FRINGE BENEFITS TAX ASSESSMENT ACT 1986 - SECT 58PB Meaning of approved worker entitlement funds

FRINGE BENEFITS TAX ASSESSMENT ACT 1986 - SECT 58PB

  (1)   A fund is an approved worker entitlement fund if the fund:

  (a)   is established by or under a law of the Commonwealth, a State or a Territory for the purpose of ensuring that long service leave is paid; and

  (b)   is operating under that law.

Endorsed funds

  (2)   A fund is also an approved worker entitlement fund if:

  (a)   the fund is endorsed as an approved worker entitlement fund under subsection   (3); or

  (b)   the entity that operates the fund is endorsed for the operation of the fund under subsection   (3A).

  (3)   The Commissioner must endorse a fund as an approved worker entitlement fund if:

  (a)   the fund is entitled to be endorsed as an approved worker entitlement fund (see subsection   (4)); and

  (b)   the fund has applied for the endorsement in accordance with Division   426 in Schedule   1 to the Taxation Administration Act 1953 .

  (3A)   The Commissioner must endorse an entity for the operation of a fund as an approved worker entitlement fund if:

  (a)   the entity is entitled to be endorsed for the operation of the fund as an approved worker entitlement fund (see subsection   (4A)); and

  (b)   the entity has applied for the endorsement in accordance with Division   426 in Schedule   1 to the Taxation Administration Act 1953 .

  (4)   A fund is entitled to be endorsed as an approved worker entitlement fund if:

  (a)   the management of the fund (including the management of the investments of the fund) is carried out at arm's length from the contributors to the fund and their associates; and

  (b)   under the fund's constituting documents:

  (i)   no more than 5% of the total assets of the fund are to be invested in an entity controlled by a contributor or an associate of a contributor; and

  (ii)   the assets of the fund are not to be used to provide or facilitate any form of financial assistance, including a loan, to a contributor, a person in respect of whom contributions are made or an associate of a contributor or an associate of a person in respect of whom contributions are made; and

  (c)   under the fund's constituting documents, payments from contributions to the fund are to be made only for the following purposes:

  (i)   to pay worker entitlements to persons in respect of whom contributions are made, or to death benefits dependants (within the meaning of the Income Tax Assessment Act 1997 ) or legal personal representatives (within the meaning of that Act) of those persons;

  (ii)   to make investments to generate income from the assets of the fund;

  (iii)   to reimburse contributors who have paid entitlements directly to persons in respect of whom contributions are made;

  (iv)   to return contributions to contributors;

  (v)   to pay, for the benefit of a person in respect of whom contributions are made, an employment termination payment (within the meaning of the Income Tax Assessment Act 1997 ) into a complying superannuation fund (within the meaning of section   45 of the Superannuation Industry (Supervision) Act 1993 ), a complying approved deposit fund (within the meaning of section   47 of the Superannuation Industry (Supervision) Act 1993 ) or a retirement savings account (within the meaning of the Retirement Savings Accounts Act 1997 );

  (vi)   to transfer contributions to another approved worker entitlement fund;

  (vii)   to pay the reasonable administrative expenses of the fund;

  (viii)   to pay amounts to a contributor's external administrator that would otherwise be payable as mentioned in subparagraph   (iii) or (iv) to the contributor;

  (ix)   to pay interest on, or to repay, money lent to the fund; and

  (d)   under the fund's constituting documents, payments from the income of the fund are to be made only for the following purposes:

  (i)   a purpose mentioned in subparagraphs   (c)(ii) to (ix);

  (ii)   to make payments to contributors to the fund;

  (iii)   to make payments to other persons where the payment is specified in subsection   (5); and

  (e)   under the fund's constituting documents:

  (i)   an account must be kept for each person in respect of whom contributions to the fund are made; and

  (ii)   the account must be kept in a manner that enables entitlements in respect of the person to be calculated; and

  (f)   the fund, or the entity that operates the fund, has an ABN.

  (4A)   An entity is entitled to be endorsed for the operation of a fund as an approved worker entitlement fund if the fund is entitled to be endorsed as an approved worker entitlement fund.

  (5)   A payment made by a fund to a person in the following circumstances is specified for the purposes of subparagraph   (4)(d)(iii):

  (a)   a contribution has been made to the fund in respect of the person; and

  (b)   the contribution would be an exempt benefit under section   58PA if the fund were an approved worker entitlement fund; and

  (c)   either:

  (i)   the payment is of a worker entitlement the contribution for which would be an exempt benefit under section   58PA if the fund were an approved worker entitlement fund; or

  (ii)   the payment is of some kind other than a worker entitlement.