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2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FIRST HOME SAVER ACCOUNTS (FURTHER PROVISIONS) AMENDMENT
BILL 2008
FIRST HOME SAVER ACCOUNT PROVIDERS SUPERVISORY LEVY
IMPOSITION BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary .................................................................................................. 5
General outline and financial impact ....................................................... 7
Chapter 1 Unclaimed money ....................................................... 11
Chapter 2 Secrecy and disclosure of information ........................ 19
Chapter 3 First Home Saver Accounts Supervisory Levy............ 25
Chapter 4 Other amendments ..................................................... 31
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ADIs authorised deposit-taking institutions
APRA Australian Prudential Regulation Authority
APRA Act Australian Prudential Regulation Authority
Act 1998
ASIC Australian Securities and Investments
Commission
ASIC Act Australian Securities and Investments
Commission Act 2001
ATO Australian Taxation Office
Commissioner Commissioner of Taxation
Corporations Act Corporations Act 2001
Family Law Act Family Law Act 1975
FHSA First Home Saver Accounts
FHSA Act First Home Saver Accounts Act 2008
FHSA (Further Provisions) First Home Saver Accounts (Further
Bill Provisions) Amendment Bill 2008
FHSA Supervisory Levy Bill First Home Saver Accounts Providers
Supervisory Levy Imposition Bill 2008
Financial Institutions Levy Financial Institutions Supervisory Levies
Collection Act Collection Act 1998
ITAA 1936 Income Tax Assessment Act 1936
ITAA 1997 Income Tax Assessment Act 1997
RSE registrable superannuation entity
RSA retirement savings account
SIS Act Superannuation Industry (Supervision)
Act 1993
TAA 1953 Taxation Administration Act 1953
TFN tax file number
5
General outline and financial impact
First Home Saver Accounts
The First Home Saver Accounts Act 2008, the First Home Saver Accounts
(Consequential Amendments) Act 2008 and the Income Tax (First Home
Saver Accounts Misuse Tax) Act 2008 implemented the Government's
election commitment to introduce First Home Saver Accounts (FHSAs).
Context
The First Home Saver Accounts (Further Provisions) Amendment
Bill 2008 (FHSA (Further Provisions) Bill) implements further aspects of
the Government's FHSA policy.
The First Home Saver Account Providers Supervisory Levy Imposition
Bill 2008 (FHSA Supervisory Levy Bill) introduces a framework for
imposing a levy on FHSA providers to provide funding for the Australian
Prudential Regulation Authority (APRA) to carry out its supervision of
financial institutions which offer FHSAs.
Overview of arrangements
The FHSA (Further Provisions) Bill deals with a number of areas,
including the following.
Secrecy and the exchange of information
Amendments are being made to ensure the secrecy provisions enable
Commonwealth agencies to share information they require in order to
fulfil their statutory obligations, while also ensuring the privacy of
account holders is protected.
Unclaimed money
A scheme for dealing with unclaimed money in FHSAs will be
established. This will be similar to the way other non-superannuation
investments are currently administered. FHSAs which have been inactive
for seven years, and where the provider has been unable to contact the
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
account holder, will be paid to the Commonwealth. Individuals who later
identify themselves to the FHSA provider will be able to reclaim their
money.
· The unclaimed money provisions will ensure that FHSA
providers are not required to service small, inactive accounts.
This is expected to ease the compliance burden for providers.
Supervisory levy
The FHSA Supervisory Levy Bill introduces a framework for imposing a
levy on FHSA providers to provide funding for APRA to carry out its
supervision of financial institutions which offer FHSAs. This is
consistent with the existing financial sector levy framework that funds
APRA's supervisory activities on a user-pays basis.
Outline
Chapter 1 describes the operation of the unclaimed money scheme.
Chapter 2 describes the secrecy and exchange of information provisions.
Chapter 3 describes the operation of the FHSA providers supervisory
levy.
Chapter 4 describes the various other amendments made by the FHSA
(Further Provisions) Bill.
Date of effect: The amendments in Schedule 1 to the FHSA (Further
Provisions) Bill apply from 1 October 2008. These provisions deal
primarily with taxation issues and ensure FHSAs operate as intended.
The amendments in Schedule 2 to the FHSA (Further Provisions) Bill
commence and apply from the day after Royal Assent.
The amendments in Schedule 3 to the FHSA (Further Provisions) Bill and
the FHSA Supervisory Levy Bill commence and apply from 1 July 2009.
The commencement of the amendments in Schedule 4 to the FHSA
(Further Provisions) Bill is contingent on the commencement of
Schedule 1 to the Family Law Amendment (De Facto Financial Matters
and Other Measures) Act 2008.
Proposal announced: FHSAs were announced in the 2007 Federal
election campaign. On 4 February 2008, the Treasurer and the Minister
for Housing announced that the Government had formally approved the
8
General outline and financial impact
establishment of FHSAs. A detailed proposal for public consultation was
released on 8 February 2008 in First Home Saver Accounts Outline of
proposed arrangements. The Government's final decisions were
announced as part of the 2008-09 Budget in the Treasurer's Media
Release No. 040 of 13 May 2008.
Financial impact: The amendments in the FHSA (Further Provisions)
Bill will not have a financial impact. The FHSA Providers Supervisory
Levy Bill is designed to recover the cost of APRA's supervision of
FHSA providers and therefore has no net financial impact.
Compliance cost impact: There are likely to be medium implementation
costs for providers who choose to offer FHSAs. However, the design of
the initiative as reflected in the law has sought to minimise compliance
costs for account providers.
9
Chapter 1
Unclaimed money
Outline of chapter
1.1 This chapter explains the operation of the unclaimed money
provisions in relation to First Home Saver Accounts (FHSAs).
Context of amendments
1.2 FHSAs can be offered by three different types of provider:
· authorised deposit-taking institutions (ADIs);
· life insurance companies; and
· registrable superannuation entity (RSE) licensees which can
provide public offer superannuation funds and are authorised
by the Australian Prudential Regulation Authority (APRA) to
offer FHSAs (authorised trustees).
1.3 The Life Insurance Act 1995 (section 216) and the Banking
Act 1959 (section 69) provide for the treatment of money, in a life
insurance company and bank account respectively, which become
unclaimed.
1.4 These Acts generally provide that a policy or account which is
inactive for seven years becomes unclaimed money and is to be paid to
the Commonwealth. The Australian Securities and Investments
Commission (ASIC) administer these provisions.
1.5 Without amendments, these Acts would apply to FHSAs
provided by life insurance companies and banks. However, because of
the particular requirements in those Acts, it is doubtful whether the
Commonwealth would be able to pay unclaimed moneys back to the bank
or life insurance company unless the account holder had satisfied the
FHSA withdrawal rules (including the four-year rule in the main case of a
home acquisition payment).
1.6 For superannuation, the Superannuation (Unclaimed Money and
Lost Members) Act 1999 provides for the treatment of unclaimed money
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
within superannuation. These rules will not apply to FHSAs held by
authorised trustees, as they are not `funds' within the meaning of that Act.
1.7 For these reasons, the First Home Saver Accounts (Further
Provisions) Amendment Bill 2008 inserts into the First Home Saver
Accounts Act 2008 (FHSA Act) separate unclaimed money provisions
which will deal specifically with FHSAs offered by all types of providers.
This will ensure a consistent framework and make it easier for FHSA
holders to understand what happens to their account if it becomes
unclaimed.
Summary of new law
1.8 At the end of each financial year, account providers must
provide ASIC with a statement of any unclaimed money held in FHSAs
they provide.
· An FHSA balance will be unclaimed money if it has not had
any withdrawals or contributions for at least seven years, and
the FHSA provider has been unable to contact the FHSA
holder after the end of that seven-year period.
1.9 Account providers must pay this unclaimed money to ASIC at
the same time they provide ASIC with the statement.
1.10 If an individual later identifies themselves to the FHSA
provider, the provider will apply to ASIC to have the money returned.
The account holder will be required to declare to their provider whether or
not they are still eligible to have an FHSA.
· If the account holder is still eligible to have an FHSA, the
provider will be able to reopen an FHSA.
· If the account holder is not eligible to have an FHSA, the
provider must contribute the money to a superannuation
account of the individual.
12
Unclaimed money
Comparison of key features of new law and current law
New law Current law
A single system will apply to FHSAs Three different systems would apply,
offered by ADIs, life insurance depending on whether the FHSA is
companies and authorised trustees. offered by an ADI, life insurance
If an FHSA has not had any company or authorised trustee.
withdrawals or contributions for at The Life Insurance Act 1995
least seven years and the FHSA (section 216) and the Banking
provider has been unable to contact Act 1959 (section 69) provide for the
the FHSA holder after the end of that treatment of FHSAs in a life
period, the FHSA will be unclaimed insurance company and bank account
money. respectively which become lost.
All providers will be required to pay · Generally, there is a requirement
unclaimed money to the in order to reclaim money that the
Commonwealth. individual be entitled to have the
· If an individual later identifies money paid to them.
themselves with the FHSA For authorised trustees, the
provider, the provider applies to Superannuation (Unclaimed Money
ASIC to have the money returned. and Lost Members) Act 1999
The account holder will be required provides for the treatment of
to declare to their provider whether or unclaimed money within
not they are still eligible to have an superannuation. These rules would
FHSA. not apply to FHSAs held by
authorised trustees, as FHSAs are not
· If the account holder is still `funds' within the meaning of that
eligible to have an FHSA, the Act. Consequently, no unclaimed
provider will be able to reopen an money provisions would operate on
FHSA. FHSAs issued by authorised trustees.
· If the account holder is not
eligible to have an FHSA, the
provider must contribute the
money to a superannuation
account of the individual.
Detailed explanation of new law
1.11 FHSAs will be excluded from the unclaimed money provisions
in both the Banking Act 1959 and the Life Insurance Act 1995. Notes will
be added to the relevant sections to ensure that readers are aware that
unclaimed FHSAs are dealt with in the FHSA Act. [Schedule 2, items 2 and 3,
subsection 69(3) of the Banking Act 1959 and Schedule 2, items 39 and 40,
subsection 126(1) of the Life Insurance Act 1995]
1.12 ASIC will have the general administration of the unclaimed
money provisions of the FHSA Act. [Schedule 2, item 4, subsection 3(3) of the
FHSA Act]
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First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
Definition of unclaimed money
1.13 FHSAs will be unclaimed money where:
· no contributions have been made to, and no payments have
been made from, the FHSA for a period of at least seven
years; and
· after the end of that period, the FHSA provider has been
unable to contact the person after making reasonable efforts.
[Schedule 2, items 12 and 14, sections 17A and 18 of the FHSA Act]
1.14 The payment of fees to the FHSA provider or amounts paid to
the Commonwealth in respect of overpayments of Government FHSA
contributions or tax on earnings, will not count as payments for the
purposes of determining whether an account is unclaimed. [Schedule 2,
item 12, section 17A of the FHSA Act]
Payment of unclaimed money to the Commonwealth
1.15 Account providers are required to provide ASIC with a
statement, in the form approved by ASIC, of all unclaimed money held in
FHSAs they provide as at the end of each calendar year. This statement
must be provided to ASIC within three months after the end of each
calendar year. Consistent with other unclaimed money regimes, failure to
provide a statement to ASIC as required is an offence and a penalty of up
to 50 penalty units applies. [Schedule 2, item 25, subsections 51A(1) and (2) of the
FHSA Act]
1.16 The statement must contain the FHSA holder's name and
address; the amount of unclaimed money; the name of the FHSA provider
and any identifying account/policy number. Other information may also
be required by the approved form to be included in the statement.
[Schedule 2, item 25, subsections 51A(3) and (5) of the FHSA Act]
1.17 Where payments have been made from an FHSA between the
end of the calendar year and the date on which the provider gives the
statement to ASIC, the statement must contain information relating to the
amounts paid. Payments of fees to the FHSA provider or amounts owing
to the Commonwealth in respect of overpayments of Government FHSA
contributions or tax on earnings do not need to be contained in the
statement. [Schedule 2, item 25, subsection 51A(4) of the FHSA Act]
1.18 When an FHSA provider gives such a statement to ASIC, it
must also pay to ASIC, on behalf of the Commonwealth, an amount to be
worked out in accordance with subsection 51B(2) of the FHSA Act. Also
14
Unclaimed money
consistent with other unclaimed money regimes, failure to pay the amount
to ASIC is an offence and a penalty of up to 50 penalty units applies.
[Schedule 2, item 25, subsection 51B(1) of the FHSA Act]
1.19 The amount is the amount in the statement less money which
was paid from FHSAs during the period between the end of the year and
the statement date less any balance remaining in an FHSA after such a
payment has been made during the period between the end of the year and
the statement date. [Schedule 2, item 25, subsection 51B(2) of the FHSA Act]
1.20 Subject to the obligation to repay money which later becomes
`found', an FHSA provider is discharged from any further liability in
respect of an account where the money has been paid to ASIC. [Schedule 2,
item 25, subsection 51B(3) of the FHSA Act]
Recovery of unclaimed money paid to the Commonwealth
1.21 Where unclaimed money has been paid to ASIC and:
· a person (or their legal personal representative) has made an
application to reclaim their money to their provider in the
form approved by ASIC; and
· the FHSA provider applies to ASIC stating it has approved
the person's application and will deal with the money in
accordance with the law,
ASIC must repay the amount. Account holders will also be able to apply
to a different provider if their original provider no longer provides
FHSAs. [Schedule 2, item 25, subsection 51C(1) of the FHSA Act]
1.22 FHSA providers are limited in how they can deal with
unclaimed money repaid to them by ASIC to ensure they only reopen an
FHSA where the `found' FHSA holder continues to meet the eligibility
requirements to hold an FHSA. FHSA providers have 30 days in which to
appropriately deal with the unclaimed money [Schedule 2, item 25,
subsection 51C(2) of the FHSA Act].
· Where the application states the person wants the money
contributed to an FHSA, and that they meet the FHSA
eligibility requirements (in section 15 of the FHSA Act), the
FHSA provider must repay the money to an FHSA opened or
issued to the person [Schedule 2, item 25, subparagraph 51C(2)(a)(i)
of the FHSA Act].
· Where the application states the person wants the money to
be contributed to a superannuation interest in a particular
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
superannuation plan, the FHSA provider must pay the money
into that plan [Schedule 2, item 25, subparagraph 51C(2)(b)(ii) of the
FHSA Act].
· Where the person is over age 60 and they want the money
paid to them, the FHSA provider must pay the money to the
person [Schedule 2, item 25, subparagraph 51C(2)(b)(iii) of the
FHSA Act].
· In other circumstances, the FHSA provider must pay the
money to a superannuation interest for the benefit of the
person in the provider's default superannuation fund
[Schedule 2, item 25, subparagraph 51C(2)(b)(iv) of the FHSA Act].
· If the person is deceased, the FHSA provider may pay the
money to the person's legal personal representative
[Schedule 2, item 25, subparagraph 51C(2)(b)(v) of the FHSA Act].
1.23 Failure to pay an amount as required is an offence and a penalty
of up to 50 penalty units applies. [Schedule 2, item 25, subsection 51C(2) of the
FHSA Act]
1.24 Where an FHSA provider satisfies ASIC that an amount paid to
ASIC under section 51B exceeded the amount that was properly payable,
ASIC must repay the excess to the provider. [Schedule 2, item 25,
subsection 51C(3) of the FHSA Act]
1.25 The Consolidated Revenue Fund is appropriated for the
purposes of returning unclaimed money. This is consistent with the
practice adopted under the Banking Act 1959 (subsection 69(8)) and the
Life Insurance Act 1995 (subsection 216(12)). [Schedule 2, item 25,
subsection 51C(4) of the FHSA Act]
Consequential amendments
1.26 Some other amendments are needed to ensure the appropriate
treatment of unclaimed money.
1.27 Where an individual has had an FHSA closed because it became
unclaimed and the balance was paid to ASIC, they will not be prohibited
from opening another FHSA. When opening another FHSA on
reclaiming their money, they must declare that the initial contribution will
be a reclaimed amount paid under paragraph 51C(2)(a) of the FHSA Act.
[Schedule 2, item 9, paragraph 15(2)(d), and item 16, subparagraph 19(1)(b)(iv) of the
FHSA Act]
1.28 An amount repaid to an FHSA under paragraph 51C(2)(a) of the
FHSA Act is not a personal contribution. This ensures a Government
16
Unclaimed money
FHSA contribution is not payable on an amount returned to an FHSA.
[Schedule 2, item 7, paragraph 11(3)(e) of the FHSA Act]
1.29 An amount reclaimed and paid to a subsequent FHSA will be
excluded from the prohibition on accepting contributions which will result
in the account balance cap being breached. This recognises that an FHSA
may grow beyond the account balance cap due to earnings or interest and
then be paid to ASIC. This amendment allows the entire balance in these
situations to be repaid to a subsequent FHSA. [Schedule 2, item 19,
subparagraph 27(1)(b)(iv) of the FHSA Act]
1.30 In order to ensure the correct taxation treatment applies to a
reclaimed amount, an amount the provider pays to the former account
holder will be treated as being paid from an FHSA. [Schedule 2, item 25,
subsection 51C(5) of the FHSA Act]
1.31 This amendment is required because in certain situations, money
repaid under subsection 51C(2) will be repaid directly from an FHSA
provider, and not necessarily from an FHSA. For example, where an
FHSA provider pays an amount directly to an individual under
paragraph 51C(2)(c).
1.32 ASIC may publish information about unclaimed money to allow
individuals to search for their money which has become unclaimed and
been paid to ASIC. [Schedule 2, item 25, section 51D of the FHSA Act]
1.33 The provisions relating to unclaimed money in FHSAs operate
to the exclusion of any law of a State or Territory which requires
unclaimed money to be paid to a State or Territory, or lodgment of a
notice of unclaimed money with an authority of a State or Territory.
[Schedule 2, item 25, section 51E of the FHSA Act]
1.34 An amendment is made to section 31 of the FHSA Act to allow
FHSA providers to make a payment from an FHSA for a compulsory
payment of unclaimed money under subsection 51B(1). [Schedule 2, item 22,
subparagraph 31(1)(b)(iv) of the FHSA Act]
17
Chapter 2
Secrecy and disclosure of information
Outline of chapter
2.1 This chapter outlines the provisions which deal with protected
information and how it may be exchanged between Commonwealth
agencies and between the Commonwealth and the States and Territories.
Context of amendments
2.2 The First Home Saver Accounts Act 2008 (FHSA Act) has a
number of provisions which deal with protected information and how it
can be disclosed.
2.3 The First Home Saver Accounts (Further Provisions)
Amendment Bill 2008 makes a number of amendments to ensure the
secrecy provisions enable agencies to share information they require to
properly administer their statutory obligations, while also ensuring the
privacy of account holders is protected.
Detailed explanation of new law
Protected information
2.4 The secrecy provisions in the FHSA Act are intended to apply
only to the information that is obtained by the Commissioner of Taxation
(Commissioner) under the FHSA Act. Notably, this is consistent with the
approach taken in the Superannuation Industry (Supervision) Act 1993
(SIS Act), which is another Act in which administration is shared by the
Commissioner, the Australian Prudential Regulation Authority (APRA)
and the Australian Securities and Investments Commission (ASIC).
2.5 As both APRA and ASIC have a role in administering the
FHSA Act and will receive FHSA information in the course of performing
their functions in relation to FHSAs, the definition of `protected
information' in the FHSA Act is being amended to ensure that
information obtained directly by APRA and ASIC is excluded. Such
information will instead be protected by ASIC and APRA's own secrecy
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
provisions contained in section 56 of the Australian Prudential Regulation
Authority Act 1998 (APRA Act) and section 127 of the Australian
Securities and Investment Commission Act 2001 (ASIC Act). [Schedule 2,
item 13, section 18 of the FHSA Act]
2.6 This exclusion, however, does not apply to information that
APRA and ASIC receive from the Commissioner which will continue to
be protected under the FHSA Act. This is consistent with other taxation
secrecy and disclosure provisions which ensure that information obtained
by the Commissioner continues to be protected under the same rules even
where this information has been disclosed to other Commonwealth
Government agencies. [Schedule 2, item 13, paragraph 18(b) of the FHSA Act]
2.7 To ensure that secrecy provisions in the ASIC Act and the
FHSA Act do not both apply to information obtained by ASIC from the
Commissioner, the secrecy provision in the ASIC Act is being amended to
ensure it does not capture information disclosed to ASIC by the
Commissioner under the FHSA Act. This amendment ensures that such
information is not captured by section 127 of the ASIC Act. [Schedule 2,
item 1, subsection 127(1AA) of the ASIC Act]
2.8 The same result in respect of information disclosed to APRA is
achieved by amending the definition of `prudential regulation law' in the
Australian Prudential Regulation Authority Regulations 1998.
Persons captured by the secrecy provision
2.9 Currently the secrecy provisions in the FHSA Act apply to,
amongst others, a person who is or has been `appointed or employed by,
or a provider of services for, the Commonwealth'. To overcome some
uncertainty as to whether this applies to employees of APRA and ASIC
who may receive protected information, this definition is being amended
to apply to persons who acquire protected information in the course of
their employment, or because of their employment. However this does
not include employees of entities to whom the information relates.
[Schedule 2, item 28, paragraph 70(1)(c) of the FHSA Act]
Disclosing protected information
Disclosure to APRA and ASIC
2.10 As noted above, both APRA and ASIC perform functions in
relation to FHSAs. APRA is responsible for the prudential regulation of
FHSA providers and ASIC is responsible for the Australian Financial
Services Licence regime under the Corporations Act 2001
(Corporations Act) as it applies to FHSA providers, as well as Product
Disclosure Statements and other disclosure obligations which apply to
20
Secrecy and disclosure of information
FHSAs. In carrying out these responsibilities, APRA and ASIC may
require information from the Commissioner.
2.11 While subsection 70(6) of the FHSA Act currently permits the
Commissioner to disclose protected information to anyone for the
purposes of carrying out functions in relation to the FHSA Act, the role
for APRA and ASIC in relation to FHSAs are not confined to the
FHSA Act. APRA and ASIC must also exercise functions under other
Acts that they administer (for instance, the Banking Act 1959 and the
Life Insurance Act 1995 for APRA and the Corporations Act for ASIC).
Therefore, to ensure that APRA and ASIC can obtain the necessary
information to carry out these functions, these amendments allow the
Commissioner to disclose protected information (within the meaning of
the FHSA Act) to APRA and ASIC:
· in relation to APRA -- for the purpose of APRA performing
its functions in relation to FHSAs; and
· in relation to ASIC -- for the purpose of ASIC performing
its functions in relation to FHSAs.
[Schedule 2, item 33, subsection 70(7A) of the FHSA Act]
2.12 The term `in relation to FHSAs' is intended to be broad enough
to cover a reference to `FHSA providers' or any other aspect of the FHSA
system.
2.13 As the Commissioner will also collect information relating to
FHSAs under the Income Tax Assessment Act 1936 (ITAA 1936), the
Income Tax Assessment Act 1997 and Schedule 1 to the Taxation
Administration Act 1953 (TAA 1953), the relevant secrecy provision
relating to these Acts (section 16 of the ITAA 1936) is being amended to
permit the disclosure of information to ASIC and APRA for the purpose
of performing their functions in relation to FHSAs. [Schedule 2, item 38,
paragraph 16(4)(hca) of the ITAA 1936]
2.14 This is consistent with the approach taken in relation to the
SIS Act which is another Act in which all three agencies share
administration. Paragraph 16(4)(hca) of the ITAA 1936 currently allows
the Commissioner to disclose income tax information to `the Australian
Prudential Regulation Authority or the Australian Securities and
Investments Commission, for the purpose of [their] administration of the
[SIS Act]'.
2.15 The reference to protected document is removed from the
provision relating to disclosure to a court as it is superfluous. [Schedule 2,
item 32, subsection 70(5) of the FHSA Act]
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2.16 To ensure consistency, a definition of FHSA is included in the
ITAA 1936 which gives FHSA the same meaning as in the FHSA Act.
[Schedule 1, item 5, subsection 6(1) of the ITAA 1936]
`On-disclosure' of information by APRA and ASIC
2.17 As described in paragraph 2.9, the secrecy provisions in
section 70 of the FHSA Act apply to employees of APRA and ASIC.
2.18 As a result of other amendments in the FHSA (Further
Provisions) Bill, once ASIC and APRA receive information from the
Commissioner under section 70 they will continue to be bound by
section 70 of the FHSA Act.
2.19 In addition, other amendments in the FHSA (Further Provisions)
Bill allow the Commissioner to disclose information to APRA and ASIC
for purposes of their administration of FHSAs.
2.20 However, under the current law, irrespective of the reason for
which APRA and ASIC receive the information, they can only then
`on-disclose' the information (even internally) in accordance with
subparagraphs 70(2)(b)(i) and (ii) -- that is, under or in relation to the
FHSA Act or in the performance of their duties under the FHSA Act.
2.21 To ensure that APRA and ASIC can use protected information
for the purpose for which they received the information from the
Commissioner under section 70, an amendment is being made so that once
APRA or ASIC receive information from the Commissioner they can use
that information for the purposes of performing their respective duties.
[Schedule 2, item 31, subparagraph 70(2)(b)(ii) of the FHSA Act]
Example 2.1
Michael, an authorised ATO officer involved in administering the
FHSA Act, discloses protected information obtained under the
FHSA Act to Sam, an employee of APRA for the purposes of enabling
Sam to administer provisions in the Banking Act 1959 incidental to the
prudential regulation of a particular FHSA provider. It is not an
offence for Michael to disclose that information, nor for Sam to
on-disclose the information in the performance of his duties as an
APRA employee.
2.22 Amendments are also being made to make the prohibition on the
use of protected information clearer. These amendments ensure that
information can be disclosed in either of the situations mentioned in
paragraph 70(2)(b). [Schedule 2, items 29 and 30, subparagraphs 70(2)(b)(i) and (ii)
of the FHSA Act]
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Secrecy and disclosure of information
Disclosure to the States and Territories
2.23 In each State and Territory, the Commissioner of State or
Territory Taxation administers the State or Territory's First Home Owner
Grant Acts. State or Territory Commissioners do extensive compliance
work in relation to the grants, including whether home buyers do actually
live in the homes that they buy.
2.24 Access to this information by the Commissioner would greatly
assist in the administration of FHSAs and, in particular, in conducting
effective compliance work. In order to facilitate information sharing,
these amendments put in place provisions that will enable the
Commissioner to provide FHSA information to State and Territory
taxation officers in instances where First Home Owner Grant information
can be provided in return.
2.25 To achieve this, the TAA 1953 is being amended to allow the
Commissioner to disclose FHSA information to a State taxation officer for
the purposes of the administration of a First Home Owner Grant Act if the
officer is authorised by law to communicate information to the
Commissioner. A State taxation officer, for the purposes of these
provisions, includes a Territory taxation officer. [Schedule 2, item 42,
subsection 13J(9) of the TAA 1953]
2.26 The current law provides that information can only be provided
to State and Territory taxation officers where `similar information' can be
provided in return. While this was intended to ensure that any exchange
of information was on a reciprocal basis, the ambiguity of what constitutes
`similar' information created significant uncertainty and problems in
administering this provision. Therefore, to overcome this ambiguity and
maintain some requirement for reciprocity, these amendments will remove
the requirement that the information be `similar' but will require that
information can be disclosed to the Commonwealth under the State tax
law. [Schedule 2, item 41, subsection 13J(1) of the TAA 1953]
2.27 The States and Territories have agreed to put in place
arrangements by which they can share their First Home Owners Scheme
information with the Commonwealth and vice versa.
23
Chapter 3
First Home Saver Accounts Supervisory
Levy
Outline of chapter
3.1 This chapter outlines the structure of the prudential supervisory
levy that will be imposed on First Home Saver Accounts (FHSA)
providers.
Context of amendments
3.2 The Australian Prudential Regulation Authority (APRA) is
funded by its regulated entities on a user-pays basis through financial
sector levies. Certain operations of the Australian Securities and
Investments Commission (ASIC) and the Australian Taxation Office
(ATO) are also funded by the financial sector levies.
3.3 The Financial Institutions Supervisory Levies Collection
Act 1998 (Financial Institutions Levy Collection Act) establishes the
administrative framework for collecting levies.
3.4 Separate levy imposition Acts establish the framework for
imposing levies on each industry. These include authorised deposit-taking
institutions (ADIs), general insurers, life insurers, retirement savings
account (RSA) providers, superannuation entities and non-operating
holding companies. The First Home Saver Accounts Providers
Supervisory Levy Imposition Bill 2008 (FHSA Supervisory Levy Bill)
will mirror these arrangements for FHSA providers.
3.5 This framework for imposing the FHSA providers supervisory
levy is modelled on the framework for the RSA providers supervisory
levy. All FHSA providers will be subject to this new levy.
3.6 Consistent with the financial institutions levy collection
framework, the amount of levy for providers from each industry will be
set through a ministerial determination. The levy determinations may
make different provisions for different classes of providers.
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
Summary of new law
3.7 This new levy imposition framework will apply to all FHSA
providers.
3.8 For trustees, their FHSA trusts would be a separate levy-paying
entity. For ADIs and life insurance companies, liability for the levy
would be calculated according to the aggregate balance of their FHSAs.
3.9 The FHSA providers supervisory levy would be administered
under the existing financial institutions levy collection framework. That
is, the Treasurer would make a determination under each levy imposition
Act that specifies how to determine assets as well as the amount of levy
payable.
Comparison of key features of new law and current law
New law Current law
A framework would be established Financial institutions supervisory
for imposing a supervisory levy on levies are imposed on the following
FHSA providers. entities: ADIs; life insurers; general
insurers; superannuation entities;
FHSA trustees would pay an FHSA RSA providers and non-operating
levy for each of their FHSA trusts. holding companies.
For ADIs and life insurers, their
liability for the levy would be
calculated according to the aggregate
balance of their FHSAs.
Detailed explanation of new law
3.10 The Financial Institutions Levy Collection Act establishes the
framework for administering and collecting financial institutions
supervisory levies. The levy imposition Acts establish the framework for
imposing levies on each industry. These include ADIs, general insurers,
life insurers, RSA providers, superannuation entities and non-operating
holding companies.
3.11 These levy imposition Acts create the framework for imposing
levies on each sector, by defining the methodology for calculating levies.
This enables the Treasurer to make determinations, one for each sector,
that specify the parameters for calculating each levy. Additionally, the
26
First Home Saver Accounts Supervisory Levy
Treasurer makes another determination under paragraph 50(1)(b) of the
Australian Regulation Authority Act 1998, to recoup the cost to the
Commonwealth of providing, through ASIC and the ATO, relevant
market integrity and consumer protection functions.
3.12 The new supervisory levy imposition framework for FHSA
providers is modelled on the RSA providers supervisory levy imposition
framework.
Amendments to the Financial Sector Levy Collection Act
3.13 The FHSA Supervisory Levy Bill will be administered as part of
the financial institutions levy collection framework. The term `leviable
FHSA entity' will be added to the list of leviable bodies in the Financial
Institutions Levy Collection Act. [Schedule 3, items 2 and 3 of the FHSA
(Further Provisions) Bill]
3.14 A leviable FHSA entity will be an ADI or life insurance
company that has notified APRA of its intention to offer FHSAs or a
trustee that has become authorised as an FHSA provider. [Schedule 3, item 5
of the FHSA (Further Provisions) Bill]
3.15 These amendments enable APRA to administer and collect
FHSA levies following the same process as other financial institutions
levies. The processes include issuing invoices to leviable bodies,
enforcing late payments and imposing penalties for late payment or
non-payment. [Schedule 3, item 4 of the FHSA (Further Provisions) Bill]
The FHSA Supervisory Levy Bill
3.16 The FHSA Supervisory Levy Bill will apply to all leviable
FHSA entities and is modelled on existing financial institutions levy
imposition Acts. [Definition of `leviable FHSA entity', section 5 of the FHSA
Supervisory Levy Bill]
3.17 This levy will be collected from the 2009-10 financial year.
[Section 2 of the FHSA Supervisory Levy Bill]
3.18 The FHSA supervisory levy will have two components: the
restricted component (related to the cost of supervision) and the
unrestricted component (related to potential system impact and vertical
equity considerations). Both components are determined as a proportion
of assets, with minimum and maximum limits for the restricted
component. [Definition of `statutory upper limit' in section 5 and section 7 of the
FHSA Supervisory Levy Bill]
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
3.19 The FHSA Supervisory Levy Bill will give the Treasurer the
flexibility to make a determination that has different provisions for
different classes of leviable FHSA entities, such as providers from
different industries, where this is appropriate. [Subsection 7(9) of the
FHSA Supervisory Levy Bill]
3.20 For leviable FHSA entities that are trustees, the FHSA levy will
be calculated on the assets in the FHSA trust. For leviable FHSA entities
that are ADIs and life insurers, the assets value that is equivalent to the
aggregate balance of their FHSAs (FHSA providers are already required
to report the total balance of their FHSAs in reporting standards issued by
APRA). [Subsection 7(7) of the FHSA Supervisory Levy Bill]
3.21 The term levy imposition day is defined as the date on which the
ADI or life insurer notifies APRA of its intention to offer FHSAs, or the
date on which the trustee becomes authorised to offer FHSAs. This
clarifies when FHSA providers begin to be liable to pay a levy without
imposing an additional reporting requirement. [Definition of `levy imposition
day' in section 5 of the FHSA Supervisory Levy Bill]
3.22 Consistent with the other financial institutions levy imposition
Acts, the FHSA Supervisory Levy Bill establishes the calculation of the
indexation factor used to establish the statutory upper limits applying to
the restricted levy component in later years. This indexation factor allows
the statutory upper limit to increase at three percentage points annually in
excess of movements in the Consumer Price Index. [Section 8 of the
FHSA Supervisory Levy Bill]
Amendments to other Levy Imposition Acts
3.23 ADIs and life insurers' assets that are used in calculating the
FHSA providers supervisory levy will not be used in calculating the ADI
supervisory levy or the life insurance supervisory levy. [Schedule 3,
items 1 and 6 of the FHSA (Further Provisions) Bill]
3.24 In other words, an ADI's assets equivalent to its aggregate
FHSA deposit balance would be excluded from calculations of the ADI
supervisory levy. Likewise, a life insurer's assets equivalent to its
aggregate FHSA policy liabilities would be excluded from calculations of
the life insurance supervisory levy.
Amendment to the FHSA Act
3.25 FHSA providers that are ADIs and life insurance companies
would be able to notify APRA when they have ceased to provide, and to
offer to provide, FHSAs. On giving this notice, the entities would cease
28
First Home Saver Accounts Supervisory Levy
to be a leviable FHSA entity and would no longer be liable to pay
FHSA levies. [Schedule 2, item 36 of the FHSA (Further Provisions) Bill]
3.26 This notice may be given when the balances of all FHSAs have
been paid out according to the payment rules in section 31 of the
FHSA Act and all accounts have been closed, or when the entity has
transferred all of its FHSA business to another provider.
29
Chapter 4
Other amendments
Outline of chapter
4.1 This chapter outlines some of the other amendments being made
in relation to First Home Saver Accounts (FHSAs).
Context of amendments
4.2 A number of minor changes are being made to the FHSA
Scheme to ensure it operates as intended.
4.3 A number of minor consequential amendments are also being
made to ensure that existing laws will interact with FHSAs appropriately.
Detailed explanation of new law
Anti-money laundering and counter-terrorism financing
4.4 To ensure consistency between various legislation, an
amendment to the Anti-Money Laundering and Counter-Terrorism
Financing Act 2006 is being made to align the definition of `contribution'
to an FHSA in that Act with the definition of `contribution' in the
First Home Saver Accounts Act 2008 (FHSA Act). [Schedule 1, item 1,
subsections 70(7A) and (7B) of the FHSA Act]
First Home Saver Accounts without a tax file number
4.5 In order to make post-tax contributions to superannuation, a
valid tax file number (TFN) must be quoted. Various amendments are
being made to ensure FHSAs without a valid TFN cannot be contributed
to superannuation.
4.6 The requirement to close an inactive FHSA and contribute the
balance to superannuation is being removed when the Commissioner of
Taxation (Commissioner) is satisfied the FHSA holder does not have a
valid TFN. [Schedule 2, items 17 and 18, paragraph 22(1)(a) of the FHSA Act]
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First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
4.7 An FHSA provider will not be able to contribute the balance of
an FHSA to superannuation where the provider has received a notice from
the Commissioner under section 67 of the FHSA Act (where the notice
has not been revoked) that the FHSA holder does not have a valid TFN.
[Schedule 2, item 24, paragraph 34(1)(c) of the FHSA Act]
4.8 Amendments are being made so that no-TFN notices that the
Australian Taxation Office (ATO) gives to FHSA providers no longer
need to refer to the requirement to close inactive accounts. [Schedule 2,
items 26 and 27, subparagraphs 67(2)(c)(i) and (ii) of the FHSA Act]
Family law related amendments
Account balance cap
4.9 Currently, if an FHSA provider accepts a contribution which
breaches the account balance cap, it can be returned to the FHSA holder
within 30 days, and the FHSA provider will not commit an offence. This
is not an appropriate outcome where the contribution is a result of a
family law obligation.
4.10 An amendment is being made to allow the FHSA provider in
such cases to return the contribution to the FHSA provider from which the
contribution came. [Schedule 2, item 20, subsection 27(2) of the FHSA Act]
Treatment of family law payments
4.11 To ensure payments and contributions to superannuation made
under a family law obligation are treated the same as other payments and
contributions, a number of provisions are being modified to refer only to
payments or contributions from an FHSA, rather than referring to the
sections under which the payments or contributions are made. [Schedule 1,
items 17 and 18, paragraphs 290-5(d) and 295-171(a) and item 23,
subparagraph 7(1)(c)(v) of the Superannuation (Government Co-contribution for Low
Income Earners) Act 2003]
Provision of information
4.12 In order to assist a spouse of an FHSA holder enter into a
financial agreement under Part VIIIA or VIIIAB of the Family Law
Act 1975 (Family Law Act), or to assist the spouse in connection with
obtaining a court order under the Family Law Act, a spouse of an FHSA
holder can make an application to the FHSA provider for information
regarding the balance of the FHSA holder's FHSA. [Schedule 2, item 37,
subsection126A(1) of the FHSA Act]
32
Other amendments
4.13 An application must be in the form approved by the
Commissioner and must be accompanied by a declaration stating that the
information will be used only for the purposes of:
· entering into a financial agreement under Part VIIIA or
VIIIAB of the Family Law Act; or
· assisting the spouse in connection with obtaining a court
order under the Family Law Act.
[Schedule 2, item 37, subsection 126A(2) of the FHSA Act and Schedule 4, item 1,
paragraph 126A(2)(a) of the FHSA Act]
4.14 An FHSA provider must comply with such an application.
Failure to do so is an offence and a penalty of up to 50 penalty units
applies. [Schedule 2, item 37, subsection 126A(3) of the FHSA Act]
4.15 In order to protect the privacy of the FHSA holder and their
spouse, an FHSA provider who receives an application must not:
· provide to the spouse any address of the FHSA holder; or
· notify the FHSA holder that such an application has been
made.
Doing so is an offence and a penalty of up to 50 penalty units applies.
[Schedule 2, item 37, subsections 126A(4) and (5) of the FHSA Act)]
Protection of First Home Saver Account providers
4.16 An amendment is made to ensure FHSA providers who act in
good faith in relation to a family law obligation will not be liable for loss
or damage. [Schedule 1, item 3, section 126C of the FHSA Act]
Tax amendments
Taxation of authorised deposit-taking income
4.17 An amendment is being made to ensure FHSA providers which
are authorised deposit-taking institutions (ADIs) are unable to claim a
deduction for amounts they credit to FHSAs. [Schedule 1, items 19 and 22,
sections 295-495 (after item 4 in the table) and 345-25 of the ITAA 1997]
4.18 This change makes it clear that an ADI does not deduct FHSA
interest credited as it would bank interest credited to an ordinary account.
Although the assessable income of an ADI that provides FHSAs is
determined in the normal way, earnings (or other returns) credited to
FHSAs are not deductible to the ADI. The taxable income of the ADI is
33
First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
then split into the FHSA component and the standard component. The
FHSA component is the amount credited to FHSAs less any fees charged
by the ADI.
4.19 The standard component is determined by subtracting the FHSA
component from the taxable income of the ADI. The standard component
is taxed at 30 per cent. The FHSA component is taxed at 15 per cent.
4.20 This special tax treatment reflects the different tax treatment of
FHSAs. Unlike interest on ordinary bank accounts for which the account
holder pays tax, the ADI pays tax on the earnings of FHSAs
(at concessional rates). If the ADI recouped this tax from FHSAs the
recoupment would not be assessable income to the ADI.
Example 4.1
An ADI that provides FHSAs has total revenue of $1,110 million,
which is the assessable income of the ADI. This includes fees charged
to FHSA depositors of $10 million. The ADI also has expenses of
$910 million which includes amounts credited to FHSAs of
$410 million. This amount of $410 million is not an allowable
deduction to the ADI. Therefore, assuming the remaining expenses
are deductible, the deductions of the ADI are $500 million
(ie, $910 million less $410 million).
As a consequence of the modification made by proposed
section 345-25, the ADI's taxable income is $610 million,
(ie, $1,110 million reduced by $910 million less $410 million).
The FHSA component is $400 million, (ie, $410 million less
$10 million). The tax payable by the ADI on the FHSA component
(at 15 per cent) is $60 million.
The standard component, which is derived by subtracting the FHSA
component from the ADI's taxable income, is $210 million,
(ie, $610 million less $400 million). The company tax payable by the
ADI on the standard component (at 30 per cent) is $63 million.
4.21 An amendment is also being made to allow for the payment of
tax from an FHSA. Amounts recouped from an FHSA for the payment of
tax will be non-assessable non-exempt income in the hands of the ADI
FHSA providers and will not need to be included in the FHSA activity
statement given to the Commissioner. [Schedule 1, item 2, paragraph 31(1)(h)
of the FHSA Act and Schedule 1, item 22, section 345-30 of the ITAA 1997 and
Schedule 1, item 25, paragraph 391-5(1)(e) of the Taxation Administration Act 1953]
4.22 Generally, the tax paid by an Australian resident company is
allocated to its shareholders by way of franking credits attached to the
dividends the shareholders receive. This ensures the income of an ADI is
34
Other amendments
not taxed twice. Amendments are being made so that ADIs which are
FHSA providers will not receive a franking credit (or debit) for tax paid in
relation to the FHSA component of their income. This ensures
shareholders of the ADI do not get a refundable tax offset for tax paid in
relation to FHSAs. To ensure parity between FHSAs and retirement
savings accounts (RSAs), the same amendment is being made in relation
to the RSA component for ADIs which are RSA providers. [Schedule 1,
item 14, subsection 205-15(3), item 15, subsection 205-30(1) and item 16,
subsection 205-30(2) of the ITAA 1997]
Fringe benefits tax
4.23 Amendments are made to ensure:
· a reimbursement by an employer in respect of an employee's
personal FHSA contribution; and
· a contribution to an FHSA by an employer on behalf of an
employee,
are not fringe benefits but are included in the assessable income of the
employee. [Schedule 1, item 4, paragraph 136(1)(hd) of the Fringe Benefits Tax
Assessment Act 1986, item 13, section 15-80 of the ITAA 1997 and item 24,
paragraph 12-1(3)(b) of the Taxation Administration Act 1953]
Separate net income
4.24 An amendment is being made to the definition of `separate net
income' in subsection 159J(6) of the Income Tax Assessment Act 1936
(ITAA 1936) to exclude returns on FHSAs and the Government FHSA
contribution. Separate net income is used as an income test for a small
number of tax offsets including the dependant spouse tax offset.
[Schedule 1, item 6, paragraphs 159J(6)(aae) and (aaf) of the ITAA 1936]
Tax file number and Australian investment income reports
4.25 As FHSA income is not the assessable income of the holder,
account providers will not need to report account holder details on the
quarterly TFN report or Australian investment income report to the
Commissioner. To achieve this result, the definitions of `interest-bearing
account', `interest-bearing deposit' and `unit trust' are amended to
exclude FHSAs. [Schedule 1, items 7 to 9, section 202A of the ITAA 1936]
4.26 Amendments are also made to various tables to take into account
the modifications elsewhere in the First Home Saver Accounts (Further
Provisions) Amendment Bill 2008 (FHSA (Further Provisions) Bill).
[Schedule 1, items 10 to 12, sections 10-5 and 11-55 of the ITAA 1997]
35
First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
Deemed quotation of tax file number
4.27 An amendment is made to section 295-615 of the ITAA 1997 to
ensure that where an FHSA provider quotes an individual's TFN to a
superannuation provider in connection with a contribution from an FHSA,
the quotation will also be made for the purposes of determining the
provider's no-TFN contributions income. [Schedule 1, items 20 and 21,
section 202A of the ITAA 1936]
Prohibition of certain uses of a First Home Saver Account
4.28 Similarly to superannuation, in order to ensure FHSAs are used
to purchase a first home, and are not used as a means of financing other
expenditure, FHSAs will be unable to be used as security for a borrowing.
4.29 Any term of a contract or other agreement which purports to
provide for a charge over an FHSA will have no effect. Rights to the
income of an FHSA are also unable to be assigned. In addition, providers
are unable to recognise, encourage or otherwise sanction a charge being
put over an FHSA. Doing so is an offence and a penalty of up to
50 penalty units applies. [Schedule 2, item 37, section 126B of the FHSA Act]
Amendments to the payment conditions
4.30 Amendments are being made to provide greater protection to
individuals who are unable to meet the payment conditions due to
circumstances which are genuinely beyond their control.
4.31 The amendments will provide that where the payment conditions
have not been met, a person will not be subject to the misuse tax if:
· the failure to meet the conditions is reasonable in the
circumstances; and
· it is reasonable to require the ex-FHSA holder do so, an
amount equal to the payment or a reasonable lesser amount is
recontributed to an FHSA as soon as is practicable.
[Schedule 2, item 10, paragraph 17(3)(b) of the FHSA Act]
4.32 In considering whether a failure to meet the payment conditions
is reasonable, regard must be had to factors in subsection 17(4) of the
FHSA Act. These are whether the circumstances were beyond control of
the individual, whether the failure was reasonably foreseeable, whether
the individual has failed the conditions on a previous occasion and any
other relevant factor. [Schedule 2, item 11, subsection 17(4) of the FHSA Act]
36
Other amendments
4.33 When considering whether it is reasonable to recontribute
money to an FHSA, a significant factor is whether the individual has lost a
significant portion of the amount withdrawn because of the actions of a
third party or some other circumstance which is out of the control of the
individual. If they are able to recontribute, the expectation is that they
would recontribute an amount within six months. If the six months has
expired and an acquisition payment has been made, but perhaps settlement
does not occur through no fault of the individual, then as soon practicable
the individual should recontribute to another FHSA.
Example 4.2
Tracy withdraws her FHSA money to purchase a home. Tracy is
unable to find a home she likes. She does not therefore acquire a home
within the six months as required by the FHSA payment conditions.
Tracy also does not recontribute the funds. Later that year the ATO
identifies that Tracy has not purchased a home. Tracy has no reason
beyond her control for not recontributing the FHSA funds and meeting
the payment rules. In this example Tracy would be in breach of the
FHSA payment rules as it would have been reasonably possible for
Tracy to recontribute to a new FHSA within six months.
4.34 Also, it will be relevant to consider whether it is reasonable for
the person to be able to reopen an FHSA, that is, whether they meet the
eligibility requirements.
Example 4.3
Amanda did purchase a home within six months of withdrawing her
FHSA money. Shortly after Amanda moves into her home it is
destroyed by a natural disaster. Amanda is therefore unable to meet
the six-month occupancy rule. For financial reasons, Amanda was
unable to rebuild and she sold the land. She is ineligible to
recontribute to an FHSA as she has already lived in a dwelling that she
has owned. In this case it would be unreasonable for Amanda to
recontribute to an FHSA and she will be deemed to have met the
payment rules.
4.35 A significant factor would be where an individual incurs
expenses associated with acquiring a qualifying interest in a dwelling
which were unavoidable. In such cases it would be reasonable for them to
contribute the amount withdrawn less the unavoidable expenses.
4.36 An individual may also lose some of the amount withdrawn due
to fraud or theft in relation to acquiring an interest in a dwelling. It may
therefore be reasonable for them to recontribute the balance of their
FHSA, less the amount lost.
37
First Home Saver Accounts (Further Provisions) Amendment Bill 2008
First Home Saver Account Providers Supervisory Levy Imposition Bill 2008
4.37 Losses or expenses not associated with acquiring an interest in a
dwelling are not intended to be taken into account when assessing whether
contributing a lesser amount is reasonable.
Example 4.4
John finds a new apartment development project he likes and
withdraws his FHSA money to pay the deposit. The developer has
asked for a long settlement period. However, six months later the
developer goes in to liquidation and is unable to fulfil the contract.
John's full deposit is returned to him. John decides to use some of the
deposit money on an overseas holiday. John then decides to
recontribute to an FHSA several months after receiving his refund.
The amount recontributed is the deposit less his holiday expenses.
In this case it would not be reasonable for John to recontribute a lesser
amount to an FHSA. John did not act as soon as practicable and had
no reason to recontribute a lesser amount to the new FHSA. John
would be in breach of the FHSA payment rules.
4.38 When recontributing an amount, an individual must declare they
meet the conditions described above. A recontribution will not be a
personal FHSA contribution. [Schedule 2, items 6 and 15,
subparagraphs 11(3)(c)(ii) and 19(1)(b)(iii) of the FHSA Act]
4.39 The term `recontribution of FHSA home acquisition payment
after failure to occupy a dwelling' is being removed from a number of
sections to reflect the fact that FHSA home acquisition payments can be
recontributed in a wider range of cases (eg, failure to meet the occupancy
rules). [Schedule 1, items 5, 8 and 21, subparagraph 11(3)(c)(ii), paragraph 15(2)(a)
and paragraph 28(2)(b) of the FHSA Act]
4.40 An amendment is also being made to ensure individuals who
transfer from one FHSA provider to another are unable to make use of the
various provisions in the Corporations Act 2001 mentioned in
subparagraph 31(1)(d)(ii) which allow individuals to access their money
in certain limited circumstances. These circumstances will now only
apply to the first FHSA which an individual opens. [Schedule 2, item 23,
paragraph 31(1)(da) of the FHSA Act]
Unauthorised trustees
4.41 APRA would be able to seek court injunctions against
unauthorised trustees to prevent them from purporting to issue FHSAs.
This provision protects would-be account holders from unauthorised
trustees. [Schedule 2, item 34 of the FHSA (Further Provisions) Bill]
4.42 The Superannuation Industry (Supervision) Act 1993 (SIS Act)
regulatory framework has been applied to FHSA trustees and their trusts
38
Other amendments
where it is appropriate to do so. In addition, APRA's power to seek court
injunctions under section 315 of the SIS Act would be applied to
unauthorised trustees, purported FHSA trusts and purported FHSAs. This
provision is consistent with APRA's powers to seek injunctions under the
SIS Act.
Application and transitional provisions
4.43 The tax-related amendments and the protection for FHSA
providers in relation to family law obligations in Schedule 1 to the FHSA
(Further Provisions) Bill apply from 1 October 2008. [Schedule 1, item 26 of
the FHSA (Further Provisions) Bill]
39
41
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