Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012


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Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012

Superannuation Auditor Registration Imposition Bill 2012

Introduced into the House of Representatives on 19 September2012
Portfolio: Treasury

Committee view

1.2        The committee seeks further information from the Treasurer with regard to various provisions in the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 before forming a view on the compatibility of the bill with human rights.

Purpose of the bill

1.3        These bills amend various superannuation laws to implement a range of changes to Australia's superannuation laws.

1.4        These two bills were introduced together and share a single explanatory memorandum. However, the human rights impact of each bill is considered separately and would appear to meet the committee’s expectations for statements to read as ‘stand-alone’ documents.

Compatibility with human rights

Schedule 1 to Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012

1.5        Schedule 1 to Superannuation Laws Amendment (Capital Gains Tax Relief  and Other Efficiency Measures) Bill 2012 amends the Income Tax Assessment Act 1997 and Tax Laws Amendment (2009 Measures No. 6) Act 2010 to reinstate the temporary loss relief for merging superannuation funds with some modifications.

1.6        The statement of compatibility states that this schedule does not raise any human rights issues.

1.7        The committee considers that schedule 1 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 does not appear to raise any human rights concerns.

Schedule 2 to Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the Superannuation Auditor Registration Imposition Bill 2012

1.8        Schedule 2 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the Superannuation Auditor Registration Imposition Bill 2012 implement the government’s reforms relating to auditors of self-managed superannuation funds (SMSFs) as part of Stronger Super. These amendments:

  • introduce a registration regime for SMSF auditors;
  • provide for the Australian Securities and Investments Commission (ASIC), as the registration body for SMSF auditors, to be responsible for setting competency standards and taking enforcement action against auditors who have not met their obligations; and
  • provide powers to the Australian Taxation Office (ATO) to monitor auditors’ compliance with relevant standards and refer any non-compliant auditors to ASIC for enforcement action consideration.

1.9        The statement of compatibility states that this schedule does not raise any human rights issues.

1.10      The committee notes that the SMSF auditor registration scheme in schedule 2 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 is likely to engage several human rights, none of which are addressed in the statement of compatibility.

  • Right to privacy: The scheme grants ASIC and ATO new monitoring, investigation and information-sharing powers to monitor approved SMSF auditors and audits of SMSFs. These powers are likely to engage the right to privacy in article 17 of the International Covenant on Civil and Political Rights (ICCPR). The statement of compatibility does not address the issue of whether the relevant powers are reasonable, necessary and proportionate to meet the legitimate objective of regulating SMSFs.
  • Right to a fair hearing: The scheme enables ASIC to cancel, disqualify or suspend a person’s registration in certain circumstances. These powers are likely to engage article 14(1) of ICCPR, which provides a general fair procedures guarantee by protecting the right to a fair hearing by an independent and impartial tribunal in the determination of rights and obligations. The statement of compatibility does not address the issue of whether these powers will be exercised consistently with article 14(1) of ICCPR, for example by providing that the relevant decisions will be subject to appropriate review.
  • Right to non-discrimination: The scheme sets out who may apply for registration as an approved SMSF auditor and the requirements a person must meet before ASIC grants an application for registration as an approved SMSF auditor. Among other things, ASIC must be satisfied that the person is a ‘fit and proper person’ to be an approved SMSF auditor. The term ‘fit and proper person’ is not defined in the bill or the parent Superannuation Industry (Supervision) Act 1993. The explanatory memorandum indicates that a broad range of factors may be taken into account in making such an assessment, including whether the person has been convicted or has legal proceedings pending for any criminal offences or other misconduct in any country. A proposal to provide for differential treatment on the basis of, for example, a criminal record is likely to engage the right to equality and non-discrimination in article 26 of ICCPR. The statement of compatibility does not address the issue of whether any differential treatment resulting from the ‘fit and proper person’ test is consistent with article 26 of ICCPR on the basis that it is reasonable, necessary and proportionate to achieving a legitimate aim. 

Schedule 3 to Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012

1.11      Schedule 3 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 amends the Taxation Administration Act 1953 to expand the information required to be reported to the Commissioner of Taxation. Under the revised reporting obligations, superannuation providers will be required to provide statements for all members who held an interest in the superannuation plan at any time during a reporting period, not just those for whom contributions are received.

1.12      The statement of compatibility states that this schedule does not raise any human rights issues.

Right to privacy

1.13      The committee notes that the expanded reporting requirements in schedule 3 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 are likely to engage article 17 of ICCPR, which provides that no one shall be subjected to arbitrary or unlawful interference with their privacy. Collecting, using, storing, disclosing or publishing personal information amounts to an interference with privacy. The statement of compatibility does not address the issue of whether the interference is not ‘arbitrary’, that is, whether the interference is for a legitimate objective and is reasonable, necessary and proportionate to that objective.

Schedule 4 to Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012

1.14      Schedule 4 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Retirement Savings Accounts Act 1997 (RSA Act) to improve the information quality in the superannuation system and ensure effective e-commerce in superannuation.

Presumption of innocence

1.15      The statement of compatibility identifies that the strict liability offence in section 34Z of the SIS Act and section 45R of the RSA Act engages the presumption of innocence, which is protected in article 14(2) of ICCPR. The offence applies where a person fails to provide prescribed information to the Commissioner in accordance with the regulations and carries a penalty of 25 penalty units. The explanatory memorandum justifies the application of strict liability on the basis that:

  • it would be difficult to prove that prescribed entities did not intend to comply with the requirement to provide the information, thereby making the provisions difficult to enforce;
  • it is vital for prescribed entities to give this information to the Commissioner in a timely manner so that there is a complete and accurate register for other participants; and
  • it is a reasonable expectation that prescribed entities will have this information readily available as it will be a core operational requirement for the receipt of data and payments for contributions and roll-overs.

1.16      The committee considers that these strict liability offences do not appear to raise any concerns with regard to the presumption of innocence in article 14(2) of ICCPR.

Right against self-incrimination

1.17      The SIS Act and the RSA Act provide for a range of monitoring powers that may be exercised by the regulator in relation to superannuation entities, including the power to compel information. These amendments extend the monitoring powers to also cover contributing employers, ie employers who make superannuation contributions for an employee to a superannuation entity or RSA provider. However, the right against self-incrimination, which is protected in article 14(3)(g) of ICCPR, will be retained for contributing employers (Schedule 4, item 18, subsection 287(5) of the SIS Act and item 41, subsection 117(5) of the RSA Act).

1.18      The statement of compatibility states that ‘item 15 [sic] ensures that for employers the privilege against self-incrimination applies in relation to the [relevant] monitoring provisions’.

1.19      The committee considers that these provisions do not appear to raise any concerns with regard to the right against self-incrimination in article 14(3)(g) of ICCPR.

Right to privacy

1.20      The amendments will enable the Commissioner for Taxation to provide a tax file number (TFN) that has been quoted by a member to a superannuation fund to other superannuation funds the member holds accounts with and who do not hold a record of the member’s TFN. They also enable employers and trustees of eligible superannuation entities to check a member’s TFN with the Commissioner for Taxation for the purpose of ensuring accurate information is recorded within the superannuation system.

1.21      These provisions engage the right to privacy in article 17 of ICCPR as the relevant information that may be shared includes personal details such as a person’s full name, date of birth and address.

1.22      The statement of compatibility indicates that the purpose of linking TFNs to member accounts is to reduce the likelihood for accounts to become lost or unclaimed. 

1.23      The statement notes these provisions only apply when a person has quoted their TFN to their trustee or employer. In addition, a person retains the right not to quote their TFN and may require a trustee to not record their TFN.

1.24      The statement also states that the handling of TFN information is regulated by the Tax File Number Guidelines 2011, issued under section 17 of the Privacy Act 1988 and that ‘there are strong protections around the use of TFN’s and penalties for inappropriate use in existing legislation’.

1.25      The committee considers that these provisions are unlikely to raise issues of incompatibility with the right to privacy in article 17 of ICCPR. Any interference with privacy would appear to be necessary to achieve the stated objective of reducing the number of lost and unclaimed superannuation accounts, which can be considered to be a legitimate objective. Further, the provisions appear to be drafted with sufficient precision and contain appropriate safeguards to ensure that the degree of interference is proportionate to that objective. In particular, a person retains the right to opt-out and the measures are subject to the TFN handling requirements under the Privacy Act 1988, which are legally binding and would appear to provide appropriate protection for the collection, storage, use, disclosure, security and disposal of individuals’ TFN information.

1.26      The committee proposes write to the Treasurer to seek clarification on the following matters before forming a view on whether these bills are compatible with human rights:

  • Whether the monitoring, investigation and information-sharing powers in schedule 2 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the expanded reporting requirements in schedule 3 of the bill are considered to be compatible with the right to privacy in article 17 of ICCPR.
  • Whether the powers to cancel, disqualify or suspend a person’s registration as a SMSF auditor in schedule 2 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 are considered to be compatible with the right to a fair hearing in article 14(1) of ICCPR.
  • Whether any differential treatment resulting from the ‘fit and proper person’ test in schedule 2 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 is considered to be compatible with the right to non-discrimination in article 26 of ICCPR.

1.27      The committee also draws the Treasurer's attention to the committee's expectation that any limitations on rights should be justified in the statement against the following three criteria: whether the limitation is aimed at achieving a legitimate objective; whether there is a rational connection between the limitation and the objective; and whether the limitation is proportionate to that objective.

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