58PBMeaning of approved worker entitlement funds

#### 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.