Bills Digest no. 75 2009–10
Tax Laws Amendment (2009 Budget Measures No. 2) Bill
2009 Note: This Digest is an historical Digest,
published after the Bill was read a third time in the Senate
on
2 December 2009. The Bill was passed by both Houses
unamended.
WARNING:
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
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Date
introduced: 21 October
2009
House: House of Representatives
Portfolio: Treasury
Commencement:
The formal provisions and
Schedules 2 and 3 commence on Royal Assent. Schedule 1 commences on
either Royal Assent or the day the proposed Income Tax (TFN
Withholding Tax (ESS)) Act 2009 receives Royal Assent,
whichever occurs last. However, if that Act does not receive Royal
Assent, then Schedule 2 to the current Bill does not commence at
all.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill amends various tax and
superannuation legislation to give effect to measures contained in
the 2009 10 Budget. Particularly the Bill is designed to:
- ensure that benefits provided to employees under an employee
share scheme (ESS) are subject to income tax at the marginal rate
applicable to the employee taxpayer rather than being subject to
fringe benefits tax, and also to provide a tax concession to
encourage low and middle-income earning employees to acquire shares
under ESSs (Schedule 1)
- tighten the application of the rules in the Income Tax
Assessment Act 1997 (ITAA 1997) relating to non-commercial
losses where an individual has an adjusted taxable income of
$250 000 or more per annum so that high-income earners cannot
offset deductions from non-commercial business activities (such as
hobby farms) against their salary, wage or other income
(Schedule 2), and
- require superannuation providers to transfer the balance of
lost members accounts to the Commissioner of Taxation where the
balance is less than $200 or the account has been inactive for more
than five years (and the provider is satisfied it will never be
possible to pay an amount to the member) (Schedule
3).
The measures contained in the Bill were announced in the 2009 10
Budget.[1] However,
between the Budget announcement and the introduction of the Bill
into Parliament in October 2009, some of the measures were revised
by the Rudd Government in response to objections not only from tax
and accounting industry representatives, but from company
executives and unions affected by the proposed changes to the
current law.
For example, one of the Government s initial budget proposals
was that all discounts received by employees under ESSs would be
taxable upfront. The Australian Workers Union (AWU) welcomed this
proposal on the basis that workers participating in ESSs would not
be disadvantaged by unintended consequences of a scheme designed to
claw back the excesses of the big end of town .[2] However, the proposal was
criticised by other groups, particularly members of the finance and
accounting industry, on the bases that often share scheme
participants do not have the money to pay tax upfront, and there is
a risk that shareholders may pay too much tax on the shares if
paying tax upfront, particularly if the value of the shares falls
later on.[3] Geoff
Price, Managing Director of Computershare Plan Managers, which
operates most of the major ESSs in Australia, was reported to have
said that the plan to make all scheme participants pay tax at the
time when shares or rights are issued in an ESS is at the very
least an unintended consequence of a crackdown on tax cheats
.[4]
Both the Productivity Commission and the Australian Prudential
Regulation Authority (APRA) have suggested that the Government
should review the rules which require a taxpayer to pay tax on
shares acquired under an ESS at the time he or she leaves the
particular company s employment rather than, say, when the shares
are realised.[5] The
Productivity Commission has argued that insisting that an employee
should pay tax at the time he or she leaves his or her place of
employment, rather than when the employee actually sells the shares
(which might be a long time in the future), is a disincentive to
keep a long-term investment in the business a view shared by
partners at law and assurance firms PricewaterhouseCoopers, Corrs
Chambers Westgarth and Deloitte Touche Tohmatsu.[6]
Originally, the Rudd Government also suggested it would change
the way that shares in private companies are valued, which resulted
in a number of major companies (such as Westfarmers) either
suspending their share plans or putting the issuing of shares on
hold pending clarification.[7] Despite the Government issuing some clarification and
undertaking limited public consultation on an exposure draft of the
Bill in July 2009, various industry representatives were still
expressing strong reservations about the proposals just a day
before the current Bill was introduced in October 2009. For
example, Greg Travers, a partner in William Buck (a leading
Australian national business advisory and chartered accounting
firm) emphasised the fact that unlike large public companies, many
private companies wishing to transfer ownership to the next
generation or bring in new managers were being unfairly hit by the
uncertainty . He explained the ramifications for small private
companies as follows:
the tax concessions are going to be too significant. If I get
shares in BHP [Billiton] I can sell on the market; if I get shares
in XYZX Pty Ltd, there is not a market to sell on. I ve got no
ability to sell to fund that tax liability so I ve got a real cash
cost but with no mechanism to fund it.[8]
Mr Travers went on to say: The valuation process drives the tax
outcomes and adverse tax outcomes can undermine an otherwise
effective succession plan or management incentive arrangement
.[9] In the event,
the Bill provides that, if (for a number of reasons) it is not
appropriate to use the ordinary market value of shares in a
particular case, then the Income Tax Assessment Regulations 1997
may specify a specific amount that taxpayers must use instead of
the market value in relation to the particular share.[10] The Explanatory
Memorandum explains that the existing rules in relation to unlisted
rights should be replicated in those regulations as an interim
measure until the Board of Taxation completes its review on how
best to determine the market value of employee share scheme
benefits .[11]
An employee share scheme is a scheme
under which interests (in the form of shares or rights, etc) in a
company are provided by the company to its employees or their
associates.[12]
The shares are offered to the employee at a discount (when compared
with the market value of the shares), but the discount must usually
be included in the employee s assessable income in the year of
income when the share or right is acquired.[13] The employee must acquire the shares
in respect of, or for or in relation directly or indirectly to any
employment of the taxpayer (or his or her associate) or any
services provided by the taxpayer (or his or her
associate).[14]
In order to qualify for the concessions that currently appear in
Division 13A of the Income Tax Assessment Act 1936 (ITAA
1936), a share in a company must meet all of the six conditions set
out in section 139CD, which are:
- that the share or right is acquired by a taxpayer under an
employee share scheme
- that the company is the employer of the taxpayer or a holding
company of the employer of the taxpayer
- that all the shares available for acquisition under the scheme
are ordinary shares and all the rights available for acquisition
under the scheme are rights to acquire ordinary shares
- that, at the time the share was acquired, at least 75 per cent
of the permanent employees of the employer were, or at some earlier
time had been, entitled to acquire:
- shares or rights under the scheme or
- shares or rights in the employer, or a holding company of the
employer, under another employee share scheme
- that, immediately after the acquisition of the share or right,
the taxpayer does not hold a legal or beneficial interest in more
than five per cent of the shares in the company, and
- that, immediately after the acquisition of the share or right,
the taxpayer is not in a position to cast, or control the casting
of, more than five per cent of the maximum number of votes that
might be cast at a general meeting of the company.
The general rule is that the discount is included in the
taxpayer s assessable income in the year of income when the share
or right is acquired.[15] However, there are three main exceptions to this
rule:
- the discount is not included for any period when the taxpayer
is a non-resident who received the share or right in respect of, or
related to, the taxpayer s engagement in foreign service[16]
- if the taxpayer acquired the share or right in anticipation of
becoming an employee of the company in question, the discount is
not usually included in the taxpayer s assessable income until the
year of income when the person actually becomes an
employee,[17]
and
- if the share or right is a qualifying share or right, and the
taxpayer has not made an election under section 139E in
relation to the share or right, then the discount is included in
the taxpayer s assessable income in the year of income when the
cessation time occurs.[18]
Under section 139E, a taxpayer may elect to include the
discount in his or her assessable income in the year the share or
right is acquired. In this case, the taxpayer includes the value of
the discount in his or her income tax return as assessable income
for the year of income the shares or rights are acquired. Any
capital gain made on the disposal of the shares or rights later on
is subject to capital gains tax (CGT) although a 50 per cent
discount may apply if the shares were acquired after 21 September
1999 and are owned for more than 12 months.
If an election is made under section 139E and the exemption
conditions in section 139CE are satisfied, the taxpayer only
includes the value of the discount in his or her assessable income
where the total value of the discount exceeds $1000.[19] This is sometimes
referred to as the upfront concession . Even if the taxpayer has
not formally made an election, he or she is taken to have made an
election if the value of the discount is $1000 or less.
If the taxpayer elects to defer the taxation of the discount,
there is no $1000 exemption. In the case of the tax-deferred
concession , the taxpayer includes not only the original value of
the shares, but also any increase in value between the time of
acquisition and the cessation time, in his or her assessable
income. In this situation, the CGT discount is not available, but
CGT is only payable if the shares or rights are not sold within 30
days of the cessation time. If CGT is payable, the taxpayer may be
able to take advantage of the CGT discount.[20]
Section 139CE sets out the exemption conditions that must be
satisfied for section 139BA ( the upfront concession ) to apply to
a share acquired under an employee share scheme:
- that the scheme did not have any conditions that could result
in any recipient forfeiting ownership of shares or rights acquired
under it
- that the scheme was operated so that no recipient would be
permitted to dispose of a share or right (the scheme share or
scheme right) acquired under it, or of a share acquired as a
result of a scheme right, before the earlier of the following
times:
- the end of the period of 3 years after the time of the
acquisition of the scheme share or scheme right
- the time when the taxpayer ceased, or first ceased, to be
employed by the employer,[21] or
- that both the employee share scheme and any scheme for the
provision of financial assistance in respect of acquisitions of
shares or rights under the employee share scheme are operated on a
non-discriminatory basis.[22]
The methods for calculating the market value of a share or right
are set out in subdivision F of Division 13A. The methods vary
depending on a number of factors, including whether the share is
listed on a stock exchange, and whether one is dealing with actual
shares or merely options (or rights ) to acquire shares, and the
timeframes in which one can exercise the option.[23]
Where fringe benefits tax (FBT) would ordinarily apply, the
discount is generally regarded as a property fringe benefit on
which tax is payable under Division 11 of Part III of the
Fringe Benefits Tax Assessment Act 1986. However, in order
to avoid the possibility of double taxation (that is, paying tax on
the same benefit twice), that Act excludes from the assessment of
FBT any discount already assessed under Division 13A of the ITAA
1936.[24]
On 23 June 2009, the Senate referred the operation of ESSs in
Australia to the Economics References Committee for inquiry and
report by 17 August 2009.[25] Specifically, the Committee was tasked with
examining:
- the structure and operation of employee share schemes;
- the benefits of employee share schemes;
- the taxation issues relating to compliance of employers and
employees participating in employee share schemes;
- the recent announcement of proposed changes to the treatment of
employee share schemes, the background to these changes,
consultation undertaken to develop these changes and the
anticipated impact of these changes on employees, employers and
Australian business generally;
- the rules governing employee share schemes in other
countries.[26]
The Committee produced a comprehensive report, including a
dissenting report by Australian Labor Party senators. It made two
recommendations. The first was that the Australian Bureau of
Statistics should conduct a survey of ESSs in Australia every five
years, including collecting data on issues including:
- the number and type of ESSs
- the number, size and industry of companies offering these
schemes
- the number of employees and equity held by them
- a breakdown of employees by occupation, educational level and
wage
- the reasons for offering and participating in the scheme
- any perceived effects and effectiveness of the schemes for both
employers and employees
- any perceived barriers in the take-up of the schemes, and
- a breakdown of general employee (broad-based) versus executive
(narrow) schemes in terms of the number of shares offered, number
of participants and equity held.
Further, it recommended that the Rudd Government should delay
the introduction of the ESS tax legislation until it had considered
the much-awaited reports of the Productivity Commission (into
executive remuneration, including ESSs), the Board of
Taxation[27] and
the Henry Review.[28] However, that recommendation was not taken up by the
Government, which introduced the current Bill (and the related
Income Tax (TFN Withholding Tax (ESS)) Bill 2009) on 21 October
2009, well before any report by the named reviews is due to be
published.[29]
Many commentators (as reported in the media) queried the need to
rush the current legislation through Parliament. Instead they
recommended a more restrained and considered approach to the
issues, having particular regard to the wide-ranging and in-depth
reviews that the Government itself initiated but which are yet to
report their findings and recommendations. For example, in October
2009, Yasser El-Ansary, Tax Counsel at the Institute of Chartered
Accountants, suggested, in light of the Productivity Commission s
draft report, that the Parliament is likely to have to revisit the
issues contained in the Bill, particularly after the Productivity
Commission publishes its final report in December 2009.[30] In this regard, it
should be noted that in the case of some amendments, the Government
itself recognises that it may need to amend the law again following
the publication of major government reviews into executive
remuneration and taxation law.[31]
In the event, the Bill was introduced in the House of
Representatives on 21 October 2009 and read a third time on 16
November 2009. It was then introduced into the Senate on 17
November 2009 and passed unamended on 2 December 2009. It was not
the subject of robust debate.[32]
On 2 December 2009, the Institute of Chartered Accountants
welcomed the passage of the legislation, with Mr El-Ansary saying:
These laws finally deliver certainty to businesses, which can now
make fully informed decisions about the remuneration packages of
their employees .[33] He did, however, also say that the Institute would
continue to work with the government to address residual issues
such as the deferred taxing point for options, limitations around
salary sacrifice arrangements and the realisation of tax
liabilities for employees who cease employment . He also drew
attention to the need for the legislation to accord with the
findings of the Productivity Commission due later this month,
saying:
The government has committed to ensuring the new tax rules work
in harmony with the findings of the Productivity Commission into
director and executive remuneration, due later this month.
Hopefully that report will recommend further adjustment of the tax
laws to appropriately deal with these residual issues [34]
On 26 June 2009, the Treasury released an exposure draft of the
measures in Schedule 2 to the Bill relating to non-commercial
losses (or hobby farms ) for public comment.[35] The provisions contained in the draft
are ostensibly the same as those contained in Schedule 2 to the
Bill as introduced into Parliament although there are some minor
changes to the wording and formatting of some provisions. Further,
the Bill as introduced into Parliament provides that an application
for the Commissioner of Taxation to exercise his or her discretion
(and allow non-commercial losses to be offset against other income
even though certain tests are not met) must now be made in an
approved form. This requirement gives applicant taxpayers a clear
picture of what evidence they should provide in support of their
applications.
On 29 October 2009, the Senate referred Schedule 2 to the Bill
(dealing with non-commercial losses) to its Economics Legislation
Committee for inquiry and report by 16 November 2009.[36] Schedule 2 is designed
to ensure that individuals with an adjusted taxable income greater
than $250 000 can only deduct excess expenses from their
non-commercial business activities (such as hobby farms ) against
future income from those activities. The Treasurer and Assistant
Treasurer explained the rationale behind the measures in a joint
press release on 12 May 2009:
the Rudd Government will close a tax loophole that allows a
relatively small number -around 11,000 - of mostly high wealth
individuals to exploit parts of the tax system to unfairly minimise
or avoid their tax obligations.
Specifically, the Government will remove the ability for high
income individuals to deduct losses from unprofitable business
activities against their own income.
The Government will do this by tightening the rules in the
income tax law applying to the use of non-commercial losses.
In certain circumstances, where expenses exceed income earned
from non-commercial business activities, salaried employees can
reduce their salary income with these excess expenses. Many of
these activities do not have a commercial purpose or character and
are no more than hobbies or lifestyle choices.
This can mean that unfair personal income tax deductions can be
claimed against salary, wage and other income for activities like
running hobby farms that don't have a commercial purpose and may
not ever make a profit.
To address this loophole, from 1 July 2009, taxpayers with
adjusted taxable incomes of over $250,000 will only be able to
deduct those expenses against the income from the non-commercial
business activity.[37]
The Committee received six submissions
and later heard evidence from nine witnesses at a public hearing in
Melbourne on 9 November 2009. The submission from the Thoroughbred
Breeders Association (TBA) is largely representative of the other
submissions. It submitted that the legislation will have an adverse
effect on a wide-range of activities that rely on investment income
because regardless of the size and scale of the business; be it
cattle farming, horse breeding or share trading, if a tax loss is
returned in any year it will be quarantined if the $250,000
adjusted taxable income threshold is exceeded .[38] It drew particular
attention to the considerable amount of investment made by
entrepreneurs in the start-up phase of a business with little or no
return for several years. It also claimed that if the proposed
amendments to the non-commercial loss provisions are successful,
many investors will withdraw from the horse breeding industry,
which particularly relies on investment income for
viability.[39]
The Economics Legislation Committee published its report on 16
November 2009.[40]
After explaining the historical background to the non-commercial
losses provisions in Division 35 of the ITAA 1997,[41] the Committee
highlighted the five main areas of concern as they were identified
at the public hearing on 9 November 2009, being:
- the $250 000 threshold
- the discretion vested in the Commissioner of Taxation
- the retrospectivity of the proposed changes[42]
- the impact on rural communities (many of which rely on
investment from high-income, city dwellers), and
- the accuracy of the revenue projections.[43]
After discussing the relevant provisions of the Bill and the
evidence received on these issues in some detail, the Committee
concluded that it supported the intention of tightening the
non-commercial losses regime of Division 35 and recommended that
the Senate pass the Bill.[44]
The key differences between the current law and the amendments
contained in Schedule 2 are set out in a table in the Main
Provisions section below.
The measures in Schedule 1 to the Bill dealing
with ESSs are estimated to have a revenue impact of $135 million
over the forward estimates period (2010 11 to 2012 13).[45] The measures in
Schedule 2 to the Bill dealing with the offsetting
of non-commercial losses is estimated to have the following revenue
impacts:[46]
|
2009 10
|
2010 11
|
2011-12
|
2012-13
|
|
Nil
|
$330m
|
$240m
|
$130m
|
The financial impact of the measures targeting lost member
superannuation accounts in Schedule 3 is expected to result in a
gain to revenue of $238 million over the forward estimates period
(up to 2012 13). The measures are also expected to increase
government expenditure by $8.4 million in the same period, thus
resulting in an overall estimated gain to revenue of just under
$230 million.[47]
Main
provisions
Given the quick passage of the Bill, it is probably unnecessary
to discuss the main provisions in detail. It may, however, be
useful (in the interests of future historical research) to mention
some of the key issues.
Item 1 of Schedule 1 to the
Bill inserts proposed Division 83A into the ITAA
1997 to deal with ESSs. At present the ITAA 1997 does not deal
specifically with the tax treatment of ESSs although Division 13A
of the Income Tax Assessment Act 1936 (ITAA 1936)
does.
In this regard, the Government is essentially continuing the
work of the Howard Government, which unsuccessfully attempted to
codify (and simplify) Australia s income tax law into one piece of
legislation back in 1997. Australia continues to have two main
income tax assessment Acts, and it is not entirely clear
particularly to the lay reader which Act deals with which issues.
At present the ITAA 1997 primarily deals with income tax (including
answering questions such as What instalments of income tax does a
taxpayer have to pay? , When and how does a taxpayer pay them? and
What happens if a taxpayer s income tax is more than the
instalments he or she has paid? ),[48] whereas the purpose of the ITAA 1936
is to consolidate and amend the law relating to the imposition
assessment and collection of a tax upon incomes .[49] Additionally, there are a number
of other Australian tax Acts that deal with issues such as the
setting of rates of taxation and other administrative
matters.[50] Thus,
while Schedule 1 to the Bill inserts
proposed Division 83A into the ITAA 1997 (which is
similar to, but also expands upon and refines existing Division 13A
of the ITAA 1936), it also repeals existing Division 13A of the
ITAA 1936 to avoid duplicating the same provisions in two different
Commonwealth Acts.
Given this history of the ESS tax legislation (see Background
section above), it is probably unnecessary to detail the nature and
effect of the main provisions in Schedule 1 to the Bill any
further. However, it may assist to set out the objects of
proposed Division 83A, and also to discuss the key
differences between the current legislation and proposed
Division 83A.
The two objects of proposed Division 83A
are:
- to ensure that benefits provided to employees under ESSs (in
the form of shares or rights) are subject to income tax at the
taxpayer employee s marginal rate under income tax law (and not
under fringe benefits tax law), and
- to encourage the alignment of the interests of employers and
employees by providing a tax concession to encourage lower and
middle income earners to acquire shares under ESSs.[51]
The key differences between the current legislation and the
measures contained in Schedule 1 are as
follows:
- the new measures target low- to middle-income earners by
introducing an income test in order for a taxpayer to be eligible
to claim the upfront concession introduced by the Tax Laws
Amendment (Budget Measures) Act 2008[52]
- employers will be required to report any shares or rights
granted under an ESS at the time of issue, rather than (for
example) when the taxpayer actually commences employment with the
company
- the threshold at which the $1000 tax concession is no longer
available has been increased from an adjusted taxable income of
$150 000 to one of $180 000
- shareholders will be able to defer the assessment of tax for up
to $5000 worth of shares under some salary-sacrifice ESSs, and
- shareholders will be able to defer tax where shares are subject
to performance criteria or sale of the shares is subject to time
restrictions.
The key differences between the current legislation and the
measures contained in Schedule 2 can be summarised
and/or contrasted in the table set out below. The table has been
compiled by the author using existing law, the text of the Bill and
the notes in the Explanatory Memorandum.
A more detailed comparison can be found in the Explanatory
Memorandum for the Bill, which also provides useful examples of the
intended operation of the new law.[53]
Current law
|
Proposed law
|
|
The general rule is that an individual carrying on a business
activity (alone or in partnership) has to quarantine losses to the
business activity. However, the taxpayer may apply the loss from
the business activity against other income in an income year if the
business activity satisfies at least one of four tests:
1. the assessable income generated from the business activity
must be at least $20 000
2. the activity must have produced a profit in three out of the
last five income years
3. the reduced cost base of real property (or interests in real
property) used on a continuing basis in the activity is at least
$500 000, and/or
4. the reduced cost base of any other asset used on a continuing
basis to carry on the activity is at least $100 000.
A taxpayer who satisfies at least one of these tests can deduct
all of the costs/expenses from their business activity from both
their business and other income.
If for reasons such as exceptional circumstances (eg drought),
the taxpayer is unable to meet one of these tests, the Commissioner
of Taxation may exercise his or her discretion and allow the
taxpayer to offset the losses against other income. However, in
such a case, the losses are quarantined to business activity, which
means that the taxpayer can only offset the loss to the extent that
it is the same amount (or less) than the income of the business.
Any such quarantined losses can be carried forward to be used
against future income from the business activity (or other income
if the taxpayer can satisfy one of the four tests in a later income
year).
|
The general rule remains, but Schedule 2 restricts access to the
four tests to taxpayers who have an adjusted taxable income of
$250 000 or more. In this way, Schedule 2 prevents high income
earners from offsetting non-commercial losses against their
ordinary salary, wage or other income.
Not all tests will apply to all relevant taxpayers. It depends
on the nature of the business activity.
A taxpayer who has an adjusted taxable income of $250 000
or more must quarantine non-commercial losses.
A taxpayer who has an adjusted taxable income of less than
$250 000 who does not satisfy at least one of the four tests
must quarantine non-commercial losses.
A taxpayer whose adjusted taxable income is less than
$250 000 may apply to the Commissioner of Taxation not
to apply the non-commercial loss rules. The taxpayer must satisfy
the Commissioner that the nature of the business activity is such
that the taxpayer will not be able to satisfy at least one of the
four tests, but that based on an objective assessment, the business
activity will generate assessable income greater than the available
deductions or will be able to meet one of the four tests within a
commercially viable period.
The Commissioner s decision can be the subject of review by the
Australian Taxation Office (internal review), the Administrative
Appeals Tribunal and the Federal Court of Australia.
|
Schedule 3 amends the Superannuation
(Unclaimed Money and Lost Members) Act 1999 to require
superannuation providers to give the Commissioner of Taxation
details relating to small accounts of lost members and inactive
accounts of unidentifiable lost members. The superannuation
providers must also pay to the Commissioner the value of any such
accounts.
Schedule 3 amends existing provisions in that
Act, but also inserts proposed Part 4A, which
deals specifically with the payment of lost member accounts to the
Commissioner.
The phrase lost member account is defined in
proposed subsection 24B(1) to mean an account held
on behalf of a lost member, where the balance of the account is
less than $200 and the account does not support or relate to a
defined benefit interest (as defined in section 292 175 of the ITAA
1997).
The phrase lost member account is also defined in
proposed subsection 24B(2) to mean an account in a
fund where:
- the account is held on behalf of a lost member
- the superannuation provider has not received an amount in
respect of the member within the last five years
- the superannuation provider is satisfied it will never be
possible for the provider to pay an amount to the member, and
- the account does not support or relate to a defined benefit
interest (as defined in section 292 175 of the ITAA 1997).
Other provisions in proposed Part 4A set out
the requirement for a superannuation provider to give a written
statement to the Commissioner about lost member accounts when
required,[54] and
sets out how a provider may correct or supplement that
information.[55]
They also set out:
- how and when the superannuation provider must pay the
Commissioner
- the requirement for a superannuation provider to pay a general
interest charge on any amount not paid to the Commissioner within
the required timeframe
- the fact that a person who fails to make a payment to the
Commissioner commits an offence, punishable by a maximum penalty of
100 penalty units (that is, $11 000)
- how the Commissioner pays the amount held on behalf of a lost
member to a single fund on behalf of the member once he or she has
been found (or to his or her legal personal representative if the
lost member has died)
- how the Commissioner refunds overpayments to superannuation
providers
- how the Commissioner may recover an overpayment made by him or
her to an eligible lost member (or to his or her legal personal
representative if the lost member has died)
- the requirement that the superannuation provider must return
any amount paid by the Commissioner to it as a result of locating a
lost member if it turns out that the payment cannot be credited to
an account on behalf of the person, and
- the liability of the Commonwealth to pay a reasonable amount of
compensation to any person if the operation of proposed
Part 4A would result in an acquisition of property from a
person otherwise on just terms, and in the event of the
Commonwealth and the person not agreeing on the amount of
compensation, for the Commonwealth to be sued in a court of
competent jurisdiction.[56]
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2795.
Morag Donaldson
14 December 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted
by the Copyright Act 1968, no person may reproduce or transmit any
part of this work by any process without the prior written consent
of the Parliamentary Librarian. This requirement does not apply to
members of the Parliament of Australia acting in the course of
their official duties.
This work has been prepared to support the work of the Australian
Parliament using information available at the time of production.
The views expressed do not reflect an official position of the
Parliamentary Library, nor do they constitute professional legal
opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any
concerns or complaints should be directed to the Parliamentary
Librarian. Parliamentary Library staff are available to discuss the
contents of publications with Senators and Members and their staff.
To access this service, clients may contact the author or the
Library’s Central Entry Point for referral.
Back to top