Bills Digest No. 158, 2012–13

24 June 2013

Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013

Kai Swoboda
Economics Section 

Date introduced: 29 May 2013

House: House of Representatives

Portfolio: Treasury

Commencement: Various dates set out in the table in section 2 of the Bill. The commencement of some elements of the Bill is dependent on the commencement of the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013.[1]

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose of the Bill

The purpose of the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013 (the Bill) is to amend the Income Tax Assessment Act 1997 (ITAA 1997)[2] so that certain tax liabilities can be transferred between various superannuation and life insurance entities. The Bill also amends the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act)[3] to allow for the payment of an additional superannuation contributions tax for some military personnel who are covered by the superannuation scheme established by the DFRDB Act.

Structure of the Bill

The Bill consists of two Schedules:

·         Schedule 1 of the Bill amends the ITAA 1997 to provide tax relief in the case of mandatory inter-fund transfers of accrued default superannuation fund balances so that members of superannuation funds are not adversely affected as a result of transfers under the proposed ‘MySuper’ arrangements[4] and

·         Schedule 2 of the Bill amends the DFRDB Act to provide for the payment of a deferred tax liability for members of the Defence Force Retirement and Death Benefits (DFRDB) superannuation scheme that arises with the general imposition on most taxpayers of an additional tax on the superannuation contributions of those earning more than $300 000.

Committee consideration

Senate Economics Committee

On 18 June 2013, the Senate Standing Committee for the Selection of Bills referred the Bill to the Senate Economics Legislation Committee (Economics Committee) for inquiry and report by 24 June 2013.[5] At the time of writing this Bills Digest, seven submissions had been received by the Economics Committee.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills has considered the Bill but has no comments to make in respect of it.[6]

Parliamentary Joint Committee on Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.[7] The Government considers that the Bill is compatible.

The Parliamentary Joint Committee on Human Rights (the Joint Committee) noted that Schedule 1 of the Bill deals with superannuation and so, in addition to engaging and promoting the right to an adequate standard of living, as noted in the Statement of Compatibility with Human Rights, is ‘likely to also engage and promote the right to social security under Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)’.[8]

In relation to Schedule 2, the Joint Committee was concerned about the proposed measure’s consistency with the right to social security, noting that:

… the effect of the amendments in this Schedule allow a lump sum to be paid from a superannuation interest in the DFRDB scheme to meet a debt account discharge liability for Australian Defence Force members of the scheme who are very high income earners. As a result of this the member's superannuation benefits, including any reversionary pension to be paid to a surviving spouse of a deceased member, is reduced. No reason is given as to why this is necessary, how much the benefits may be reduced by, and whether this is consistent with the right to social security under article 9 of the ICESCR.[9]

That being the case, the Joint Committee stated its intention ‘to write to the Minister for Financial Services and Superannuation’ to seek further information.[10]

Schedule 1—Loss relief and asset roll-over for transfer of amounts to a MySuper product

Background

What is a roll over and how is this affected by tax arrangements?

It is common for superannuation account balances to be transferred between superannuation funds as a result of a conscious choice made by a member of a superannuation fund to consolidate superannuation account balances or to move to a more appropriate superannuation product or fund. These transfers—also referred to as ‘roll overs’—involve the transfer of balances within the superannuation system. In general, a roll over will involve the transfer of a member’s accumulated balance—in cash—from one fund to another. Importantly, the transfer of a superannuation balance to another superannuation fund crystalises any accumulated tax benefits which are then not available to the new superannuation fund.

Broadly, capital gains tax (CGT) is levied on any capital gains derived by taxpayers that take place on the happening of a specific event for an asset that is subject to CGT.[11] The transfer of assets from one superannuation fund to another will typically trigger a CGT event A1 (section 104–10 of the ITAA 1997) and the realisation of capital gains, or capital losses, for the transferring fund as appropriate. Under current legislation net capital losses are extinguished on the winding up of the transferring fund, and are unavailable for use in the successor fund. Had the transferring fund continued, they would have been available to reduce that fund’s overall CGT liability.[12]

Importantly, for superannuation funds and their members, relief from CGT has been made available in the past in certain circumstances. These instances have included:

·         roll over relief and exemptions on certain transfers arising from a marriage/relationship breakdown[13] and

·         limited loss transfer and roll over relief for merging superannuation funds that occur on or after 24 December 2008 up to 30 September 2011. This was then extended from 1 October 2011 to 1 July 2017.[14]

MySuper and superannuation industry structure

‘MySuper’ is an outcome of the Government’s ‘Stronger Super’ package of measures for the superannuation industry. The ‘Stronger Super’ package of reforms essentially represents the Government’s response to the ‘Super System Review’—commonly referred to as the ‘Cooper Review’—which examined a broad range of issues in the superannuation industry over the period 2009–2010.[15]

MySuper is one element of the Stronger Super package of measures and is intended to be a ‘low cost and simple superannuation product that will replace existing default funds’.[16] Key regulatory aspects of MySuper superannuation accounts include:

·         required product rules including setting of fees

·         single diversified investment strategy (which may take account of a person’s age)

·         selection of ‘default’ MySuper’ products in modern awards by a special panel of the Fair Work Commission

·         collection and publication of comparable MySuper product performance information

·         specific superannuation trustee obligations including satisfying a ‘scale test’[17]

·         mandatory requirements for employers to make contributions for employees who have not made a choice of fund to a fund that offers a MySuper product by 1 January 2014 and

·         the transfer of existing ‘default’ superannuation balances where the member has not exercised choice of superannuation fund into a MySuper account by 1 July 2017.

Many of the regulatory requirements to support MySuper have already been enacted such as:

·         Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012—included licensing arrangement for funds offering a MySuper product and key features of a MySuper product such as requiring a single diversified or lifecycle investment strategy, all members having access to the same options and facilities, and only permitting fees that are the same for all members in the MySuper product, with the exception of the administration fee[18]

·         Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 —general enhancements to superannuation trustee obligations but also specific ‘enhanced trustee obligations’ for MySuper products that require the trustees to determine whether the scale of the fund is sufficient on an annual basis to continue to offer a MySuper product[19]

·         Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012—included additional fee rules, funds to publish a ‘product dashboard’ for each of the fund’s MySuper and choice products on a part of their website, the provision of death and disability benefits within MySuper, the Fair Work Commission to only list funds that have a MySuper product as a default fund in modern awards by 1 January 2014, and funds having until 1 July 2017 to transfer all accrued default amounts to a MySuper product unless the member opts-out in writing[20] and

·         Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012—permitted merging superannuation funds to choose to take up capital gains tax loss relief where the transferring entity transfers assets to the receiving entity on, or after, 1 October 2011 and before 2 July 2017.[21]

Other Bills which have been introduced to support the regulatory requirements of MySuper are currently under consideration by the Senate, such as:

·         Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013—includes further requirements relating to the product dashboard and fee rules.[22]

As noted above, the mandatory transfer of existing default superannuation balances to MySuper accounts by 1 July 2017 was implemented by the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012.[23] A transfer to a MySuper account may involve a move between products in the same fund or to another fund. As at 17 June 2013, 43 Registrable Superannuation Entities (RSEs) had an authorised MySuper product.[24] The Australian Prudential Regulation Authority (APRA) expects to receive around 110 to 115 generic MySuper applications.[25]

Policy development

The Government’s initial response to the Cooper Review in December 2010 broadly endorsed the Cooper Review’s broad recommendations relating to the development of a ‘simple, cost‐effective product with a diversified portfolio of investments for the vast majority of Australian workers who are invested in the default option of their current fund’.[26] Such a policy was also part of the Australian Labor Party’s election commitments for the August 2010 federal election.[27]

The policy requiring superannuation funds to transfer the accrued balances of default members to a MySuper product by 1 July 2017 was part of the Government’s more detailed response to the Cooper Review in September 2011.[28] The Government noted at the time that it would ‘continue to consult key stakeholders on CGT consequences that may directly arise from transitioning to MySuper and to what extent, if any, CGT rollover relief is appropriate.[29]

The measure to provide CGT relief upon the mandatory transfer of default balances to comply with MySuper requirements by 1 July 2017 was first announced by the Government on 24 April 2012, in conjunction with an announcement of short-term relief to facilitate broader superannuation fund mergers.[30]

On 18 May 2012, the Government released a consultation paper that included the broad design principles for the measure.[31] Draft legislation for the measure was released on 22 April 2013.[32]

Policy position of non-government parties/independents

The Coalition did not support the legislation to require the mandatory transfer of accrued default superannuation balances to a MySuper product by 1 July 2017.[33]

In a dissenting report on the Parliamentary Joint Committee on Corporations and Financial Services (Corporations and Financial Services Committee) inquiry into the relevant Bill, Coalition members of the Committee opposed such a transfer for several reasons including that superannuation fund members who had explicitly chosen ‘default’ arrangements could be affected by the transfer, members may be transferred to a product with a lower, or less appropriate, level of insurance cover and that there was limited competition in the default superannuation market.[34]

In relation to the potential impact on members of such transfers, Coalition members of the Corporations and Financial Services Committee noted that:

… [transferred] members will also have incurred transaction costs from the selling and re-buying of assets as a result of the transfer – unnecessarily crystallising any capital gains.[35]

When the current Bill was debated in the House of Representatives on 20 June 2013, the Coalition indicated that it would support the measure in the House, but support in the Senate would be subject to the findings of the Senate Economics Committee inquiry.[36]

Position of major interest groups

The superannuation industry generally supports the need for CGT relief for the transfer of accrued default balances to MySuper products.[37] The Australian Institute of Superannuation Trustees noted that:

Part of the MySuper reforms were designed to ensure that members of superannuation funds were able to benefit from economies of scale. We supported measures where members of funds which participate in mergers aren’t unnecessarily penalised through capital gains tax idiosyncrasies. The fact that a fund may not develop a MySuper product should not mean that members of those funds who are required to be transferred out of such a fund to an external MySuper-compliant fund are not unduly penalised. Likewise, we fully support the other side of the equation, where assets are required to be transferred as a result of such member movements. Our support for this measure is consistent with this.[38]

Financial implications

The Explanatory Memorandum notes that the amendments proposed by Schedule 1 have a ‘small unquantifiable cost to revenue over the forward estimates, estimated to be less than $10 million per annum’.[39]

Key issues and provisions

Key features of the measure

If CGT relief is not in place in relation to mandatory inter-fund transfers that take place to meet the July 2017 deadline for transfer of accrued default superannuation account balances, superannuation fund members may be disadvantaged.

Item 1 of Schedule 1 amends the ITAA 1997 to insert proposed Division 311—loss relief and asset roll-over for transfer of amounts to a MySuper Product, which provides tax relief for certain entities if a superannuation fund member’s accrued default superannuation account balance is required to be transferred to a MySuper product in another complying superannuation fund.[40]

Key features of the arrangements in proposed Division 311 are:

·         eligibility to utilise the measure is restricted to transferring entities that are a trustee of a complying superannuation fund, a life insurance company or a trustee of a pooled superannuation trust and the transfer relates to a mandatory transfer of an accrued default superannuation account balance to another superannuation fund between the period 1 July 2013 and 1 July 2017[41]

·         the transferring entity can choose to transfer any, or all, of the transferring entity’s losses in whole or in part or to roll-over an asset to certain entities but any transferred realised capital losses must be ‘reasonably attributable’ to the accrued default amount of the member (proposed subsections 311-20(2), (3) and (4))

·         the effect of transferring a net capital loss depends on the income year to which the loss relates (an income year earlier than the year in which amounts are transferred) and the type of entity to which the loss is being transferred (proposed section 311–25) but has the effect of removing the losses for the transferring entity and handing these to the receiving entity and

·         the effect of transferring a tax loss is to reduce the transferring entity’s tax loss by the transferred amount and hand this loss to the receiving entity, with the amount to be credited against the receiving entity’s taxable income on the day the transfer is made (proposed section 311–30).

Repeal

Part 3 of Schedule 1 of the Bill includes sunsetting arrangements to reflect that the measure is intended to be in place only to facilitate transfers to meet the 1 July 2017 MySuper deadline.

Application

Those provisions relating to tax relief for the mandatory transfer by certain entities of a superannuation fund member’s accrued default superannuation account balance prior to the MySuper deadline of 1 July 2017 generally apply to income years that include 1 July 2013 and later income years.

The repeal provisions generally take effect from 2 July 2019.

Schedule 2—Sustaining the superannuation contribution concession: consequential amendments for defence force superannuation

Schedule 2 of the Bill amends the DFRDB Act to allow a lump sum to be paid from a superannuation interest in the DFRDB scheme to meet a debt account discharge liability for Australian Defence Force members of the scheme who are very high income earners. According to the Explanatory Memorandum:

As a result a member’s superannuation benefits, including any reversionary pension to be paid to the surviving spouse of a deceased member, is reduced.[42]

Background

The changes proposed by Schedule 2 of the Bill are directly linked to an announcement by the Government as part of the 2012–13 Budget in May 2012 that:

The Government will make the superannuation system fairer by reducing the higher tax concession that very high income earners receive on their concessional contributions, to align it more closely with the concession received by average income earners …

Currently, the 15 per cent flat tax on concessional contributions provides high income earners with a significantly larger tax concession than those on lower marginal tax rates.

From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30 per cent to 15 per cent (excluding the Medicare levy).[43]

On 12 May 2012, the Government was reported as clarifying that coverage of the measure would extend to all workers earning more than $300 000, including Federal politicians and Commonwealth public servants.[44]

The Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 (TSLA Bill), introduced into the House of Representatives on 15 May 2013, implements this proposal.

The TSLA Bill makes a number of amendments to reduce the tax concession on certain superannuation contributions for individuals earning more than $300 000. (There are some exceptions—Constitutionally protected State higher level office holders, Commonwealth judges and temporary residents who depart Australia.[45])

Defence Force Retirement and Death Benefits Scheme

The DFRDB Scheme was the compulsory superannuation scheme for military personnel between 1972 and 1991.[46] As at 30 June 2012, there were 53 348 DFRDB pensioners and 3243 DFRDB contributing members.[47]

The DFRDB is a defined benefits scheme, providing for a level of pension payments that is based on a formula that includes the member’s annual rate of pay and completed years of effective service.[48] Members have the option to commute (that is, exchange) a portion of that future retirement benefit for a lump sum. From 2002, the maximum amount that a member may commute is five times the annual rate of retirement benefit on exit.[49] Initially the maximum amount able to be commuted was four times, but this was lifted progressively between 1982 and 2002 to offset the impact of the 1983 concessional tax increases on lump sum eligible termination payments.[50]

Limited information is available on how many members of the DFRDB Scheme may be affected by the proposed measure. However, the number of DFRDB members affected by the change is likely to be small, applying to those members of the DFRDB Scheme holding the rank of Lieutenant General (or equivalent) and above.[51]

This Bill is a necessary consequence of the amendments in the TSLA Bill.

Position of non-government parties

The Coalition did not oppose the TLSA Bill when it was debated in the House of Representatives. However, the Coalition commented that:

Whilst the coalition would in normal circumstances be opposed to yet another tax increase by Labor, as the Leader of the Opposition outlined in his budget reply speech, given the state of the budget the coalition will not oppose this schedule.[52]

When the current Bill was debated in the House of Representatives on 20 June 2013, the Coalition indicated that it would support the measure in the House, but support in the Senate would be subject to the findings of the Senate Economics Committee inquiry.[53]

Financial implications

The Explanatory Memorandum notes that the financial impact of the amendments proposed by Schedule 2 was included as part of the TLSA Bill.[54]

Key issues and provisions

The application of the proposed 15 per cent tax is relatively straightforward for an individual in an accumulation superannuation fund, whose annual earnings and superannuation payments are transparent. However, for defined benefit schemes—where benefits are set independently to the level of an individual’s contributions—special rules are established by the TSLA Bill to determine the ‘value’ of certain annual superannuation contributions so that the $300 000 threshold can be applied.

In addition to this complexity to calculate the potential liability for the additional tax, the TSLA Bill also establishes a payment regime for specific Commonwealth public sector defined benefit superannuation schemes. This defers payment of the tax until a superannuation benefit is paid, with arrangements that create a ‘debt account’ that will accrue interest at the long term bond rate for each financial year over which such a debt accrues.

This Bill largely replicates these arrangements for the DFRDB Scheme, requiring some adjustments to cater for some specific provisions of the DFRDB Scheme such as the ability for commutation, invalidity pensions and reversionary pensions paid to surviving spouses. Essentially then, the amendments in this Bill ‘allow a lump sum to be paid from a superannuation interest in the DFRDB Scheme to meet a debt account discharge liability’ for members of the Scheme who are very high income earners.[55]

Item 1 of Schedule 2 of the Bill repeals and replaces the existing definition of benefit in the DFRDB Act. The proposed definition retains aspects of the existing definition but includes the amount that is to be the additional tax to be paid under the TSLA Bill upon payment of a DFRDB benefit.

Item 6 of Schedule 2 of the Bill inserts proposed Part VIB into the DFRDB Act to provide for a payment mechanism for the deferred tax liability that may arise under the additional 15 per cent superannuation contributions tax to be imposed on taxpayers earning more than $300 000 per year by the TSLA Bill.

The proposed mechanism is largely modelled on that included in the TSLA Bill with the additional requirements to cater for the payment of the tax liability prior to a member electing to commute their retirement benefit or class C invalidity pay (proposed sections 49L and 49M).

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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ISSN 1328-8091

[1].              The Bill homepage for the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 which contains information about the passage of the Bill through the Parliament, can be viewed at: http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr5035%22

[2].              The text of the Income Tax Assessment Act 1997 can be viewed at: http://www.comlaw.gov.au/Details/C2013C00082/Download

[3].              The text of the Defence Force Retirement and Death Benefits Act 1973 can be viewed at: http://www.comlaw.gov.au/Details/C2012C00559/Download

[4].              Australian Government, ‘MySuper’, Treasury website, viewed 19 June 2013, http://strongersuper.treasury.gov.au/content/Content.aspx?doc=publications/information_pack/mysuper.htm

[5].              Information about the inquiry and the report (when published) can be viewed at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/superannuation_2013/index.htm

[6].              Senate Standing Committee for the Scrutiny of Bills, Report No. 6 of 2013, 19 June 2013, p. 78, viewed 19 June 2013, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=scrutiny/alerts/2013/index.htm

[7].              The Statement of Compatibility with Human Rights can be found at pages 19 and 25 of the Explanatory Memorandum to the Bill.

[8].              Parliamentary Joint Committee on Human Rights, Eighth Report of 2013, June 2013, p. 16, viewed 19 June 2013, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=humanrights_ctte/reports/index.htm

[9].              Ibid.

[10].              Ibid.

[11].              Section 104–5 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the events and assets that are subject to CGT. Importantly, these provisions also set out key dates which affect the liability for CGT depending on when the CGT asset was acquired.

[12].              Treasury, Capital gains tax roll-over for complying superannuation funds with capital losses, Discussion paper, Canberra, 16 January 2009, p. 2, viewed 17 June 2013, http://archive.treasury.gov.au/documents/1461/PDF/Discussion_paper.pdf

[13].              These arrangements are set out in Division 126 of the ITAA 1997.

[14].              These arrangements are set out in Division 310 of the ITAA 1997. The initial period of relief was implemented by the Tax Laws Amendment (2009 Measures No. 6) Act 2010 which can be viewed at: http://www.comlaw.gov.au/Details/C2010A00019/Download. The latter period was implemented by the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 which can be viewed at: http://www.comlaw.gov.au/Details/C2012A00158/Download

[15].              Review into the Governance, Efficiency, Structure and Operation of Australia’s Superannuation System website, viewed 19 June 2013, http://www.supersystemreview.gov.au/content/content.aspx?doc=html/final_report.htm. The Cooper Review was chaired by former deputy commissioner of ASIC Jeremy Cooper and was conducted over the period 2009–2010. The Cooper Review covered a broad range of issues including the performance and governance of the superannuation industry and has formed the basis for a number of recent legislative changes under the Government’s ‘Stronger Super’ package of measures. The ‘Stronger Super’ website can be viewed at: http://strongersuper.treasury.gov.au/content/Content.aspx?doc=home.htm

[16].              Australian Government, ‘MySuper’, Treasury website, viewed 19 June 2013, http://strongersuper.treasury.gov.au/content/Content.aspx?doc=publications/government_response/key_points.htm

[17].              The so-called ‘scale test’ requires trustees of a superannuation fund that includes a MySuper product to determine on an annual basis whether the beneficiaries of the fund who hold the MySuper product are disadvantaged, in comparison to the beneficiaries of other funds who hold a MySuper product within those other funds, based on the number of members or assets in the MySuper product or fund (section 29VN of the Superannuation Industry (Supervision) Act 1993 (SIS Act, which can be viewed at http://www.comlaw.gov.au/Details/C2013C00126), inserted into the SIS Act by the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012, which can be viewed at: http://www.comlaw.gov.au/Details/C2012A00117).

[18].              The text of the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 can be viewed at: http://www.comlaw.gov.au/Details/C2012A00162/

[19].              The text of the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 can be viewed at: http://www.comlaw.gov.au/Details/C2012A00117

[20].              The text of the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 can be viewed at: http://www.comlaw.gov.au/Details/C2012A00171

[21].              The text of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 can be viewed at: http://www.comlaw.gov.au/Details/C2012A00158

[22].              The Bill homepage to the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013 can be viewed at: http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4948%22. See also P Darby, Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2012, Bills Digest, no. 76, 2012–13, Parliamentary Library, Canberra, 2013, viewed 19 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=BillId_Phrase%3A%22r4948%22%20Dataset%3Abillsdgs;rec=0

[23].              New Part 33 of the Superannuation Industry (Supervision) Act 1993 as included in item 13 of Schedule 6 to the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012.

[24].              Australian Prudential Regulation Authority (APRA), ‘Register of RSE licensees and RSEs: list of MySuper authorisations’, APRA website, viewed 17 June 2013, http://www.apra.gov.au/RSE/Pages/default.aspx

[25].              H Rowell (Executive General Manager, APRA), Economics Legislation Committee, Treasury Portfolio, Budget Estimates 2013–2014 , Australian Prudential Regulation Authority, 4 June 2013, p. 128, viewed 17 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Festimate%2F783aa248-536b-4625-ab3f-2b140d1a1c4e%2F0010%22

[26].              Australian Government, Government response to the review into the governance, efficiency, structure and operation of Australia’s superannuation system, Commonwealth of Australian, Canberra, 16 December 2010, pp. 5–8, viewed 18 June 2013, http://strongersuper.treasury.gov.au/content/publications/government_response/downloads/Stronger_Super.pdf

[27].              C Bowen, J Gillard and W Swan, Labor helps families save with simpler low-cost super, Australian Labor Party policy document, Federal Election 2010, 1 August 2010, viewed 18 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fpartypol%2FY2IX6%22

[28].              Australian Government, Stronger Super: information pack, 21 September 2011, p. 3, viewed 18 June 2013, http://strongersuper.treasury.gov.au/content/publications/information_pack/downloads/information_pack.pdf

[29].              Ibid., p. 8.

[30].              B Shorten (Minister for Financial Services and Superannuation), Tax relief for superfund mergers helps to lower fees, media release, 24 April 2012, viewed 18 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1587493%22

[31].              B Shorten (Minister for Financial Services and Superannuation), Government releases paper on tax relief for superfund mergers, media release, 18 May 2012, viewed 18 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1642955%22

[32].              Treasury, ‘Income tax relief to facilitate the Government's MySuper reforms’, Treasury website, viewed 20 June 2013, http://www.treasury.gov.au/ConsultationsandReviews/Submissions/2013/MySuper-reforms

[33].              That is, the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012.

[34].              Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012, 9 October 2012, pp. 80–85, viewed 18 June 2013, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=corporations_ctte/completed_inquiries/2010-13/mysuper_transparency/report/index.htm

[35].              Ibid., p. 83.

[36].              A Smith, ‘Second reading speech: Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013’, Federation Chamber, Debates, 20 June 2013, p. 87, viewed 21 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2Fdd8fab1f-c4e4-4b85-bf93-8f1a9c7cba8e%2F0223%22

[37].              Australian Institute of Trustees (AIST), Submission to Treasury, Draft legislation to facilitate the MySuper reforms, 3 May 2013, viewed 19 June 2013, http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/2013/MySuper%20reforms/Submissions/PDF/AIST.ashx; Association of Superannuation Funds of Australia (ASFA), Submission to Treasury, Draft legislation to facilitate the MySuper reforms, 3 May 2013, viewed 20 June 2013, http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/2013/MySuper%20reforms/Submissions/PDF/ASFA.ashx

[38].              Australian Institute of Trustees (AIST), Submission to Treasury, Draft legislation to facilitate the MySuper reforms, op. cit.

[39].              Explanatory Memorandum, Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013, p. 3, viewed 21 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr5079_ems_58457f15-1663-4191-b060-a7b37de50152%22

[40].              The accrued default superannuation account balance is stated by item 12 of the Bill to be the accrued default amount and is defined in section 20B of the SIS Act.

[41].              The terms ‘complying superannuation fund’ and ‘pooled superannuation trust’ are defined in the ITAA 1997 and have the same meaning as under section 45 of the SIS Act. The term ‘Life insurance company’ is defined in the ITAA 1997 to have the same meaning as under section 21 of the Life Insurance Act 1995. In general, a complying superannuation fund is one that complies with all of the requirements and prudential standards under the SIS Act. Key features of a complying superannuation fund are that it is eligible for concessional tax treatment, it may accept contributions under the superannuation guarantee scheme and is an approved rollover vehicle. In general, a pooled superannuation trust is a unit trust maintained by a large superannuation fund which is used only for investing assets of regulated superannuation funds, authorised deposit funds and life offices. A list of pooled superannuation trusts (PSTs) is available at: http://www.apra.gov.au/RSE/Pages/PST.aspx?dtype=PST

[42].              Explanatory Memorandum, Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013, op. cit., p. 21.

[43].              B Shorten (Minister for Financial Services and Superannuation), 2012–13 Budget: superannuation reforms, media release, 8 May 2012, viewed 3 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1622553%22

[44].              D Crowe, ‘MPs' super tax dodge slammed: budget changes create inequity’, The Weekend Australian, 12 May 2012, p. 1, viewed 3 June 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2F1629897%22

[45].              A copy of the Bill, the Explanatory Memorandum and the Bills Digest can be viewed at: http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query%3DId%3A%22legislation%2Fbillhome%2Fr5035%22

[46].              Commonwealth Superannuation Corporation, CSC annual report to Parliament 2011–12: DFRB Scheme, DFRDB Scheme and DFSPB, 2012, p. 24, viewed 17 June 2013, http://csc.gov.au/reports-and-information/annual-reports/

[47].              Ibid., p. 28.

[48].              Commonwealth Superannuation Corporation (CSC), ‘Defence Force Retirement and Death Benefits Authority: about your scheme’, CSC website, 2010, p. 11, viewed 17 June 2013, http://dfrdb.gov.au/forms-and-publications/publications/

[49].              Ibid., p. 13. Commutation is covered by section 24 of the Defence Force Retirement and Death Benefits Act 1973.

[50].              Department of Defence, The Military Superannuation Review, Appendix E, History and description of the current scheme, viewed 17 June 2013, http://www.defence.gov.au/DPE/PAC/msr_report.pdf

[51].              Department of Defence (DoD), Annual report 2011–12, DoD, Canberra, 2012, Chapter 2 and Appendix 5, pp. 25 and 276, viewed 21 June 2013, http://www.defence.gov.au/budget/11-12/dar/

[52].              A Smith, ‘Second reading speech: Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013; Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013’, House of Representatives, Debates, 29 May 2013, p. 34, viewed 31 May 2013, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F9887dbf0-2eba-448e-82db-0288b44668a2%2F0105%22

[53].              A Smith, ‘Second reading speech: Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013’, op. cit.

[54].              Explanatory Memorandum, Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013, op. cit., p. 4.

[55].              Ibid., p. 21.