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Salaries Legislation Amendment (Salary
Sacrifice) Bill 2008
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill is intended to address the ability of the holders of certain offices to
enter into effective salary sacrifice arrangements as defined by Australian
Taxation Office Ruling 2001/10. It seeks to ensure that arrangements already
entered into, and similar arrangements if they are entered into in the future,
meet the requirements of the ATO ruling.
An effective salary sacrifice arrangement is one whereby the person being
paid agrees to give up income in return for some other benefit in advance of
becoming entitled to (that is, earning) the income. The legislation addresses
the critical questions of (a) whether holders of the various offices are legally
able to give up income, (b) whether there is a point in the future from which
they can give up the income.
These questions are addressed quite directly. The Parliament of Victoria has
established the offices, and has set the bases on which remuneration is
determined. It is within the legislative competence of the Parliament to alter
these various provisions so as to allow office holders to enter into effective
salary sacrifice arrangements.
The office holders within the scope of this Bill are--
· office holders--people appointed to public offices whose
remuneration is fixed or determined by the Act creating the
office, by the statutory instrument appointing them or by the
Governor in Council;
· judicial officers, some of whom are covered by the
Constitution Act 1975 and some of whom are not;
· Members of Parliament.
561310 1 BILL LA INTRODUCTION 2/12/2008
None of these are employees. Parliament has established certain specific
offices, and provided for a mechanism by which people can be appointed to
those offices, and remunerated while holding the office. The remuneration
arises from holding the office, not from performing any specific work.
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the purposes of the Act. These are to amend the
Constitution Act 1975, the County Court Act 1958 and the
Magistrates' Court Act 1989, the Victorian Civil and
Administrative Tribunal Act 1998, the Parliamentary Salaries
and Superannuation Act 1968, the Attorney-General and
Solicitor-General Act 1972, the Public Administration Act
2004 and the Public Prosecutions Act 1994 to permit salary
sacrificing arrangements by various judicial officers, office
holders and Members of Parliament and to validate such
arrangements entered into by those covered by the amended Act.
Clause 2 provides that the Act commences on the day on which it receives
the Royal Assent, other than certain provisions that need to be
synchronised with the commencement of the Courts Legislation
Amendment (Associate Judges) Act 2008.
PART 2--AMENDMENTS TO CONSTITUTION ACT 1975
Clause 3 amends section 82 of the Constitution Act 1975 to permit salary
sacrificing by judges of the Supreme Court. By virtue of these
amendments--
· subsection (4) will allow a judge by notice in writing to
the Attorney-General to enter into an arrangement under
which the Judge agrees to receive the whole or part of
his or her total amount of future salary as non-salary
benefits of an equivalent value;
· subsection (5) provides that a notice under
subsection (4) must specify a date in the future from
which the arrangement is to take effect;
· subsections (5A) and (6) allow a judge to vary or revoke
a notice with effect from a future date;
· subsection (6C) follows the existing subsection (6B),
which provides that the salary of a judge may not be
reduced, and provides that a salary sacrifice
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arrangement under the section does not constitute, and
is deemed never to have constituted, a reduction in the
salary of a judge who enters or entered into the
arrangement;
· subsection (7) in its existing form provides for the
special appropriation of the amounts required by the
Constitution Act for the remuneration of judges, and
paragraph (a) of that subsection is amended to make it
clear that salaries includes the amount of any non-salary
benefit;
· subsection (7A) provides that a salary sacrifice
arrangement entered into by a judge before this Bill is
enacted has effect according to its tenor as if it were an
arrangement under this section;
· subsection (7B) provides that a pre-existing
arrangement may hereafter only be varied or revoked in
accordance with subsection (5A);
· subsection (10) defines non-salary benefits to have the
same meaning as in clause 3(5) of Schedule 1A to the
Public Administration Act 2004--that Schedule is to
be inserted by clause 19.
Clause 4 amends section 80D of the Constitution Act 1975 to permit
salary sacrificing by acting judges of the Supreme Court and to
provide that arrangements already entered into have effect as if
there were arrangement under that section. The amendments are
in form and effect identical to those in respect of judges of the
Court, except that there is no provision relating to a reduction in
salary as there is no equivalent provision to section 82(6B) of that
Act.
Clause 5 amends section 83A of the Constitution Act 1975 to permit
salary sacrificing by masters of the Supreme Court and to provide
that arrangements already entered into have effect as if there
were arrangement under that section. The amendments are in
form and effect identical to those in respect of judges of the
Court.
Clause 6 amends section 83A of the Constitution Act 1975 to replace the
word "master" in subsections (2A), (2B) and (3A) of the
Constitution Act 1975 with the expression "associate judge".
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PART 3--AMENDMENTS TO COUNTY COURT ACT 1958
Clause 7 amends section 10 of the County Court Act 1958 to permit
salary sacrificing by County Court judges and to provide that
arrangements already entered into have effect as if there were
arrangement under that section. The amendments are in form and
effect identical to those in respect of judges of the Supreme
Court.
Clause 8 amends section 11 of the County Court Act 1958 to permit
salary sacrificing by acting County Court Judges and to provide
that arrangements already entered into have effect as if there
were arrangement under that section. The amendments are in
form and effect identical to those in respect of County Court
Judges, except that there is no provision relating to a reduction in
salary as there is no equivalent provision to section 10(6B) of that
Act.
Clause 9 amends section 17AA of the County Court Act 1958 to permit
salary sacrificing by masters of the County Court and to provide
that arrangements already entered into have effect as if there
were arrangement under that section. The amendments are in
form and effect identical to those in respect of judges of the
Court.
Clause 10 amends section 17AA of the County Court Act 1958 to replace
the word "master" in subsections (2A), (2B) and (3A) with the
expression "associate judge".
PART 4--AMENDMENTS TO MAGISTRATES' COURT
ACT 1989
Clause 11 amends Part 1 of Schedule 1 to the Magistrates' Court Act 1989
to permit salary sacrificing by magistrates and to provide that
arrangements already entered into have effect as if there were
arrangement under that Schedule. The amendments are in form
and effect identical to those in respect of judges of the Supreme
Court.
Clause 12 amends Part 2 of Schedule 1 of the Magistrates' Court Act 1989
to permit salary sacrificing by acting magistrates and to provide
that arrangements already entered into have effect as if there
were arrangement under that section. The amendments are in
form and effect identical to those in respect of magistrates, except
that there is no provision relating to a reduction in salary as there
is no equivalent provision to clause 9 of that Schedule.
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PART 5--AMENDMENT TO VICTORIAN CIVIL AND
ADMINISTRATIVE TRIBUNAL ACT 1998
Clause 13 amends the Victorian Civil and Administrative Tribunal Act
1998 to insert a new section 17A to permit salary sacrificing by
members of the Victorian Civil and Administrative Tribunal.
By virtue of these amendments--
· subsection (1) will allow a member by notice in writing
to the Attorney-General to enter into an arrangement
under which the member agrees to receive the whole or
part of his or her total amount of future salary as non-
salary benefits of an equivalent value;
· subsection (2) provides that a notice under
subsection (1) must specify a date in the future from
which the arrangement is to take effect;
· subsections (3) and (4) allow a member to vary or
revoke a notice with effect from a future date;
· subsection (5) provides that a salary sacrifice
arrangement entered into by a member before this Bill is
enacted has effect according to its tenor as if it were an
arrangement under this section;
· subsection (6) provides that a pre-existing arrangement
may hereafter only be varied or revoked in accordance
with subsection (3);
· subsection (7) defines non-salary benefits to have
the same meaning as in clauses 3(5) and 3(6) of
Schedule 1A to the Public Administration Act 2004--
that Schedule is to be inserted by clause 19.
PART 6--AMENDMENTS TO PARLIAMENTARY SALARIES
AND SUPERANNUATION ACT 1968
Clause 14 amends the Parliamentary Salaries and Superannuation Act
1968 to insert a new section 7A to permit salary sacrificing by
Members of Parliament. By virtue of these amendments--
· subsection (1) will allow a member by notice in writing
to enter into an arrangement under which the member
agrees to receive the whole or part of his or her total
amount of future salary as non-salary benefits of an
equivalent value;
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· subsection (2) provides that a notice under
subsection (1) must specify a date in the future from
which the arrangement is to take effect;
· subsections (3) and (4) allow a member to vary or
revoke a notice with effect from a future date;
· subsection (5) provides that the notice must be given to
the Clerk of the House in which the member sits;
· subsection (6) provides that an arrangement under this
section cannot be to the Parliamentary Contribution
Superannuation Scheme or to the chosen or default fund
under Part 4;
· subsection (7) provides that a salary sacrifice
arrangement entered into by a member before this Bill is
enacted has effect according to its tenor as if it were an
arrangement under this section;
· subsection (8) provides that a pre-existing arrangement
may hereafter only be varied or revoked in accordance
with subsection (3);
· subsection (9) defines non-salary benefits to have
the same meaning as in clauses 3(5) and 3(6) of
Schedule 1A to the Public Administration Act 2004--
that Schedule is to be inserted by clause 19;
Clause 15 amends section 9(1) of the Parliamentary Salaries and
Superannuation Act 1968. In its existing form the subsection
provides for the special appropriation of the amounts required for
the remuneration of Members of Parliament, and the subsection
is amended to make it clear that salaries includes the amount of
any non-salary benefit and any amount salary sacrificed under
Part 4, which in section 41 already deals with salary sacrifice.
Clause 16 amends section 41 of the Parliamentary Salaries and
Superannuation Act 1968.
· Subsections (1), (6) and (8) are amended to remove the
requirement that a notice be signed by the member so as
to make these provisions consistent with the notice
requirements elsewhere in the Bill.
· Subsection (2) is replaced in order to make it clearer
that salary sacrifice arrangements can relate only to
future parliamentary salary.
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· Subsection (3) is amended to require an arrangement to
be for an amount rather than for a percentage of salary.
· Subsection (11) is new, and provides that an
arrangement already in place is deemed to have been
made in accordance with the section as now amended.
PART 7--AMENDMENT TO ATTORNEY-GENERAL AND
SOLICITOR-GENERAL ACT 1972
Clause 17 amends the Attorney-General and Solicitor General Act 1972 to
insert a new section 7 to permit salary sacrificing by the
Solicitor-General. By virtue of these amendments--
· subsection (1) will allow the Solicitor-General by notice
in writing to enter into an arrangement under which he
or she agrees to receive the whole or part of his or her
total amount of future salary as non-salary benefits of an
equivalent value;
· subsection (2) provides that a notice under
subsection (1) must specify a date in the future from
which the arrangement is to take effect;
· subsections (3) and (4) allow the Solicitor-General to
vary or revoke a notice with effect from a future date;
· subsection (5) defines non-salary benefits to have
the same meaning as in clauses 3(5) and 3(6) of
Schedule 1A to the Public Administration Act 2004--
that Schedule is to be inserted by clause 19.
PART 8--AMENDMENTS TO PUBLIC ADMINISTRATION
ACT 2004
Clause 18 amends the Public Administration Act 2004 to insert a new
section 115A, which gives effect to a new Schedule 1A.
Clause 19 amends the Public Administration Act 2004 to insert a new
Schedule 1A. This Schedule sets out the provisions relating to
salary sacrifice for all office holders not explicitly provided for in
other clauses of the Bill (other than the Governor, the Director of
Public Prosecutions and the Auditor-General).
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The Schedule is as follows--
Clause 1 contains the definitions. The expression office holder is
defined to mean a prerogative office holder appointed under
section 88 of the Constitution Act 1975 and a person appointed
to a public office whose remuneration is fixed by the Act
establishing the office, or fixed in or determined in accordance
with the person's instrument of appointment, or fixed or
determined by the Governor in Council or by a Minister.
Clause 2 provides that the Schedule does not apply to any of the
judicial officers or office holders covered by other provisions of
the Bill, or to the Auditor-General or Director of Public
Prosecutions.
Clause 3(1) will allow an office-holder by notice in writing to
enter into an arrangement under which he or she agrees to receive
the whole or part of his or her total amount of future salary as
non-salary benefits of an equivalent value.
Clause 3(2) provides that a notice under subsection (1) must
specify a date in the future from which the arrangement is to take
effect.
Clauses 3(3) and 3(4) allow an office-holder to vary or revoke a
notice with effect from a future date.
Clause 3(5) defines non-salary benefits to mean superannuation
contributions or other benefits of a kind that could be the subject
of a salary sacrifice arrangement under the rules or arrangements
applying to salary sacrifice by an executive in the Victorian
Public Service but not to include superannuation contributions
to a superannuation fund established by or under an Act unless
that Act expressly authorises such an arrangement; or other
superannuation contributions unless they are to a complying
superannuation and the fund will accept the contributions.
Clause 3(6) provides that for the purposes of this clause,
non-salary benefits in subclause (5) includes any taxes, costs
or charges associated with the salary sacrifice arrangements.
Some salary sacrifice arrangements in the Bill refer to non-salary
benefits as defined in clause 3(5) only, others to those as defined
in clauses 3(5) and 3(6).
Clause 4 authorises past salary sacrifice arrangements entered
into by office holders.
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PART 9--AMENDMENTS TO PUBLIC PROSECUTIONS
ACT 1994
Clause 20 amends the Public Prosecutions Act 1994 to insert a new
section 15A to permit salary sacrificing by the Chief Crown
Prosecutor. By virtue of these amendments--
· subsection (1) will allow the Chief Crown Prosecutor by
notice in writing to enter into an arrangement under
which the member agrees to receive the whole or part of
his or her total amount of future salary as non-salary
benefits of an equivalent value;
· subsection (2) provides that a notice under subsection
(1) must specify a date in the future from which the
arrangement is to take effect;
· subsections (3) and (4) allow the Chief Crown
Prosecutor to vary or revoke a notice with effect from a
future date;
· subsection (5) provides that a salary sacrifice
arrangement entered into by a member before this Bill is
enacted has effect according to its tenor as if it were an
arrangement under this section;
· subsection (6) provides that a pre-existing arrangement
may hereafter only be varied or revoked in accordance
with subsection (3);
· subsection (7) defines non-salary benefits to have
the same meaning as in clauses 3(5) and 3(6) of
Schedule 1A to the Public Administration Act 2004--
that Schedule is to be inserted by clause 19.
Clause 21 amends the Public Prosecutions Act 1994 to insert a new
section 19A to permit salary sacrificing by an Acting Chief
Crown Prosecutor. The amendments are in form and effect
identical to those relevant to the Chief Crown Prosecutor.
Clause 22 amends the Public Prosecutions Act 1994 to insert a new
section 32A to permit salary sacrificing by Crown Prosecutors.
The amendments are in form and effect identical to those relevant
to the Chief Crown Prosecutor.
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Clause 23 amends the Public Prosecutions Act 1994 to insert a new
section 36BA to permit salary sacrificing by Associate Crown
Prosecutors. The amendments are in form and effect identical to
those relevant to the Chief Crown Prosecutor.
PART 10--REPEAL OF AMENDING ACT
Clause 24 provides that this Act is to be repealed on the first anniversary of
the day on which all of its provisions are in operation.
The repeal of this Act does not affect the continuing operation
of the amendments made by it (see section 15(1) of the
Interpretation of Legislation Act 1984).
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