plan to Simplify
and Streamline Superannuation Outcome of Consultation, 5
September 2006, The Hon. Peter Costello MP, A Plan To Simplify and
Streamline Superannuation Transitional Issues That Apply
Immediately , Media Release, No 57 of 2006, 14 June 2006.
Simplified Superannuation Final Decisions , Media Release, No 93 of
2006, 5 September 2006.
Nielson, Tax Laws Amendment (Simplified Superannuation) Bill
2006 , op. cit.
Nielson, Tax Laws Amendment (Simplified Superannuation) Bill,
John Wasilliev, ATO warns on super fund risks , Australian
Financial Review, 12 February 2007, p. 1, 12.
John Wasilliev, ibid.
14 February 2007
Bills Digest Service
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Australian Parliament using information available at the time of
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of the Parliamentary Library, nor do they constitute professional
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© Commonwealth of Australia 2007
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Published by the Parliamentary Library, 2007.
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