Bills

Statutes Amendment (Superannuation) Bill

Introduction and First Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (16:05): Obtained leave and introduced a bill for an act to amend the Parliamentary Superannuation Act 1974, the Police Superannuation Act 1990, the Southern State Superannuation Act 2009 and the Superannuation Act 1988. Read a first time.

Second Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (16:06): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This Bill seeks to make amendments to the following Acts for the purpose of making amendments to the superannuation arrangements provided under those statutes: the Police Superannuation Act 1990, the Parliamentary Superannuation Act 1974, the Superannuation Act 1988 and the Southern State Superannuation Act 2009.

One of the main proposals dealt with in the Bill is the extension of the regulation making power under section 52 of the Police Superannuation Act 1990. This proposed power will enable regulations to be made that recognise salary in a prescribed manner for the purpose of determining contributions or benefits in relation to contributors to the Police Superannuation Scheme. An equivalent power already exists under Section 59 of the Superannuation Act 1988. This will enable regulations to be made that would recognise specific allowances for superannuation purposes from the date the member commenced or commences to receive the allowance.

The reason that this issue has arisen with respect to allowances payable to police officers is that the 'South Australia Police Enterprise Agreement 2011' (the 'Agreement'), dated 18 May 2011, provides that from 1 July 2011, 'Officers of Police' are entitled to be paid a 'Flexibility Allowance' of 5% of their annual salary. The Agreement also provides that 'for superannuation purposes, the Allowance will only operate and be applied with a prospective effect'. While this allowance will already be recognised under the Police Superannuation Act 1990 for contribution and benefit purposes, it will be necessary, in order to give effect to the provisions in the Agreement which state that the Allowance will only have 'prospective effect', to recognise the Allowance on a time weighted basis by regulation. This will prevent members of the Police Superannuation Scheme who are in receipt of this allowance from receiving a retrospective windfall gain in benefits, especially to those who may only receive that allowance for a short period of time in comparison to the period of service, to the detriment of the overall funding of the scheme.

There are two main proposals in the Bill which concern the Southern State Superannuation Act 2009. The first proposal concerns a minor technical problem with the membership provisions of Triple S. Section 19 of the Southern State Superannuation Act 2009 provides that a person is a member of the Scheme where the Crown, or an agency or instrumentality of the Crown is liable to pay a superannuation guarantee charge under Commonwealth legislation. Section 27 of the Superannuation Guarantee (Administration) Act 1992, being the Commonwealth legislation referred to in the Triple S membership provisions, effectively provides that employers are not required to make superannuation guarantee (SG) contributions in respect of those of its employees earning less than $450 per month. While not required, an employer may nevertheless choose to make contributions in respect of its employees in that category. In terms of Triple S membership, it has recently become apparent that State Government agencies are making superannuation contributions in respect of a number of employees earning less than $450 per month. This issue particularly affects those in receipt of disability support pensions who are employed by the Department of Communities and Social Inclusion, and being paid a percentage of the minimum wage payable. The problem is that under the strict interpretation of the legislation, these persons are not members of Triple S under section 19 of the Southern State Superannuation Act 2009, as there is no obligation on employers to make the SG contribution under Commonwealth law. This is despite the fact that they are otherwise treated as 'members' of Triple S. Therefore, to overcome this issue, the Bill seeks to amend section 19 of the Act to ensure that employees are also taken to be members of Triple S in such circumstances where the agency is not liable to make an SG contribution in respect of the member under the Commonwealth law, but nevertheless elects to make such a contribution. The Bill also seeks to insert transitional provisions to ensure that anyone affected by this anomaly prior to the commencement of the amendment will be taken to be a member of Triple S. This does not represent a change in policy but rather, seeks to formalise current practice amongst agencies.

The second proposal in the Bill relating to the Southern State Superannuation Act 2009 concerns the confidentiality provisions in section 28 of the Act. The need for the exchange of data held by the Super SA Board in the administration of Triple S, and by the Southern Select Superannuation Corporation in the administration of Super SA Select, is paramount, particularly since insurance coverage is provided to Super SA Select members through Triple S pursuant to the terms and conditions of the Southern State Superannuation Act 2009. The proposed amendment will facilitate the exchange of data between the two schemes, in that it will allow member information to be disclosed to the Southern Select Superannuation Corporation for purposes related to the administration of Triple S (eg insurance purposes), or Super SA Select. A corresponding amendment has already been made to the confidentiality provisions in the Public Corporation (Southern Select Super Corporation) Regulations 2012, being the regulations governing Southern Select Super Corporation.

The final main proposal in the Bill seeks to make amendments to the Superannuation Act 1988, the Police Superannuation Act 1990 and the Parliamentary Superannuation Act 1974 to permit the superannuation board of the relevant scheme to release a portion of a member's superannuation for the purpose of funding a 'Division 293 tax' debt incurred by that member. Division 293 tax is in general terms imposed on concessional contributions of high income earners whose income and relevant concessionally taxed contributions (referred to as low tax contributions) exceeds $300,000. The assessed Division 293 tax is 15% of low-tax contributions that exceed the $300,000 threshold. Commonwealth superannuation regulations permit the trustee to release superannuation upon being issued with a 'release authority' to pay for a Division 293 debt. However, the legislation governing the Pension and Lump Sum Scheme, Police Superannuation Scheme and Parliamentary Superannuation Scheme does not currently permit the relevant Board to release superannuation money for this purpose. The proposed amendments thereby seek to insert a mechanism for affected members to request the relevant Board to release funds direct to the Commissioner of Taxation for the purposes of paying a Division 293 tax debt. The payment of this tax is also applicable to members of Triple S under the Southern State Superannuation Act 2009, where their income and relevant concessionally taxed contributions exceeds $300,000. This issue has been addressed separately in respect of Triple S members by regulations made under that Act.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Amendment provisions

These clauses are formal.

As there is no provision fixing a date for commencement, the measure will come into operation on the day on which it is assented to by the Governor in accordance with section 7 of the Acts Interpretation Act 1915.

Part 2—Amendment of Parliamentary Superannuation Act 1974

3—Insertion of section 23AAE

Proposed section 23AAE authorises the Parliamentary Superannuation Board to make payments to the Commissioner of Taxation, or to members, as required by the Taxation Administration Act 1953 of the Commonwealth for the purpose of facilitating payment of the Commonwealth Division 293 tax in relation to members of PSS3. The section provides that the Board must debit the amount of any such payment against the member's Government contribution account (or another account if the balance of the Government contribution account is not sufficient).

Part 3—Amendment of Police Superannuation Act 1990

4—Insertion of section 35B

Proposed section 35B will facilitate the payment of Division 293 tax for contributors to the Police Superannuation Scheme who are entitled to a pension. The section will authorise the Police Superannuation Board to commute a portion of a contributor's pension into a lump sum of the same amount as the Division 293 tax that the contributor is liable to pay.

If the Board receives a Division 293 release authority under the Taxation Administration Act 1953 of the Commonwealth, the Board must commute a portion of the pension of the contributor to whom the authority relates so as to provide a lump sum of the same amount as the tax. The lump sum must then be paid by the Board to the Commissioner of Taxation.

5—Amendment of section 52—Regulations

This clause recasts subsection (3) of section 52 of the Act so that the regulations may prescribe the salary of a contributor, or an amount taken to be salary, for the purposes of determining the contributor's contributions or benefits under the Act. Section 59 of the Superannuation Act 1988 includes a similar regulation making power.

Part 4—Amendment of Southern State Superannuation Act 2009

6—Amendment of section 3—Interpretation

This amendment to section 3 of the Southern State Superannuation Act 2009 makes it clear that a participating employer for the purposes of the Act is an employer with whom the South Australian Superannuation Board has entered into an arrangement under section 6 of the Act.

7—Amendment of section 19—Membership of scheme

Section 19 of the Act provides that a person is a member of the Triple S scheme if the Crown, or an agency or instrumentality of the Crown, is liable to pay a superannuation guarantee surcharge under Commonwealth legislation in relation to the person. As amended by this clause, the section will also provide that a person is a member of the scheme if the Crown, or an agency or instrumentality, is not required to pay a superannuation guarantee surcharge but pays an amount to the Treasurer in relation to the person as if it were required to do so under section 21 of the Act.

8—Amendment of section 28—Confidentiality

Section 28, which deals with confidentiality, is amended by this clause so that members of the Board and persons employed in the administration of the Act can divulge information of a personal or private nature, or information as to the entitlements or benefits of a person, to a person responsible for the administration of a prescribed scheme. The purpose of divulging the information must be related to the administration of the Act or the administration of the prescribed scheme. A prescribed scheme is a superannuation fund or scheme prescribed for the purposes of section 21.

9—Amendment of Schedule 1—Transitional provisions

This clause inserts a new transitional provision. Proposed clause 16B has the effect of deeming a person to have been a member of the Triple S scheme before the commencement of the amendment to section 19 made by clause 7 if the Crown, or an agency or instrumentality of the Crown, paid an amount to the Treasurer in relation to the person as if required to do so under section 21 of the Act (or under section 26 of the Southern State Superannuation Act 1994) even though there was no liability to pay a superannuation guarantee surcharge in relation to the person under Commonwealth legislation.

Part 5—Amendment of Superannuation Act 1988

10—Amendment of section 4—Interpretation

This clause inserts a number of new definitions necessary in relation to proposed provisions providing for the payment of Division 293 tax. A Division 293 release authority is a release authority relating to Division 293 tax issued by the Commonwealth Commissioner of Taxation. Division 293 tax has the same meaning as in the Commonwealth Income Tax Assessment Act 1997.

11—Insertion of section 32E

This proposed new section applies to new scheme contributors under the Superannuation Act 1988. If the South Australian Superannuation Board receives a Division 293 release authority in relation to a contributor who is entitled to a benefit, the Board is required to pay to the Commissioner of Taxation, from the contributor's benefit, an amount equal to the Division 293 tax payable by the contributor.

The proposed section also makes provision for an amount of a contributor's benefit to be set aside for Division 293 tax purposes even though a release authority has not yet been issued. Under the relevant provisions, a contributor who has, or will shortly have, an entitlement to a benefit may request the Board to withhold from the benefit (or potential benefit) an amount equal to the contributor's estimate of the amount of Division 293 tax he or she is or will be liable to pay. On receiving a Division 293 release authority in respect of the contributor, the Board must pay the contributor's tax to the Commissioner of Taxation from the amount that has been withheld at the contributor's request. Any balance of the withheld amount is to be paid to the contributor.

12—Insertion of section 40AB

Proposed section 40AB will facilitate the payment of Division 293 tax for old scheme contributors who are entitled to a pension. The section will authorise the South Australian Superannuation Board to commute a portion of a contributor's pension into a lump sum of the same amount as the Division 293 tax that the contributor is liable to pay.

If the Board receives a Division 293 release authority under the Taxation Administration Act 1953 of the Commonwealth, the Board must commute a portion of the pension of the contributor to whom the authority relates so as to provide a lump sum of the same amount as the tax. The lump sum must then be paid by the Board to the Commissioner of Taxation.

Debate adjourned on motion of Mr Pederick.