Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SUPERANNUATION LEGISLATION AMENDMENT (NEW ZEALAND
ARRANGEMENT) BILL 2012
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Employment and Workplace Relations and Minister for Financial Services
and Superannuation, the Hon Bill Shorten MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Portability of superannuation between Australia
and New Zealand .......................................................... 5
Index ..................................................................................................... 23
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
Arrangement Arrangement between the Government of
Australia and the Government of New
Zealand on Trans-Tasman Retirement
Savings Portability
ITAA 1997 Income Tax Assessment Act 1997
S(GCLIE) Act Superannuation (Government
Co-contribution for Low Income Earners)
Act 2003
SIS Regulations Superannuation Industry (Supervision)
Regulations 1994
TAA 1953 Taxation Administration Act 1953
1
General outline and financial impact
Portability of superannuation between Australia and
New Zealand
Schedule 1 to this Bill amends the Income Tax Assessment Act 1997
(ITAA 1997) and other Acts to introduce an Arrangement that allows
individuals to move their retirement savings between Australia and
New Zealand.
Date of effect: The amendments commence on the day the Arrangement
between the Government of Australia and the Government of
New Zealand comes into force for Australia.
Proposal announced: This measure was jointly announced by the
Treasurer and the New Zealand Minister for Finance in the Treasurer's
Media Release No. 084 of 16 July 2009.
Financial impact: The measure has a positive revenue impact of
$6.8 million over four years to 2016-17.
Human rights implications: This Bill does not raise any human rights
issue. See Statement of Compatibility with Human Rights -- Chapter 1,
paragraphs 1.76 to 1.96.
Compliance cost impact: The measure is expected to have a medium
overall compliance cost impact, comprised of a medium implementation
impact and a low increase in ongoing compliance costs.
3
Portability of superannuation between
Australia and New Zealand
Outline of chapter
Schedule 1 to this Bill amends the Income Tax Assessment Act 1997
(ITAA 1997) and other Acts to allow individuals to move their retirement
savings between Australia and New Zealand.
All references in this chapter are to the ITAA 1997 unless otherwise
specified.
Context of amendments
1.2 The Australian Government is committed to the closest possible
relations between Australia and New Zealand. The year 2013 is the
thirtieth anniversary of the Closer Economic Relations Trade Agreement
which, together with the Single Economic Market agenda, has brought
down trade barriers, reduced costs for business, encouraged investment
and created jobs and economic growth for both Australia and
New Zealand.
1.3 Australians and New Zealanders may move freely across the
Tasman Sea and can live and work in either country. New Zealanders
living in Australia can contribute to Australian superannuation funds.
The current superannuation laws do not allow Australians and New
Zealand citizens living in Australia, who leave Australia indefinitely, to
either access their superannuation benefits on their departure (prior to
reaching preservation age) or to move their benefits to a superannuation
fund in another country.
On 16 July 2009, the Australian Treasurer and the New Zealand
Minister of Finance signed an Arrangement between the Government of
Australia and the Government of New Zealand on Trans-Tasman
Retirement Savings Portability (the Arrangement). The Arrangement
establishes a scheme to enable Australians and New Zealanders to transfer
their retirement savings when they move between Australia and New
Zealand, while preserving the integrity of the retirement savings systems
of both countries.
5
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
The Arrangement is intended to enhance the development of a
seamless trans-Tasman labour market and supports progress towards a
single economic market, to which the two Governments are jointly
committed through the Australia New Zealand Closer Economic Relations
Trade Agreement.
The Arrangement is intended to apply to individuals who emigrate
between the two countries and intend to stay indefinitely or permanently
in the host country.
For example, individuals with an interest in an Australian
superannuation fund may transfer their superannuation benefits to a
New Zealand KiwiSaver scheme when they move to New Zealand.
Similarly, individuals in New Zealand who hold retirement savings in
a KiwiSaver account will be able to transfer those savings to an Australian
superannuation fund when they move to Australia.
The Arrangement assists Australians and New Zealanders to
streamline their financial affairs when they cross the Tasman, consolidate
their retirement savings in their country of residence and avoid paying
unnecessary fees and charges on multiple accounts held in the two
countries.
The Arrangement may also assist funds by removing small or inactive
accounts, belonging to former members now living in New Zealand, from
the Australian superannuation system.
Details of the Arrangement
Key features of the Arrangement include:
· individuals may transfer their retirement savings between
an Australian complying superannuation fund and a
New Zealand KiwiSaver scheme;
· the transfer of retirement savings is voluntary for members,
and voluntary for funds to accept the transferred savings;
· retirement savings are to be transferred with minimal
compliance and administration costs;
· New Zealand-sourced retirement savings transferred to
Australia are subject to the non-concessional contributions
cap on their initial entry into the Australian superannuation
system;
6
Portability of superannuation between Australia and New Zealand
· the transferred savings are generally subject to the rules of
the host country, with limited and specified exceptions (see
paragraphs 1.14 to 1.17); and
· the transferred savings must be separately identifiable within
the account established in the host country, to allow the
application of the specified source country rules (see
paragraphs 1.14 to 1.17).
Australian-sourced retirement savings held in KiwiSaver schemes:
· may not be withdrawn to purchase a first home;
· may be accessed when the individual reaches age 60 and
satisfies the Australian definition of retirement at that age;
and
· may not be transferred to a third country.
New Zealand-sourced retirement savings held in Australian
superannuation funds:
· may only be transferred to and held in complying
superannuation funds that are regulated by the Australian
Prudential Regulation Authority;
· may not be transferred to or held in self-managed
superannuation funds;
· may not be transferred to a third country; and
· may be accessed when the member reaches the age of
retirement as defined in the New Zealand Superannuation
and Retirement Income Act 2001 (currently 65).
The Arrangement specifies that New Zealand-sourced retirement
savings held in Australian superannuation funds may not be accessed
under the conditions of release for retirement or attaining preservation age
as defined in the Superannuation Industry (Supervision) Regulations 1994
(SIS Regulations), that is conditions of release 101 and 110 respectively
of Schedule 1 to the SIS Regulations (see Example 1.4).
The regulations may prescribe the preservation rules and conditions of
release that apply to New Zealand-sourced amounts, consistent with the
terms of the Arrangement.
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Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
A key feature of the Arrangement is that New Zealand-sourced
amounts held in Australian complying superannuation funds are generally
subject to Australian tax and superannuation rules, consistent with the
terms of the Arrangement (see Example 1.2).
Consequently, earnings on New Zealand-sourced amounts are taxed at
Australian rates and are included in the taxable component of the
member's interest. If the member later transfers the benefits to a
KiwiSaver scheme, the earnings are included in the Australian-sourced
amount.
A consequence of being subject to Australian superannuation rules is
that New Zealand-sourced amounts held in Australian complying
superannuation funds cannot be withdrawn to purchase a first home.
Australian superannuation legislation does not permit benefits to be
withdrawn for this purpose.
Australian-sourced amounts held in KiwiSaver schemes are generally
subject to New Zealand tax and superannuation rules, consistent with the
terms of the Arrangement (see Example 1.6).
Summary of new law
Schedule 1 to the Bill amends the ITAA 1997 to implement the
taxation treatment that applies to retirement savings transferred between
Australia and New Zealand under the Arrangement.
Amounts may only be transferred between KiwiSaver schemes and
Australian complying superannuation funds, consistent with the terms of
the Arrangement. A complying superannuation fund includes an eligible
rollover fund.
Amounts transferred from a KiwiSaver scheme to an Australian
complying superannuation fund are treated as contributions made by the
member for the member's benefit.
The contributions are not taxed on their entry into the Australian
superannuation system.
The contributions are non-concessional contributions and are subject
to the non-concessional contributions cap on their initial entry into the
Australian superannuation system, consistent with the terms of the
Arrangement. If the contribution also includes any Australian-sourced or
returning New-Zealand sourced amounts, these amounts may be excluded
from the cap in certain circumstances (see paragraphs 1.48 to 1.52).
8
Portability of superannuation between Australia and New Zealand
New Zealand-sourced retirement savings are included in the
contributions segment of a superannuation interest and therefore form part
of the tax free component of the interest. Any Australian-sourced amount
of the contribution may be included in the contributions segment in
certain circumstances (see paragraphs 1.57 to 1.61).
Amounts transferred from an Australian complying superannuation
fund to a KiwiSaver scheme are not taxed on their exit from the
Australian superannuation system. The departing Australia
superannuation payment does not apply to Australian and New Zealand
citizens and to permanent residents.
Schedule 1 also permits the SIS Regulations to set out the
superannuation treatment of retirement savings transferred under the
Arrangement. For example, the regulations may prescribe that
contributions received from a KiwiSaver scheme and amounts transferred
to a KiwiSaver scheme are subject to the contribution and payment
standards respectively in the SIS Regulations.
Schedule 1 to the Bill also amends the Taxation Administration Act
1953 (TAA 1953) and the Superannuation (Government Co-contribution
for Low Income Earners) Act 2003 (S(GCLIE) Act).
Comparison of key features of new law and current law
New law Current law
Members of Australian There are no provisions to allow
superannuation funds may transfer members of Australian
their superannuation benefits to a superannuation funds who emigrate
New Zealand KiwiSaver scheme. to transfer their superannuation
benefits to a foreign superannuation
fund.
Members of KiwiSaver schemes may Retirement savings from foreign
transfer their retirement savings to an superannuation funds may be
Australian superannuation fund. transferred into the Australian
superannuation system.
9
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
New law Current law
Contributions from KiwiSaver Retirement savings transferred from
schemes are: foreign superannuation funds are:
· personal contributions of the · personal contributions of the
individual; individual;
· non-concessional contributions · non-concessional contributions
and subject to the and subject to the
non-concessional contributions non-concessional contributions
cap; cap; and
· not taxed; and · may be taxable in certain
· included in the contributions circumstances.
segment of the superannuation
interest.
Benefits transferred to a KiwiSaver No equivalent.
scheme are not taxed on their exit
from the Australian superannuation
system.
When benefits are transferred to a No equivalent.
KiwiSaver scheme, the transferring
trustee of the Australian fund must
provide a statement in respect of the
benefits to the KiwiSaver scheme
provider and to the member.
Detailed explanation of new law
Introduction of Trans-Tasman Retirement Savings Portability
Schedule 1 sets out the tax provisions that apply to amounts
transferred between Australian complying superannuation funds and
New Zealand KiwiSaver schemes under the Arrangement. The SIS
Regulations may prescribe the superannuation treatment of these amounts.
Division 312 inserts provisions about amounts paid between New
Zealand KiwiSaver schemes and Australian complying superannuation
funds. [Schedule 1, item 2, section 312-1]
Subdivision 312-A provides that the Division implements the
Arrangement between the Governments of Australia and New Zealand on
Trans-Tasman Retirement Savings Portability. [Schedule 1, item 2,
section 312-5]
10
Portability of superannuation between Australia and New Zealand
Definitions
A number of new definitions are inserted into the ITAA 1997.
`KiwiSaver scheme' has the meaning given by the KiwiSaver Act 2006
of New Zealand. [Schedule 1, item 4, subsection 995-1(1)]
KiwiSaver schemes were established in New Zealand in 2007 to help
scheme members save for their retirement.
`KiwiSaver scheme provider' has the meaning given by the KiwiSaver
Act 2006 of New Zealand. [Schedule 1, item 5, subsection 995-1(1)]
Schedule 1 to the Bill also inserts definitions for `Australian-sourced
amount', `tax free component of an Australian-sourced amount', `New
Zealand-sourced amount' and `returning New Zealand-sourced amount'
[Schedule 1, items 3 and 6 to 8, subsection 995-1(1)]. The regulations may
prescribe the meanings of these definitions.
Contributions to Australian superannuation funds from KiwiSaver
schemes
Subdivision 312-B sets out the provisions relating to amounts
contributed to Australian superannuation funds from KiwiSaver schemes
(see Example 1.1).
Contribution to complying superannuation fund
An amount transferred from a KiwiSaver scheme to a complying
superannuation fund is treated as a personal contribution. [Schedule 1,
item 2, subsection 312-10(1)]
Consequently, the contribution is:
· not included in the assessable income of the receiving
Australian superannuation fund [Schedule 1, item 2, note 1 to
subsection 312-10(1)];
· treated as a non-concessional contribution [Schedule 1, item 2,
note 2 to subsection 312-10(1)]; and
· included in the contributions segment of the member's
superannuation interest.
11
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
Division 290 of the ITAA 1997 (Contributions to superannuation
funds) does not apply to the contribution, consistent with the treatment of
roll-over superannuation benefits between Australian funds. [Schedule 1,
item 2, subsection 312-10(2)]
Consequently, the contribution is not deductible as a personal
contribution under Subdivision 290-C of the ITAA 1997 and is not
eligible for a spouse contribution offset under Subdivision 290-D.
Section 295-200 and Subdivision 305-B of the ITAA 1997 do not
apply to the contribution. [Schedule 1, item 2, subsection 312-10(2)]
Subsection 312-10(2) clarifies that the contribution is not subject to the
tax arrangements that may, in certain circumstances, apply to amounts
transferred from foreign superannuation funds. That is, the contribution,
or part of the contribution, is not included in the assessable income of the
receiving Australian superannuation fund as a transfer from a foreign
superannuation fund.
Non-concessional contributions
The contribution is treated as a non-concessional contribution on its
initial entry into the Australian superannuation system. As such, it is
subject to the non-concessional contributions cap under
Subdivision 292-C of the ITAA 1997. Contributions that exceed the
non-concessional contributions cap (worked out under section 292-85 of
the ITAA 1997) are liable to the excess non-concessional contributions
tax.
The regulations may prescribe that the contribution is subject to the
contributions standards in the SIS Regulations, including the requirement
for fund trustees to reject a single contribution that exceeds the
non-concessional contributions cap.
Australian-sourced and returning New Zealand-sourced amounts of the
contribution may be excluded from the non-concessional contributions
cap, as these amounts may have already been counted towards the cap in
the year in which they were first contributed to an Australian
superannuation fund.
In order for these amounts to be excluded from the non-concessional
contributions cap, the receiving Australian fund trustee must be advised of
any Australian-sourced or returning New Zealand-sourced amounts of the
contribution. The regulations may prescribe that the KiwiSaver scheme
provider or the member may give this information to the receiving fund's
trustee. [Schedule 1, item 2, subsection 312-10(3)]
12
Portability of superannuation between Australia and New Zealand
The note to the subsection clarifies that the returning amounts of the
contribution are excluded from non-concessional contributions, and the
balance of the contribution is included in non-concessional contributions.
[Schedule 1, item 2, note to subsection 312-10(3)]
Information about amounts previously contributed to an Australian
complying superannuation fund is provided to the KiwiSaver scheme
provider and to the member on the statement about benefits paid to
KiwiSaver schemes (see paragraphs 1.66 - 1.69). This information assists
the KiwiSaver scheme provider or the member to provide evidence of the
returning amounts' status to the receiving fund's trustee, so that the
amounts are not subject to the contributions cap again (see Examples 1.3,
1.5 and 1.7).
The exclusion of these amounts may reduce the amount of the
contribution that is subject to the non-concessional contributions cap.
Assessable income and capital gains
The contribution is non-assessable non-exempt income of the member.
[Schedule 1, item 2, subsection 312-10(4)]
This tax treatment is consistent with the treatment of roll-over
superannuation benefits between Australian superannuation funds
(section 306-5 of the ITAA 1997).
The contribution is not subject to capital gains tax on entry into the
Australian superannuation system. [Schedule 1, item 2, subsection 312-10(5)]
This tax treatment is consistent with the treatment of contributions to a
superannuation fund.
Components of a superannuation interest
A New Zealand-sourced amount and any tax free component of an
Australian-sourced amount of the contribution are included in the
contributions segment of the member's superannuation interest in the
fund. [Schedule 1, item 2, paragraphs 312-10(6)(a) and (b)]
The effect of this provision is that these amounts form part of the tax
free component of the member's interest in the Australian superannuation
fund. The tax free component will be taken into account in working out
the components of any benefits subsequently paid from the member's
interest.
In order for these amounts to be included in the contributions segment,
the receiving Australian fund trustee must be advised of the New Zealand-
13
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
sourced amount and any tax free component of an Australian-sourced
amount of the contribution. The regulations may prescribe that the
KiwiSaver scheme provider or the member may give this information to
the receiving fund's trustee. [Schedule 1, item 2, subsection 312-10(6)]
The note to the subsection 312-10(6) clarifies that the
New Zealand-sourced amount and any tax free component of an
Australian-sourced amount of the contribution are included in the
contributions segment and form part of the tax free component of the
member's interest. The balance of the contribution is excluded from the
contributions segment and is included in the taxable component.
[Schedule 1, item 2, note to subsection 312-10(6)]
Information about the tax free and taxable components of the
member's former interest in an Australian superannuation fund is
provided to the KiwiSaver scheme provider and to the member on the
statement about benefits paid to KiwiSaver schemes (see paragraphs
1.66 - 1.69). This information assists the KiwiSaver scheme provider or
the member to provide evidence of any tax free component of an
Australian-sourced amount to the receiving fund's trustee so the tax free
component maintains its status in the member's current interest (see
Example 1.7).
Example 1.1
Stanley, aged 35, lives in New Zealand and has accumulated
NZ$200,000 in his KiwiSaver scheme account. Stanley decides to
move to Australia indefinitely and transfer his KiwiSaver scheme
savings to an Australian complying superannuation fund.
Stanley's KiwiSaver contributions into his Australian fund are treated
as a non-concessional contribution and are subject to the current
Australian annual non-concessional contribution cap of AU$150,000.
However, the Australian rules allow Stanley to bring forward the next
two years' worth of contributions, allowing a maximum transfer of
AU$450,000. This allows Stanley to transfer all his KiwiSaver scheme
savings into Australia's superannuation system.
Stanley's KiwiSaver scheme savings are not taxed on their entry into
the Australian superannuation system and form part of the tax free
component of his interest in his Australian superannuation fund. They
are tagged within his account as being New-Zealand-sourced.
Example 1.2
Stanley's New Zealand-sourced savings in his Australian
superannuation fund savings are subject to Australian taxation rates.
Earnings on the New Zealand-sourced savings are included with his
Australian-sourced amounts (for example, superannuation guarantee
14
Portability of superannuation between Australia and New Zealand
contributions from his employer) and form part of the taxable
component of his interest.
His New Zealand-sourced savings are, for the most part, also subject to
Australian superannuation rules, although specified New Zealand
source country rules apply.
A key source country rule is that Stanley is not able to access his
New Zealand-sourced savings until he reaches the KiwiSaver age of
retirement of 65 years. This is later than the preservation age
(between 55 and 60) and retirement age (60) in Australia.
Stanley is also unable to use his New Zealand-sourced savings to
purchase a first home while they are held in his Australian
superannuation fund, or to transfer his New Zealand-sourced savings to
a self-managed superannuation fund or to a third country.
Example 1.3
After ten years in Australia, Stanley considers moving back to New
Zealand. He would be able to transfer all his accumulated savings to a
KiwiSaver scheme account. The trustee of his transferring Australian
fund would provide the receiving KiwiSaver scheme provider, and
Stanley, with a statement about the transferred benefits, including
information about his contributions (concessional or non-concessional)
and the components (tax free or taxable).
Upon their transfer to the KiwiSaver scheme, Stanley's Australian
superannuation benefits would be tagged within his account as being
Australian-sourced.
Example 1.4
Stanley remains in Australia, reaches his Australian preservation age of
60 and decides to retire. He can only access his Australian-sourced
savings upon his retirement, as his New Zealand-sourced savings must
remain preserved in the fund until the higher KiwiSaver age of
retirement of 65 years.
Superannuation benefits paid to KiwiSaver schemes from Australian
superannuation funds
Subdivision 312-C sets out the provisions relating to superannuation
benefits paid to KiwiSaver schemes from Australian superannuation funds
(see Example 1.5).
A superannuation benefit paid to a KiwiSaver scheme provider by the
trustee of an Australian complying superannuation fund in respect of a
15
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
member is non-assessable non-exempt income of the member. [Schedule 1,
item 2, section 312-15]
This tax treatment is consistent with the treatment of roll-over
superannuation benefits between Australian superannuation funds
(section 306-5 of the ITAA 1997).
The regulations may prescribe the circumstances in which members of
Australian superannuation funds may transfer their benefits to a
KiwiSaver scheme.
Example 1.5
Silpa, aged 35, is an Australian citizen currently living in
New Zealand. During her working life in Australia she accumulated
AU$20,000 in her Australian complying superannuation fund. Silpa
has no intention of returning to Australia and would like to transfer her
Australian superannuation benefits into her KiwiSaver scheme account
in New Zealand.
The trustee of Silpa's transferring Australian fund provides the
receiving KiwiSaver scheme provider, and Silpa, with a statement
about the transferred benefits, including information about her
contributions (concessional or non-concessional) and the components
(tax free or taxable).
Upon their transfer to the KiwiSaver scheme, the savings are tagged
within Silpa's account as being Australian-sourced.
Example 1.6
Silpa's Australian-sourced savings are subject to New Zealand taxation
rates, and are for the most part subject to New Zealand superannuation
rules, although several specified Australian source country rules apply.
A key source country rule is that Silpa may access her
Australian-sourced savings on retirement at or after age 60. This is
currently earlier than the KiwiSaver age of retirement of 65 years.
Silpa is unable to use her Australian-sourced savings to purchase a first
home while the savings are held in a KiwiSaver scheme, or to transfer
her Australian-sourced savings to a third country.
Example 1.7
After fifteen years in New Zealand, Silpa decides to return to Australia
and transfer all her accumulated savings to an Australian complying
superannuation fund.
16
Portability of superannuation between Australia and New Zealand
Silpa is able to provide the receiving Australian trustee with the
statement from her previous Australian superannuation fund to confirm
that part of her Australian-sourced savings were previously counted
towards the non-concessional contributions cap. This amount is not
counted again towards the non-concessional contributions cap. Silpa's
New Zealand-sourced savings, and the balance of her
Australian-sourced savings, are subject to the non-concessional
contributions cap.
The statement also confirms that part of Silpa's Australian-sourced
savings was included in the tax free component of her former interest.
This amount is included in the contributions segment (and the tax free
component) of her new Australian interest, along with her
New Zealand-sourced savings. The balance of her Australian-sourced
savings is included in the taxable component of her new interest.
Example 1.8
If Silpa had remained in New Zealand and retired on reaching age 60,
she could only access her Australian-sourced savings. Silpa's
New Zealand sourced savings must remain preserved in the scheme
until the higher KiwiSaver age of retirement of 65 years.
Statements about benefits paid to KiwiSaver schemes
Schedule 1 amends the TAA 1953 to insert a provision requiring the
trustee of an Australian superannuation fund to provide a statement to a
KiwiSaver scheme provider and to the member in respect of the member's
benefits paid to the KiwiSaver scheme. [Schedule 1, item 10, section 390-12 of
the TAA 1953]
The transferring trustee must give the statement to the receiving
KiwiSaver scheme provider within seven days after the payment of the
benefit, and give the statement to the member within 30 days after the
payment of the benefit. The statement must be in the approved form.
[Schedule 1, item 10, subsections 390-12(2) and (3) of the TAA 1953]
The approved form may require the statement to contain information
about contributions made to the fund in respect of the member,
information about the tax free and taxable components of the benefit, and
other information relating to the benefit. [Schedule 1, item 10, subsections 390-
12(4) and (8) of the TAA 1953]
The statement provides information to the KiwiSaver provider and to
the member about the transferred benefits. This information assists the
KiwiSaver scheme provider or the member to provide evidence of any
returning amounts' tax status to a receiving fund's trustee, should these
amounts re-enter the Australian superannuation system. For example, the
statement would confirm whether the amounts were previously counted
17
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
towards the non-concessional contributions cap, and whether the amounts
were included in the taxable or tax free components of the interest (see
Examples 1.3, 1.5 and 1.7).
Superannuation co-contribution for low income earners
The contribution is not an eligible personal superannuation
contribution for the purposes of receiving the Government co-contribution
for low income earners [Schedule 1, item 9, subparagraph 7(1)(c)(iia) of the
S(GCLIE) Act]. This provision is consistent with the treatment of a
superannuation lump sum paid from a foreign superannuation fund to a
complying superannuation fund.
Application and transitional provisions
The amendments made by Schedule 1 apply to amounts transferred
between complying superannuation funds and KiwiSaver schemes on or
after the Arrangement takes effect. [Schedule 1, item 12]
The amendments made by this Schedule apply only to amounts
transferred under the Arrangement. They do not apply to amounts
transferred before this Arrangement commences, or to amounts
transferred under circumstances that fall outside of this Arrangement, or
to amounts transferred between schemes or funds other than KiwiSaver
schemes and Australian complying superannuation funds.
The Minister will announce when the Arrangement comes into force
for Australia by notice in the Gazette.
The Arrangement comes into force no sooner than the first day of the
second month following the month in which the two Governments have
exchanged notes informing each other that their respective constitutional
or legislative matters necessary to give effect to the Arrangement have
been fulfilled.
Consequential amendments
Contributions to Australian superannuation funds from KiwiSaver
schemes, and superannuation benefits paid to KiwiSaver schemes from
Australian funds, are included in the list of non-assessable non-exempt
income provisions in section 11-55 of the ITAA 1997. [Schedule 1, item 1,
section 11-55]
18
Portability of superannuation between Australia and New Zealand
Section 390-12 is included in the provision about providing
information in a statement to an individual or the trustee of the
individual's estate. [Schedule 1, item 11, paragraph 390-15(1)(a) of the TAA 1953]
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Portability of superannuation between Australia and New Zealand
1.76 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
1.77 Schedule 1 to this Bill amends the ITAA 1997 and other Acts to
implement an Arrangement that allows individuals to move their
retirement savings between Australia and New Zealand.
1.78 On 16 July 2009, the Governments of Australia and
New Zealand signed an Arrangement on Trans-Tasman Retirement
Savings Portability (the Arrangement). The Arrangement establishes a
scheme to enable Australians and New Zealanders to transfer their
retirement savings when they move between Australia and New Zealand,
while preserving the integrity of the retirement savings systems of both
countries.
1.79 The Arrangement is intended to enhance the development of a
seamless trans-Tasman labour market and supports progress towards a
single economic market, to which the two Governments are jointly
committed through the Australia New Zealand Closer Economic Relations
Trade Agreement.
1.80 Key features of the Arrangement include:
· individuals may transfer their retirement savings between
certain superannuation funds and schemes in Australia and
New Zealand;
· the transfer of retirement savings is voluntary for members,
and for funds to accept the transferred savings; and
19
Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
· transferred savings are generally subject to the tax and
superannuation rules of the host country.
1.81 Schedule 1 to the Bill implements the taxation treatment of the
retirement savings transferred under the Arrangement.
1.82 Broadly, the savings transferred between the two countries are
not subject to tax on entry into, or exit from, the Australian
superannuation system.
1.83 New Zealand retirement savings transferred to Australian
superannuation funds are subject to the non-concessional contributions
cap on their initial entry into the Australian superannuation system, in the
same way that contributions from resident fund members are subject to
the cap.
1.84 The trustee of the transferring Australian superannuation fund
must provide the receiving KiwiSaver scheme provider, and the member,
with personal information about the member and details of the transferred
savings. The disclosure of this information is required to facilitate the
transfer and to assist the member to obtain favourable tax treatment,
should the transferred savings re-enter the Australian superannuation
system.
Human rights implications
1.85 This Bill engages the following human rights:
· right to freedom of movement;
· right to work and rights at work;
· prohibition on interference with privacy; and
· right to equality and non-discrimination.
Right to freedom of movement
1.86 The Bill engages and promotes the right to freedom of
movement in Article 12 of the International Covenant on Civil and
Political Rights.
1.87 The Bill removes an impediment to labour mobility between
Australia and New Zealand. The impediment is the current inability of
individuals to transfer their retirement savings when they move between
Australia and New Zealand, resulting in those individuals holding
retirement savings accounts in two countries.
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Portability of superannuation between Australia and New Zealand
Right to work and rights at work
1.88 The Bill engages and promotes the right to work and rights at
work in Articles 6(1) and 7 of the International Covenant on Economic,
Social and Cultural Rights.
1.89 The Bill enhances the movement of labour between Australia
and New Zealand by helping individuals streamline and consolidate their
retirement savings in their country of residence.
Prohibition on interference with privacy
1.90 The Bill engages and promotes the prohibition on interference
with privacy in Article 17 of the International Covenant on Civil and
Political Rights.
1.91 The disclosure of personal information and details of the
member's superannuation benefits is protected by the transferring
trustee's obligations under the Anti-Money Laundering and
Counter-Terrorism Financing Act 2006, the Privacy Act 1988 and the
National Privacy Principles under the Privacy Act.
Right to equality and non-discrimination
1.92 The Bill engages and promotes the right to equality and
non-discrimination in Article 2(2) of the International Covenant on
Economic, Social and Cultural Rights and Article 26 of the International
Covenant on Civil and Political Rights.
1.93 Retirement savings from foreign superannuation funds may be
transferred into the Australian superannuation system. However, there are
no provisions in the superannuation legislation to allow Australian and
New Zealand citizens and permanent residents who emigrate to transfer
their benefits to a foreign superannuation fund.
1.94 The Bill allows Australian and New Zealand citizens and
permanent residents of Australia to transfer their superannuation benefits
between certain Australian and New Zealand funds and schemes.
1.95 As noted above, the Arrangement is intended to enhance the
development of a seamless trans-Tasman labour market and supports
progress towards a single economic market, to which the two
Governments are jointly committed through the Australia New Zealand
Closer Economic Relations Trade Agreement.
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Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012
Conclusion
1.96 This Bill is compatible with human rights as it promotes the
right to freedom of movement, the right to work and rights at work, the
prohibition on interference with privacy and the right to equality and
non-discrimination.
Minister for Financial Services and Superannuation, the
Hon Bill Shorten MP
22
Index
Schedule 1: Portability of superannuation between Australia
and New Zealand
Bill reference Paragraph number
Item 1, section 11-55 1.75
Item 2, section 312-5 1.33
Item 2, subsection 312-10(1) 1.40
Item 2, note 1 to subsection 312-10(1) 1.40
Item 2, note 2 to subsection 312-10(1) 1.40
Item 2, subsection-312-10(2) 1.42, 1.44
Item 2, subsection 312-10(3) 1.49
Item 2, note to subsection 312-10(3) 1.50
Item 2, section 312-10(4) 1.53
Item 2, section 312-10(5) 1.55
Item 2, subsection 312-10(6) 1.59
Item 2, note to subsection 312-10(6) 1.60
Item 2, paragraphs 312-10(6)(a) and (b) 1.57
Item 2, section 312-15 1.63
Item 2, section 312-1 1.32
Items 3 and 6 to 8, subsection 995-1(1) 1.38
Item 4, subsection 995-1(1) 1.35
Item 5, subsection 995-1(1) 1.37
Item 9, subparagraph 7(1)(c)(iia) of the S(GCLIE) Act 1.70
Item 10, subsections 390-12(4) and (8) of the TAA 1953 1.68
Item 10, section 390-12 of the TAA 1953 1.66
Item 10, subsections 390-12(2) and (3) of the TAA 1953 1.67
Item 11, paragraph 390-15(1)(a) of the TAA 1953 1.76
Item 12 1.71
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