More than two years after the New Zealand government completed its legislative form-filling to authorise trans-Tasman superannuation portability, the Australian version limped across the parliamentary finish line last week.
The 'Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012' was signed off by the Australian Senate on November 22 after little debate.
However, Liberal senator, Mathias Corman, did take the opportunity to put the boot into the Labor government over its tardy implementation of an agreement first signed in July 2009.
"While New Zealand have acted promptly on the agreement-they clearly have a very good government over there-and their legislation received assent on 7 September 2010, it has taken the Gillard Labor government two years to bring a relatively simple bill before this parliament," Corman said during the Bill's second reading. "Labor seem unable to progress even non-controversial bills in a timely fashion."
Corman was the only Australian senator to comment on the legislation, reflecting its generally non-controversial nature and overall lack of interest in anything NZ-related across the ditch.
That last point may explain why Labor took so long to enact the NZ super portability legislation, particularly as it has been engaged in major reform of its own superannuation and financial services industries over that time.
And as some worked examples in the explanatory memorandum (involving characters named Stanley and Silpa) reveal, the legislation, while simple conceptually, suggests a lot of practical difficulties when you consider the extent of country-swapping individuals (New Zealanders mostly) engage in.
The portability laws require each relevant provider to tag the country-of-origin funds and apply the appropriate rules to that portion regardless of whether it is housed in an Australian super fund or NZ KiwiSaver scheme.
It doesn't take much imagination to see how complicated this could get if people shift their super funds between countries multiple times.
The Australian explanatory memorandum, though, did confirm that only the original capital amount, and not any earnings that capital may have produced, are subject to the country-of-origin restrictions.
For instance, the memo says, if KiwiSaver funds were moved to an Australian super scheme "... earnings on New Zealand-sourced amounts are taxed at Australian rates and are included in the taxable component of the member's interest".
"If the member later transfers the benefits to a KiwiSaver scheme, the earnings are included in the Australian-sourced amount."
As well, despite some last-minute lobbying from the Australian self-managed super fund (SMSF) sector, the one controversial aspect of the just-passed legislation which specifically excludes KiwiSaver funds from rolling into SMSFs - remained intact.
Corman lamented the SMSF-exclusion but suggested it would not last forever.
"A future coalition government will consider an expansion of the agreement at a future time to include self-managed superannuation funds, in consultation with our friends in New Zealand," he said.
In the meantime the cross-Tasman flow of super savings will be legally ratified "no sooner than the first day of the second month following the month in which the two Governments have exchanged notes informing each other that their respective constitutional or legislative matters necessary to give effect to the Arrangement have been fulfilled". According to Bill English, that means real super money should be able to take the trans-Tasman trip in about seven months.By David Chaplin