EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 102
Issued by the authority of the Minister for Revenue and Assistant Treasurer
Corporations Act 2001
Corporations Amendment Regulations 2007 (No. 1)
The purpose of these regulations is to support the implementation of the Government’s Simplified Superannuation reforms announced in the 5 September 2006 statement A Plan to Simplify and Streamline Superannuation – Outcomes of Consultation. These regulations complement other regulations supporting the reforms which were registered on 2 April 2007 and 13 April 2007.
The Tax Laws Amendment (Simplified Superannuation) Act 2007 and related Acts give effect to the Simplified Superannuation reforms, making superannuation easier to understand, improving incentives to work and save, and providing greater flexibility over how superannuation savings can be drawn down in retirement.
Subsection 1364(1) of the Corporations Act 2001 (Corporations Act) provides that the Governor–General may make regulations prescribing matters required or permitted by the Corporations Act to be prescribed by regulations, or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Corporations Act.
The Regulations replace redundant references and terms as a result of the rewrite of superannuation taxation law.
Details of the Regulations are set out in the Attachment.
The Corporations Agreement 2002 requires the Commonwealth to consult members of the Ministerial Council for Corporations before making amendments to the Corporations Regulations. The responsible Ministers of the States and Territories on the Ministerial Council for Corporations have been consulted regarding the Regulations and no adverse comments have been made.
The Corporations Act specifies no other conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations commence on 1 July 2007.
The Regulations are legislative instruments for the purposes of the Legislative Instruments Act 2003.
ATTACHMENT
Details of the Corporations Amendment Regulations 2007 (No. 1).
Regulation 1 specifies the name of these regulations as the Corporations Amendment Regulations 2007 (No. 1).
Regulation 2 provides that the regulations commence on 1 July 2007.
Regulation 3 provides that Schedule 1 amends the Corporations Regulations 2001 (the Principal Regulations).
Schedule 1 Amendments
Items 1, 2, 3 and 4
Item 1 omits the definition of eligible termination payment from subregulation 1.0.02(1) of the Corporations Regulations 2001. The Superannuation Legislation Amendment (Simplification) Act 2007 removes the concept of an ‘eligible termination payment’ from the Income Tax Assessment Act 1936, and consequently that definition is no longer required in the Principal Regulations
The Tax Laws Amendment (Simplified Superannuation) Act 2007 introduces and provides a definition of a ‘superannuation lump sum’ into the Income Tax Assessment Act 1997 (1997 Tax Act). This term replaces the concept of an ‘eligible termination payment’. Item 2 will insert a corresponding definition of a ‘superannuation lump sum’ into subregulation 1.0.02(1) of the Corporations Regulations 2001.
Items 3 and 4 amend the definition of superannuation-sourced money to align the operation of that term with the new tax law concepts. The definition continues to refer, in part, to eligible termination payments as the definition of superannuation sourced money allows payments received as eligible termination payments prior to 1 July 2007 to be included as superannuation sourced up to 6 months after the payment is received. The other reference to an eligible termination payment is replaced with the new term, ‘superannuation lump sum’.
Item 5
As part of the Simpler Superannuation reforms superannuation taxation law is rewritten into the 1997 Tax Act. This means that many existing references to the Income Tax Assessment Act 1936 need to be updated to refer to the 1997 Tax Act. The definition of a complying superannuation fund and the definition of a constitutionally protected fund are now found in subsection 995-1(1) of the 1997 Tax Act.
Item 5 amends the definition of superannuation provider in subregulation 7.9.01(1) to update references to the Income Tax Assessment Act 1936 to the new provisions in the 1997 Tax Act.
Overview
The Corporations Amendment Regulations 2007 (No. 1), enacted to support the implementation of the Government's Simplified Superannuation reforms, address the need to streamline and simplify superannuation regulations in alignment with updated tax laws. These regulations were introduced to complement other reforms that were registered on 2 April 2007 and 13 April 2007, and they give effect to the reforms as outlined in the Tax Laws Amendment (Simplified Superannuation) Act 2007. The objective of these regulations is to facilitate the transition to a more straightforward and accessible superannuation system, thereby improving the incentives for individuals to work and save, and offering greater flexibility in drawing down superannuation savings during retirement. Enacted under the authority of the Minister for Revenue and Assistant Treasurer, these regulations are necessary to update and replace outdated references and terms within the Corporations Regulations 2001, ensuring they remain consistent with the new superannuation taxation framework.
Scope and Application
The Corporations Amendment Regulations 2007 (No. 1) applies to the regulation of corporations under the Corporations Act 2001, with a specific focus on the amendments necessitated by the Simplified Superannuation reforms. These reforms are designed to make superannuation easier to understand, improve incentives to work and save, and provide greater flexibility over superannuation savings in retirement. The regulations are applicable to entities that are subject to the Corporations Act, including corporations, trustees of superannuation funds, and other entities governed under this legislation. The geographic reach of these regulations is national, as the Corporations Act 2001 operates across Australia, including the Commonwealth, states, and territories. The regulations do not explicitly state exclusions or thresholds but are tailored to align the existing regulatory framework with the new superannuation tax laws introduced by the Superannuation Legislation Amendment (Simplification) Act 2007 and the Tax Laws Amendment (Simplified Superannuation) Act 2007. These regulations facilitate the transition by updating definitions and references within the Corporations Regulations 2001 to reflect changes in the taxation laws, ensuring consistency and coherence in regulatory application.
Key Provisions
The Corporations Amendment Regulations 2007 (No. 1) primarily address the amendment of superannuation-related definitions and references within the Corporations Regulations 2001 to align with the Simplified Superannuation reforms (reg. 2). These reforms aim to make superannuation easier to understand and provide greater flexibility over superannuation savings in retirement. Regulation 3, through Schedule 1, amends the Corporations Regulations 2001 to reflect changes in the tax law, such as the replacement of 'eligible termination payment' with 'superannuation lump sum' (Item 1 and Item 2). The amendments also update definitions to align with the new tax concepts (Item 3 and Item 4), and modify references to the Income Tax Assessment Act 1936 to the Income Tax Assessment Act 1997 (Item 5).
These regulations impose specific obligations on entities and individuals governed by the Corporations Act 2001. For instance, entities managing superannuation funds must now use the updated definitions and references as per the amended regulations (reg. 3, Schedule 1, Item 1 to Item 5). This includes updating their internal records, communications, and compliance frameworks to reflect the new definitions of 'superannuation lump sum' and the updated references to tax law provisions. Additionally, financial institutions and other entities that interact with superannuation funds must ensure their systems and processes are aligned with these regulatory changes.
The Corporations Amendment Regulations 2007 (No. 1) do not explicitly state penalties or specific consequences for non-compliance with the new provisions. However, non-compliance with the Corporations Act 2001 generally can result in civil or criminal penalties. Civil penalties may include fines of up to $210,000 for individuals and $1,050,000 for bodies corporate, depending on the severity and nature of the breach. Criminal penalties may also apply, with individuals facing imprisonment of up to five years and bodies corporate facing fines of up to $5.25 million. The exact penalties would depend on the specific provisions of the Corporations Act 2001 that are contravened.