Chapter 1 - Introduction

Chapter 1 - Introduction


1.1        On 7 December 2006, the Senate referred the Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006 (the Bill) to the Standing Committee on Legal and Constitutional Affairs, for inquiry and report by 8 February 2007.

1.2        The Bill proposes to amend the Bankruptcy Act 1966 (Bankruptcy Act), the Payment Systems and Netting Act 1998, and the Proceeds of Crime Act 2002 to:

1.3        The principal purpose of the major amendments proposed by the Bill is to allow bankruptcy trustees to recover superannuation contributions made with the intention of defeating creditors. As jointly announced by the Attorney-General and the Minister for Revenue & Assistant Treasurer on 27 July 2006, these amendments will apply to superannuation contributions made on or after 28 July 2006.[1] The effect of the amendments will be that payments to superannuation plans to defeat creditors will be recoverable in the same way as other payments or transfers to defeat creditors.

1.4        According to the Explanatory Memorandum (EM), these amendments will:

1.5        In his Second Reading Speech, the Minister for Justice and Customs stated that:

The amendments provide an appropriate balance between the need to encourage people to save for retirement and the need to protect creditors from unscrupulous debtors who can currently attempt to avoid paying their debts by converting wealth into superannuation in the lead up to bankruptcy. They will allow superannuation contributions to be recovered only where there has been deliberate action by the bankrupt to avoid paying creditors.

The amendments have been developed following extensive public consultation. The approach taken by these amendments avoids the complexity of earlier proposals and is consistent with the Government's plan to simplify and streamline superannuation.[4]

Conduct of the inquiry

1.6        The committee advertised the inquiry in The Australian newspaper on 12 December 2006, and invited submissions by 19 January 2007. Details of the inquiry, the Bill, and associated documents were placed on the committee's website. The committee also wrote to over 160 organisations and individuals.

1.7        The committee received 15 submissions which are listed at Appendix 1. Submissions were placed on the committee's website for ease of access by the public.

1.8        The committee held a public hearing in Canberra on 23 January 2007. A list of witnesses who appeared at the hearing is at Appendix 2 and copies of the Hansard transcript are available through the Internet at


1.9        The committee thanks those organisations and individuals who made submissions and gave evidence at the public hearing.

Note on references

1.10      References in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard transcript.

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