Occupational Superannuation Standards Regulations (Amendment) 1993 No. 189
EXPLANATORY STATEMENT
STATUTORY RULES 1993 No. 189
ISSUED BY THE AUTHORITY OF THE TREASURER
Occupational Superannuation Standards Act 1987
Occupational Superannuation Standards Regulations (Amendment)
The Occupational Superannuation Standards Act 1987 (the Act) provides operating standards and other relevant conditions with which superannuation funds, approved deposit funds and pooled superannuation trusts are required to comply in order to be eligible for taxation concessions under the Income Tax Assessment Act 1936.
Section 22 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
The regulations amend the Occupational Superannuation Standards Regulations (the Principal Regulations). They give effect to the Treasurer's announcement of 27 May 1993 that the Government would introduce measures in the Superannuation Industry (Supervision) legislation introduced into the Parliament that day prohibiting superannuation funds from giving financial assistance to, or acquiring assets from, members or their relatives. The Government also announced that in order to cover the period until the commencement date of the new legislation, the Principal Regulations would be amended to prohibit the provision of financial assistance to and the intentional acquisition of assets from, members, or their relatives. The regulations give effect to the Government's decision.
The Treasurer announced this amendment would take effect from 27 May 1993, the date of his announcement, however, the commencement date will be on gazettal, not 27 May 1993 as announced.
These regulations are designed to address a tax avoidance avenue. On this basis it was important to announce the measure and give immediate effect to it.
The existing Occupational Superannuation legislation is essentially structured such that the Act empowers the making of certain regulations. On this basis, the appropriate place to give effect to the measure was in the Principal Regulations.
The intended effects of the regulations are included in the SIS legislation, but it was not clear that the SIS provision could be effectively backdated; because if a fund were engaged in this type of activity and decided not to become a regulated superannuation fund, there would be no enforcement powers under the SIS legislation regarding that fund. In any case, it was considered best to proceed as quickly as possible by using an approach that would make clear the Government's intention so that people would know how they were affected. Therefore, the Government announced that Occupational Superannuation Standards Regulations would be made to give effect to this measure.
The regulations are described in detail in the attachment.
The regulations commence on gazettal.
ATTACHMENT
Occupational Superannuation Standards Regulations (Amendment)
Regulation 1
Subregulation 1.1 provides that the Occupational Superannuation Standards Regulations (the Principal Regulations) are amended by these regulations.
Regulation 2
Subregulation 2.1 provides for the introduction of two new regulations, 18BA and 18BB.
Regulation 18BA relates to the provision of financial assistance (other than lending) to members or their relatives of superannuation funds and provides that the provision in subregulation (2) is prescribed as an operating standard.
Subregulation (2) prohibits the trustee of a superannuation fund from providing any financial assistance (other than lending) using resources of the fund to any member or relative of a member of the fund.
Subregulation (3) provides that 'relative' has the same meaning as in the Income Tax Assessment Act 1936. Relative is defined in that Act to include lineal ancestors or descendants including adopted children, brother, sister, uncle, aunt, nephew, niece of both the person and his or her spouse and the spouse of a relative.
Background
The prohibition on the provision of financial assistance (other than lending) is similar to that proposed in Clause 61(1)(b) of the Superannuation industry (Supervision) Bill 1993 which was introduced into Parliament on 27 May 1993. The Government announced that the intent of this clause would be introduced to the Principal Regulations to cover the period up to the commencement date of the Superannuation Industry (Supervision) legislation.
Regulation 18BB relates to the intentional acquisition of assets from members or their relatives of superannuation funds and provides that the provisions in subregulations (2) and (3) are prescribed as operating standards.
Subregulation (2) prohibits the trustee of a superannuation fund from intentionally acquiring an asset from a member or relative of a member of the fund. The regulation will cover the acquisition of all assets, including non-monetary assets such as houses and copyrights. (However, normal contributions to schemes would, of course, be permitted.)
Subregulation (3) prohibits schemes the intention of which is to avoid application of subregulation (2). 'Scheme' means:
(a) any agreement, arrangement, understanding, promise or undertaking:
(i) whether express or implied; or
(ii) whether or not enforceable, or intended to be enforceable, by legal proceedings. and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
Subregulation (4) provides that 'relative' has the same meaning as in the Income Tax Assessment Act 1936. Relative is defined to include lineal ancestors or descendants including adopted children, brother, sister, uncle, aunt, nephew, niece of both the person and his or her spouse and the spouse of a relative.
Background
The prohibition on the provision on the intentional acquisition of assets is similar to that proposed in Clause 62 of the Superannuation Industry (Supervision) Bill 1993 which was introduced into Parliament on 27 May 1993. The Government announced that the intent of this clause would be introduced to the Principal Regulations to cover the period up to the commencement date of the Superannuation Industry (Supervision) legislation.