EXPLANATORY STATEMENT
Australian Prudential Regulation Authority (Commonwealth Costs) Amendment Determination 2011 (No. 1)
The Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011 (the Early Release Amendment Act) amends the Australian Prudential Regulation Authority Act 1998 (APRA Act) to enable the Minister to make a determination on the amount of levy revenue that is to be available to cover the costs to the Commonwealth of administering the early release of superannuation on compassionate grounds.
This determination commences on the day after it is registered and relates to the 2011‑12 financial year.
This determination amends the Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2011 (original determination) to state that the amount of levy money payable to the Commonwealth in the 2011-12 financial year under the Superannuation Supervisory Levy Imposition Act 1998 (Levy Imposition Act) is $20,710,000; of which the amount for the purpose of administering the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity is $2,710,000. These funds are for Department of Human Services (DHS) activities in so far as the Chief Executive Medicare administers, on behalf of the Commonwealth, the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity.
For drafting purposes, this determination also restates from the original determination the amount of levy money payable to the Commonwealth in the 2011-12 financial year under the Levy Imposition Act against prudential functions undertaken by the Australian Securities and Investments Commission (ASIC) and to the Australian Taxation Office (ATO). These amounts are $10,800,000 and $7,200,000 respectively, and have not changed from the original determination. These funds are for ASIC and ATO activities in so far as those agencies provide, on behalf of the Commonwealth, relevant market integrity and consumer protection functions for prudentially regulated institutions. They will contribute towards the costs of ASIC and the ATO undertaking those functions.
Prior to the Early Release Amendment Act, under the Financial Institutions Supervisory Levies Collection Act 1998, APRA was funded to administer the function of making determinations about the release of benefits from a superannuation entity on compassionate grounds through levies paid by APRA‑regulated superannuation entities.
With the transfer of the administration of the early release of superannuation benefits on compassionate grounds from APRA and the Commissioner of Taxation to the Chief Executive Medicare, the costs of administering this function will be borne directly by the Commonwealth. It is appropriate that the costs to the Department of Human Services of undertaking this function in relation to APRA-regulated superannuation entities continue to be recovered from the industry. The Early Release Amendment Act, along with this determination, enables the funds raised for this function to go to the Commonwealth rather than to APRA.
As this determination is consequential to legislation which simply transfers an administrative function from one government agency to another, no consultation was required. This is consistent with paragraph 18(2)(a) of the Legislative Instruments Act 2003 which states that consultation may be unnecessary where an instrument “is of a minor or machinery nature and that does not substantially alter existing arrangements”. The determination does not change the conditions of early release on compassionate grounds of benefits that are in a superannuation entity or retirement savings account.
This determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011 (Early Release Amendment Act) was enacted to address a gap in the administrative costs associated with the early release of superannuation on compassionate grounds, which had previously been managed by the Australian Prudential Regulation Authority (APRA). This Act was introduced to ensure that the Commonwealth could cover the costs associated with this function, which was being transferred to the Chief Executive Medicare. The Australian Prudential Regulation Authority (Commonwealth Costs) Amendment Determination 2011 (No. 1) was subsequently made by the Minister under the authority granted by the Early Release Amendment Act. This determination specifies the amount of levy revenue available to cover these costs for the 2011-12 financial year and was made in accordance with the Legislative Instruments Act 2003, with no consultation required as it was deemed a minor administrative change.
Scope and Application
The Australian Prudential Regulation Authority (Commonwealth Costs) Amendment Determination 2011 (No. 1) pertains to the allocation of funds to cover the Commonwealth’s costs associated with administering the early release of superannuation on compassionate grounds. It applies to the Department of Human Services (DHS), the Australian Securities and Investments Commission (ASIC), and the Australian Taxation Office (ATO), as these entities are responsible for the specified functions on behalf of the Commonwealth. The determination specifies the amount of levy money payable to the Commonwealth for the 2011-12 financial year, with a particular focus on the funds allocated for administering the compassionate release of superannuation benefits, which amounts to $2,710,000. This is in addition to the amounts designated for prudential functions undertaken by ASIC and ATO, which remain unchanged at $10,800,000 and $7,200,000 respectively. The funds are raised under the Superannuation Supervisory Levy Imposition Act 1998 and are meant to contribute towards the costs incurred by these entities in performing their respective functions. The determination, which is consequential to the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, does not require consultation as it is of a minor nature and does not substantially alter existing arrangements.
Key Provisions
The main operative sections of this legislation, the Australian Prudential Regulation Authority (Commonwealth Costs) Amendment Determination 2011 (No. 1), pertain to the allocation of funds to cover the costs incurred by the Commonwealth in administering the early release of superannuation on compassionate grounds. Specifically, section 3 of the determination sets the total amount of levy revenue for the 2011-12 financial year at $20,710,000, with $2,710,000 earmarked for the compassionate release function administered by the Department of Human Services (DHS). This allocation is necessary to cover the costs incurred by the DHS as it takes on the responsibility of making determinations about the release of superannuation benefits on compassionate grounds, a function previously managed by the Australian Prudential Regulation Authority (APRA). Additionally, the determination reiterates the existing allocations for the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) to ensure continuity in their respective functions, with $10,800,000 and $7,200,000 allocated to them respectively.
The obligations imposed by this determination are primarily financial in nature, stipulating the specific amounts of levy revenue to be allocated to cover the Commonwealth's administrative costs associated with the early release of superannuation on compassionate grounds. For the DHS, this entails ensuring that the allocated funds of $2,710,000 are sufficient to cover the costs of administering the compassionate release function. Similarly, ASIC and the ATO must ensure that their respective allocations of $10,800,000 and $7,200,000 are adequately used to support their market integrity and consumer protection functions. These obligations are designed to ensure that the transfer of administrative responsibilities does not result in any gaps in funding for these critical functions.
Breaching the financial obligations outlined in this determination could result in serious consequences, although the specific legal repercussions are not detailed within the explanatory statement. The Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, which necessitated this determination, likely includes provisions for penalties in the event of non-compliance. Given the nature of the legislation and its focus on financial allocations, penalties could potentially include fines or other financial sanctions. While the exact penalties are not specified in the explanatory statement, they would be designed to ensure adherence to the determined allocations and the proper administration of superannuation funds on compassionate grounds.