I move that the Bill be now read a second time.
Mr Speaker
The accompanying Bill dealing with the transfer of financial institutions from the State to the Commonwealth regulatory regime provides for friendly societies that operate benefit fund business to become regulated as life insurance companies. By becoming life companies under Commonwealth legislation, friendly societies will be able to seek approval to be a retirement savings account (RSA) institution so as to provide RSA business.
Therefore, the transfer of friendly societies into the Commonwealth regime opens up opportunities for the industry to conduct new business. This outcome will be achieved by having friendly societies enter a competitively neutral financial market. New entry into the RSA market increases competition for retirement savings products and expands the choice available to consumers.
This also means that another Wallis Report recommendation will be met recommendation 43 that sought the extension of the right to offer RSAs to other APRA regulated institutions.
A necessary consequence of this extension of RSA business is to provide appropriate tax treatment for RSA business of friendly societies and other registered organizations. The accompanying Bill includes amendments to the taxation legislation to achieve this. This Bill amends the Income Tax Rates Act 1986 to specify the rates of tax that apply to the RSA business of friendly societies and other registered organizations. The RSA business of friendly societies and other registered organizations will be taxed at the same rate that applies to the RSA business of competing entities, including life insurance companies and banks.
In particular, income credited by a friendly society to an RSA will be taxed at the 15 per cent rate applying to complying superannuation savings. Any profit generated by the friendly society will be taxed at the company tax rate.
I commend the Bill to the House and present the explanatory memorandum.