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FRINGE BENEFITS TAX ASSESSMENT ACT 1986 - SECT 58PB

Meaning of approved worker entitlement funds

             (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.



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