Josh Frydenberg (Kooyong, Liberal Party, Minister for the Environment and Energy) Share this | Hansard source

Firstly, I would like to thank those members who have contributed to this debate.

Schedule 1 of this bill introduces changes to support the integrity of the superannuation taxation reform package and ensure that it operates as intended. The superannuation taxation reform package was passed by parliament in November 2016. It is the most comprehensive suite of superannuation taxation reforms in a decade, delivering on our commitment to improve the fairness, sustainability, flexibility and integrity of the superannuation system. In the process of implementing the superannuation taxation reform package, concerns were identified about the ability of self-managed superannuation fund members to circumvent the new cap on tax-free retirement-phase assets through borrowings. From 1 July 2017 a transfer balance credit will arise where there is a repayment of the principal and interest of a limited recourse borrowing arrangement that has the effect of shifting value from the accumulation phase into the tax-free retirement phase. This will support the integrity of the superannuation tax reform package by ensuring that the targeting of tax concessions is not undermined. The changes affect the ability of SMSFs to enter into an LRBA where the member has already reached their transfer balance cap and wishes to finance the LRBA through a transfer of accumulation funds to the pension phase.

Schedule 1 also makes a number of minor and technical amendments that will ensure that the package operates as intended. These changes will be welcomed by industry. With changes to clarify that pooled superannuation trusts that are eligible for superannuation relief to improve outcomes for recipients of a structured settlement or personal injury order as a result of a serious or catastrophic injury, and to clarify the treatment of transition to retirement income streams when a member has satisfied a nil condition of release, these measures will improve the operation of the superannuation tax reform package to ensure it achieves its objective of a fair, more sustainable and more flexible superannuation system.

Schedule 2 of the bill refines changes made to personal and corporate insolvency law by the Insolvency Law Reform Act 2016. The passage of this schedule will lower compliance costs for insolvency practitioners and companies under administration and ensure that the Fair Entitlements Guarantee Recovery Program can access the information it needs to reclaim funds paid out under the program. This schedule amends a prohibition introduced by the Insolvency Reform Act which may be interpreted as creating unnecessarily high compliance costs. The prohibition prevents insolvency practitioners deriving a profit except as approved by the Corporations Act 2001 or the Bankruptcy Act 1966. This schedule clarifies the operation of the prohibition and removes the requirement for creditors to approve a single profit or advantage each time it is on-paid to a related entity of the practitioner—including, for example, payments made to the practitioner's employees in the ordinary course of their employment. These amendments will reduce costs without weakening the prohibition's intended protective purpose. The schedule also repeals a provision inserted by the Reform Act that would inhibit the Fair Entitlements Guarantee Recovery Program's work of reclaiming funds owed by insolvent companies to their employees. The amendments in the schedule present refinements to existing law. Though minor, the amendments will be welcomed by insolvency practitioners, creating certainty and efficiency while maintaining the positive effect of previous reforms to insolvency law.

I commend the bill to the House.

Question agreed to.

Bill read a second time.

See this speech in context