A recent speech by Senator Helen Coonan reminded us of the scale of legislative and policy change that has affected, and will affect, the superannuation industry this year. Her list of plans for the year are impressive, but she also has considerable scope for further reform in a number of areas, particularly in those that affect individuals at a basic human level.
In a country that has modernised and extensively reformed its financial services, privacy, consumer and human rights laws, the current SIS Regulations that set the preservation age for the withdrawal and use of super benefits for Australians, for example, don’t even contemplate what is the reality for the average indigenous male and female Australian. It’s out of step with worldwide trends and in need of reform.
Currently, a person’s preservation age depends on his or her birth date, but the Australian Bureau of Statistics’ (ABS) paper on indigenous mortality rates illustrates that most indigenous males, and many indigenous females, assuming they have accumulated super benefits as a result of employment, do not reach ‘normal retirement age’, never mind preservation age.
The ABS figures show that the life expectancy at birth for the indigenous population does differ greatly from that of the total Australian population. Census and ABS data indicate that indigenous males born in 1995-1997 are expected to live 54 years, around 21.5 less than the life expectancy for total males (75.7 years), while indigenous females are expected to live 61 years. It is time that our laws reflected this reality.
The Government’s initiative of reducing the superannuation surcharge rates over three years is welcome but does not detract from the fact that this tax is unfair, unreasonable and, in many instances, a contradiction of retirement income policy that has as its underpin the accumulation of superannuation benefits.
It is well documented that to best utilise the benefits of compound interest, one must save early and contribute continuously. Male and female postgraduate students, for example, and women who have taken time out of the workforce to raise their children and then re-enter the workforce late or return to full-time work later in life on a salary that is caught by the surcharge, suffer detrimentally. Is it not time that the surcharge legislation is amended so that assessable amounts cease to be referable to salaries and rather be made referable to account balances in super funds?
At a state level, at least, laws affecting same sex partners have been revised. At a Federal level, however, the law of superannuation is still discriminatory, especially so if one is gay or lesbian and a member of a super fund. From an estate planning perspective, it is essential for gay and lesbian couples to each have a will in which they fully provide for their partner — if that is their intention — and, in spite of the inequitable lack of tax concessions that are available to same sex partners, to nominate their legal personal representative as their nominated beneficiary.
The reason for this is that unless they can prove that they were wholly or partly dependent upon their deceased same sex partner, same sex partners in a superannuation context are not defined as a “dependant” of the deceased partner under current legislation. This is a form of discrimination which should be remedied.
A report by the Human Rights and Equal Opportunity Commission has recommended that the legislation be amended. It found that Australia’s super laws breach international treaties, including the International Covenant on Civil and Political Rights and two international conventions to which Australia is a signatory.
Currently, trustees may be risking their fund’s complying status if a death benefit is paid to a same sex partner. Further discrimination also occurs on the death of a member where there is a failure to acknowledge or investigate the dependency of a child of the same sex couple when the member contributor is not the biological parent.
In New South Wales, the Superannuation Legislation Amendment (Same Sex Partners) Act 2000 has been passed, which affects New South Wales Government employees only. It changes the definition of de facto partner to be the same as the one provided in Section 4 of the controversial Property (Relationships) Act 1984 as amended at July 13, 1999, namely:
“A relationship between two adult persons:
(a) who live together as a couple, and
(b) who are not married to one another or related by family.”
The definition of a de facto spouse as found in the Income Tax Assessment Act 1936 (ITAA), however, is still discriminatory. It is defined to mean … “in relation to a person, includes another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person”.
The definition of dependant in the ITAA is spouse, child under the age of 18-years or financial dependant not including same sex partners. This means that although a death benefit may be paid to a same sex partner of a New South Wales government employee, the benefit will not attract the same tax concessions as it would if being paid to an opposite sex partner.
— Marie Sullivan is a business development executive at NSP Buck.
