Retirement Savings Accounts Amendment Regulations 2002 (No. 3) 2002 No. 90
EXPLANATORY STATEMENT
STATUTORY RULES 2002 No. 90
ISSUED BY THE AUTHORITY OF THE MINISTER FOR REVENUE AND ASSISTANT TREASURER
Retirement Savings Accounts Amendment Regulations 2002 (No. 3)
Subsection 200(1) of the Retirement Savings Account Act 1997 (the Act) provides that the Governor General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
The purpose of the proposed Regulations is to amend the Retirement Savings Accounts Regulations 1997 to allow temporary residents to access their superannuation upon permanent departure from Australia.
The proposed regulations will:
• insert a new condition of release into the Regulations to allow temporary residents to access their superannuation upon permanent departure from Australia;
• specify two processes for the release of superannuation depending upon the value of the member's withdrawal benefit; and
• identify the eligible visa classes for release of benefits.
EXPLANATION OF PROVISIONS
Regulation 1 - Name of Regulations
This clause is a formal provision specifying the mode of citation of the regulations.
Regulation 2 - Commencement
The regulations will commence on 1 July 2002.
Regulation 3 - Amendment of the Retirement Savings Accounts Regulations 1997
This clause provides that the Retirement Savings Accounts Regulations 1997 (the RSA Regulations) are amended as set out in Schedule 1.
SCHEDULE 1 - AMENDMENTS
Item 1 defines eligible temporary residents and notes that visas no longer issued by the Department of Immigration and Multicultural and Indigenous Affairs may also be eligible.
Item 2 describes the mandatory cashing of benefits in Retirement Savings Accounts (RSAs).
In RSAs, cashing must occur upon receipt of a request from a member provided that the member provides appropriate verification of their eligible temporary resident and departure status.
A simplified verification process is available for members with withdrawal benefits less than $5000, while for larger balances members must obtain verification from the Department of Immigration, Multicultural and Indigenous Affairs. The simplified verification processes for low balance individuals are consistent with the Government's policy that small balances should not be diminished by the payment of fees and charges.
Benefits must be cashed as a single lump sum. This will allow simplified calculation of tax benefits and ensures that funds will not have to maintain small balances for members seeking access to benefits under this measure. Allowance is made for contributions or transfers or rollovers received after the cashing of benefits. Payments in these circumstances will not require a subsequent member application.
For completed applications received prior to 1 November 2002, a three-month period is provided in which payments must be made by the RSA provider. After that time, payments must be made within 28 days. The intention is to provide a phasing-in period for providers while ensuring that members receive their benefits within a reasonable time period.
Item 3 omits the nil cashing restriction of having departed from Australia prior to 1 July 1998 to take up permanent residence outside Australia where the written request for release was made prior to 1 July 1998. The item substitutes a condition of release of benefits for a temporary resident permanently departing Australia. Provision is also made for cashing restrictions in that the benefit must be at least the amount of the member's withdrawal benefit, be cashed as a single lump sum with the exception of contributions or rollovers or transfers received after the benefits are cashed.
Item 4 specifies the list of eligible visa classes. The intent of this item is to provide access to superannuation benefits under this measure for departing temporary residents who do not reserve the option of retiring in Australia and accessing the Age Pension. As such, it excludes Australian citizens, permanent residents and New Zealanders. Schedule 1A includes visa classes which are no longer issued by the Department of Immigration and Multicultural and Indigenous Affairs.
Overview
The Retirement Savings Accounts Amendment Regulations 2002 (No. 3), enacted by the Minister for Revenue and Assistant Treasurer, aim to amend the Retirement Savings Accounts Regulations 1997 to facilitate access to superannuation for temporary residents upon their permanent departure from Australia. This amendment was necessary to address the gap in the existing regulations which did not adequately cater to the needs of temporary residents. The regulations allow for the release of superannuation benefits upon permanent departure, with a distinction in processes depending on the amount of the member's withdrawal benefit. A simplified verification process is available for those with smaller balances, while larger balances require verification from the Department of Immigration, Multicultural and Indigenous Affairs. Eligible visa classes are specified to exclude Australian citizens, permanent residents, and New Zealanders, ensuring that the measure targets those who are not considering retirement in Australia. These regulations, which commenced on 1 July 2002, reflect the government's policy to streamline the process for small balance holders and ensure timely access to superannuation benefits for eligible temporary residents.
Scope and Application
The Retirement Savings Accounts Amendment Regulations 2002 (No. 3) applies to eligible temporary residents who are departing Australia permanently and wish to access their superannuation. These regulations amend the Retirement Savings Accounts Regulations 1997 to provide a new condition of release for such individuals. They are intended to ensure that departing temporary residents can access their superannuation funds without unnecessary delays or complications. The regulations also specify the processes for the release of superannuation, distinguishing between members with withdrawal benefits less than $5000 and those with larger balances. Furthermore, the regulations identify the eligible visa classes, ensuring that the measures are applicable only to those temporary residents who are permanently leaving Australia. The regulations do not apply to Australian citizens, permanent residents, or New Zealanders. The geographic reach of these regulations is confined to Australia, impacting only those within the Australian jurisdiction. The regulations came into effect on 1 July 2002, and allow for certain transitional measures to be observed until 1 November 2002. Any further details or extensions to the application of these regulations would be governed by subordinate instruments as authorised by the Retirement Savings Account Act 1997.
Key Provisions
The Retirement Savings Accounts Amendment Regulations 2002 (No. 3) introduces changes to the Retirement Savings Accounts Regulations 1997, primarily to facilitate the access of superannuation funds by eligible temporary residents upon their permanent departure from Australia. These changes are aimed at ensuring that departing temporary residents can access their superannuation benefits without unnecessary barriers. Regulation 3 specifies the amendments to the RSA Regulations, and these are detailed in Schedule 1.
Under Item 1 of Schedule 1, the Regulations define eligible temporary residents, including those with visas that are no longer issued by the Department of Immigration and Multicultural and Indigenous Affairs. Item 2 outlines the mandatory cashing of superannuation benefits in RSAs. It requires that benefits be cashed upon the receipt of a request from a member, provided the member verifies their eligibility and departure status. For members with withdrawal benefits of less than $5000, a simplified verification process is available, while those with larger balances must obtain verification from the Department of Immigration, Multicultural and Indigenous Affairs. This distinction ensures that small balances are not unduly diminished by fees and charges.
The obligations imposed by these Regulations include the requirement for members to provide appropriate verification of their status and departure from Australia, and for RSA providers to cash benefits as a single lump sum. This requirement simplifies the calculation of tax benefits and ensures that members receive their funds in a timely manner. Providers must process completed applications within 28 days, with a three-month phasing-in period for applications received before 1 November 2002. Item 3 removes the restriction that benefits could not be cashed if the member departed before 1 July 1998, replacing it with a condition of release for temporary residents permanently departing Australia. It also stipulates that the benefit must be at least the amount of the member’s withdrawal benefit and must be cashed as a single lump sum, except for contributions or rollovers received after the benefits are cashed.
The Regulations further specify, in Item 4, the list of eligible visa classes for the release of superannuation benefits. This exclusion of Australian citizens, permanent residents, and New Zealanders ensures that the measure is targeted at temporary residents who do not plan to retire in Australia and access the Age Pension.
In terms of consequences, the Regulations do not explicitly detail offences, penalties, or specific civil or criminal consequences for non-compliance. However, the importance of adhering to the stipulated verification processes and timely payment of benefits is implicit. Non-compliance by RSA providers could potentially lead to administrative actions or financial penalties under the broader Retirement Savings Account Act 1997 or related regulations. The detailed requirements and processes are designed to ensure that all parties fulfil their obligations effectively to facilitate the smooth release of superannuation benefits to eligible temporary residents.