Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

At least we are certain about what to do on trusts.

Schedule 3 contains amendments to streamline the process for claiming tax deductions for the cost of total and permanent disability (TPD) insurance provided through superannuation. These amendments are designed to reduce costs for superannuation funds in complying with the law following the expiry of the current transitional relief which applies to these insurance policies.

Superannuation funds commonly take out death and disability insurance to cover liabilities they may incur to their members. Disability insurance taken out by superannuation funds includes TPD insurance.

The cost of TPD insurance provided through superannuation is deductible to the extent the policies provide cover which is consistent with the definition of 'disability superannuation benefit' in the Income Tax Assessment Act 1997. Where broader insurance cover is provided, superannuation funds are required to obtain an actuary's certificate to determine the deductible portion of the premium.

These amendments allow the percentage of certain TPD insurance premiums that is deductible to be specified in regulations. This will assist superannuation funds by avoiding the need to engage an actuary to determine the deductible portion of premiums in many cases. The regulations containing the prescribed percentages will be developed following consultation with industry.

The government introduced transitional provisions in 2010 which were designed to allow time for the industry practice of deducting the full cost of broader disability insurance policies to be brought into alignment with the operation of the law. These transitional provisions expire on 30 June 2011.

The amendments in this schedule extend this transitional relief to funds that self-insure their liability to provide disability benefits. This will provide equitable treatment between self-insured funds and premium-paying funds, and will avoid the need for self-insured funds to amend tax returns and obtain revised actuary's certificates where they have claimed deductions for broader disability insurance for the relevant income years.

Schedule 4 introduces amendments to ensure additional employer contributions imposed by an industrial agreement, or the rules of a superannuation fund, will not be reportable employer superannuation contributions.

Reportable employer superannuation contributions are contributions to superannuation above the minimum required by the superannuation guarantee that employees can influence, such as salary sacrifice and similar arrangements. Reportable employer superannuation contributions are counted as income when determining a person's eligibility for government financial assistance programs.

Contributions mandated by an industrial agreement, or a superannuation fund cannot be controlled by employees, and cannot be accepted by employees as income or other benefit. These contributions should not be considered income when assessing a person's eligibility for government financial assistance.

Full details of the measures in this bill are contained in the explanatory memorandum.

Debate adjourned.

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