Commonwealth of Australia Explanatory Memoranda

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TEMPORARY RESIDENTS' SUPERANNUATION LEGISLATION AMENDMENT BILL 2008

2008




               THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA











                                   SENATE











     temporary residents' superannuation legislation amendment bill 2008











                FURTHER SUPPLEMENTARY EXPLANATORY MEMORANDUM








     Amendments and requests for amendments to be moved on behalf of the
                                 Government








                     (Circulated by the authority of the
                      Treasurer, the Hon Wayne Swan MP)






Table of contents


Glossary    1


General outline and financial impact    3


Chapter 1    Temporary residents' unclaimed   superannuation interest     5



Glossary

         The following abbreviations and acronyms are used throughout this
         supplementary explanatory memorandum.

|Abbreviation        |Definition                   |
|ATO                 |Australian Taxation Office   |
|Commissioner        |Commissioner of Taxation     |
|the Bill            |Temporary Residents'         |
|                    |Superannuation Legislation   |
|                    |Amendment Bill 2008          |

General outline and financial impact

Temporary residents' unclaimed superannuation interest


         The Temporary Residents' Superannuation Legislation Amendment
         Bill 2008 (the Bill) will implement key aspects of the Government's
         measure to require superannuation funds to pay the unclaimed
         superannuation of departed temporary residents to the Australian
         Taxation Office (ATO).


         The Bill does not provide for any interest to be paid to any
         previously departed temporary resident that later claims an
         unclaimed superannuation amount from the ATO.


         These amendments make changes to Schedule 1 to the Bill to enable
         interest to be paid to certain previously departed temporary
         residents who are Australian citizens or permanent visa holders.


         Proposal announced:  These amendments have not previously been
         announced.


         Financial impact:  These amendments are expected to result in a
         cost to Budget of $7.5 million over the forward estimates up to and
         including 2011-12.


         Compliance cost impact:  Nil.



Chapter 1
Temporary residents' unclaimed superannuation interest

Amendments 1 and 2 - guide material


      1. The guide in the Bill will be amended to outline that amounts that
         can be payable by the Commissioner of Taxation (Commissioner) under
         the temporary residents' superannuation measure can include
         interest in certain cases.


Amendments 3, 4 and 5 - interest payable in certain circumstances


      2. In accordance with proposed section 20H the Commissioner will be
         able to make a payment in respect of a person for whom an amount
         has been paid to the Commissioner under section 17 or 20F.


      3. Proposed subsection 20H(2A) will mean that the Commissioner is
         required to make a payment of interest under section 20H if any
         interest is payable and if the Commissioner is satisfied that the
         person is an Australian citizen or holds a permanent visa, and,
         either left Australia after 30 June 2007 or held a temporary visa
         after 30 June 2007.


      4. Proposed subsection 20H(2B) will mean that the Commissioner will
         work out the amount of interest (if any) that is payable in
         accordance with the regulations.


      5. The amount of interest will be calculated only on amounts that have
         been paid by superannuation funds under the temporary resident
         superannuation measure under proposed subsection 20F(1).   Interest
         will not be payable on amounts received by the Commissioner under
         section 17.


      6. The amount of interest will be calculated at a rate equal to the
         annual yield on Treasury bonds with a 10 year term or another rate
         prescribed by the regulations.  The regulations may provide for
         various matters relevant to working out the interest.  For example,
         working out the periods for which particular rates apply to
         particular amounts, which would then affect, among other things,
         the compounding of interest.


      7.  Proposed subsection 20H(2C) will mean that the regulations may
         prescribe different rates for different periods over which the
         interest accrues.  The regulations will also be able to prescribe a
         nil rate once a person turns 65 years old.  This is the age at
         which other non-temporary resident unclaimed superannuation monies
         are transferred by funds to the ATO.  This will not limit the ways
         in which the regulations may work out the interest under proposed
         subsection 20H(2B).


Amendments 6 and 7 - taxation of interest


      8. These amendments will mean that any interest that is payable under
         proposed subsection 20H(2A) will form part of the taxable component
         for superannuation benefit taxation purposes and within that
         component form part of the element untaxed in the fund.