EXPLANATORY STATEMENT
STATUTORY RULES NO 356 1989
ISSUED BY AUTHORITY OF THE TREASURER
OCCUPATIONAL SUPERANNUATION STANDARDS ACT 1987
OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT)
LEGISLATIVE BASIS FOR THE REGULATIONS
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 trust are required to comply in order to be eligible for taxation concessions under the Income Tax Assessment Act 1936. The provisions relating to pooled superannuation trusts are new, having been inserted by Taxation Laws Amendment Act (No 2) 1989, which received Royal Assent on 30 June 1989.
Section 22 of the Act provides that the Governor-General may make regulations under the Act, and section 8A provides that regulations may prescribe operating standards for pooled superannuation trusts. Subsection 4(5) provides that the first regulations made for the purposes of the definition of ‘pooled superannuation trust’ in subsection 3(1), or for the purposes of the operating standards, may apply from a date earlier than the day when the regulations are notified in the Gazette, provided it is not earlier than 1 July 1988.
PURPOSE OF THE REGULATIONS
The main purpose of the regulations is to prescribe the following matters relating to pooled superannuation trusts:
(i) the unit trusts to which the definition of ‘pooled superannuation trust’ in subsection 3(1) of the Act 1987 applies. Compliance with the definition forms part of the pooled superannuation trust conditions with which pooled superannuation trusts have to comply in order to be eligible for concessions under the Income Tax Assessment Act 1936;
(ii) operating standards for such trusts. The standards also form part of the pooled superannuation trust conditions with which pooled superannuation trusts have to comply in order to be eligible for concessions under the Income Tax Assessment Act 1936; and
(iii) the forms of certificate by the trustees and the approved auditor of a pooled superannuation trust that are to accompany the annual return of the trust, and the amount of the application fee that is payable when the trustees seek from the Insurance and Superannuation Commissioner a notice of compliance with the pooled superannuation trust conditions.
DEFINITION OF ‘POOLED SUPERANNUATION TRUST’
The regulations provide that the definition of ‘pooled superannuation trust’ should only apply to those unit trusts which are resident in Australia and which are used exclusively for the investment of the assets of superannuation funds, approved deposit funds, tax-advantaged funds of life insurance companies, tax-advantaged business of registered organizations (eg trade unions and friendly societies) and tax exempt entities (eg religious institutions).
Consistent with the arrangements announced by the Treasurer in the May 1988 Economic Statement, they also provide for the regulation prescribing the unit trusts to which the definition of ‘pooled superannuation trust’ applies to have effect from 1 July 1988. Thus, with respect to the 1988-89 year of income, where a unit trust complied with the definition of ‘pooled superannuation trust’ at all times after 30 June 1988 that it was in existence, it would be eligible to receive taxation concessions.
In addition, the regulations make it permissible for one pooled superannuation trust to hold units in another pooled superannuation trust.
OPERATING STANDARDS
The operating standards that have been prescribed require the trustees of a pooled superannuation trust who wish to benefit from relevant tax concessions to comply with the following requirements:
(i) The trustees must satisfy themselves that only certain categories of persons (‘eligible investors’) hold units in their trust by requesting from prospective unitholders and unitholders, on purchasing units and at regular intervals, a statement containing specified particulars (‘an eligible investor statement’).
Those eligible investors who are trustees of superannuation funds (including public sector superannuation funds from 1 July 1990), approved deposit funds or other pooled superannuation trusts should have a notice of compliance with the relevant fund or trust conditions from the Insurance and Superannuation Commissioner. The notice of compliance is to be in relation to their most recently completed year of income, the immediately previous year, or an earlier year approved in writing by the Commissioner. Where such investors do not have a notice of compliance, the eligible investor statement must include a statement that the investors have taken, or intend to take, action to obtain one.
(ii) Where the trustees become aware that a unitholder is not an eligible investor, or a unitholder fails to provide an eligible investor statement within 30 days of being requested to do so, the trustees must request (in writing within 14 days) the unitholder to dispose of the units to an eligible investor or to the trustees within a further 30 days. Where the unitholder does not comply with this request the trustees must redeem the units within a further 30 days.
In cases where a request to dispose of units has been made and a unitholder subsequently satisfies the trustees (within 30 days) that the unitholder will be able to supply an eligible investor statement within 60 days of the request, the trustees must allow that extra period. If the unitholder fails to provide the statement within the extra time granted, the trustees must redeem the units within a further 30 days.
(iii) The trustees must maintain a register of unitholders.
(iv) The trustees must arrange for the accounts and records of the trust for each year of income to be audited by an approved auditor, and for the auditor’s report to be given to them not later than the day on which they are to submit their annual return to the Insurance and Superannuation Commissioner.
(v) The trustees must ensure that from 30 June 1991 the governing rules of their trust include the requirements imposed by the operating standards applicable to that pooled superannuation trust.
The regulations prescribing these standards will have effect from the date on which they are notified in the Gazette.
APPLICATION FEE
The regulations prescribe the application fee payable by the trustees of pooled superannuation trusts to be $30, ie the amount currently applicable to superannuation funds and approved deposit funds.
Details of the regulations are set out in the Attachment.
ATTACHMENT
CONTENTS OF THE REGULATIONS
REGULATION 1 - This regulation specifies the date of commencement of regulation 4, which defines ‘pooled superannuation trust’, as 1 July 1988.
REGULATION 2 - This regulation defines the Occupational Superannuation Standards Regulations as the Principal Regulations.
REGULATION 3 - This regulation amends regulation 3 of the Principal Regulations by replacing the definition of ‘actuary’ with a more up-to-date and self contained definition, and by inserting a definition of ‘public sector fund’.
REGULATION 4 - This regulation inserts a new regulation 3A into the Principal Regulations. This new regulation sets out the meaning of ‘pooled superannuation trust’, ie it prescribes the unit trusts to which the definition of ‘pooled superannuation trust’ in subsection 3(1) of the Occupational Superannuation Standards Act 1987 applies.
REGULATION 5 - This regulation expands the meaning of ‘approved auditor’ contained in subregulation 4(2) of the Principal Regulations to include the Auditor General of the Commonwealth or of a state or Territory, and also extends that meaning to the auditor of a pooled superannuation trust. It also makes related amendments to subregulation 4(3) of the Principal Regulations so that in certain circumstances a registered auditor will not be regarded as independent and, therefore, would not be an approved auditor in relation to a pooled superannuation trust.
REGULATION 6 - This regulation inserts after Part III of the Principal Regulations a new Part IIIA, entitled, ‘Pooled Superannuation Trusts’.
The new Part IIIA consists of regulations 23A-23P, which prescribe operating standards for pooled superannuation trusts.
• New regulation 23A sets out the interpretation of a number of terms.
• New regulation 23B provides that operating standards applicable to superannuation trusts are those prescribed by new regulations 23C, 23D, 23E, 23F, 23G, 23H, 23J, 23K, 23L, 23M, 23N, and 23P.
• New regulation 23C provides that the trustees of a pooled superannuation trust must not, on or after 1 March 1990, allow a person to become a holder of units or additional units in the trust unless the trustees have received an eligible investor statement by the person in relation to units in the trust.
• New regulation 23D lists the particulars which must be contained in an eligible investor statement to be supplied to the trustees of a pooled superannuation trust by a person wishing to hold units in that trust. These include the grounds of eligibility of the person to hold those units.
• New regulation 23E lists the persons who are eligible investors for the purposes of holding units in a pooled superannuation trust.
• New regulation 23F lists the circumstances in which the trustees of a superannuation fund, an approved deposit fund or another pooled superannuation trust will be eligible to hold units in a pooled superannuation trust during the first or second year of income of their fund or trust.
• New regulation 23G lists the circumstances in which the trustees of a superannuation fund, an approved deposit fund, or another pooled superannuation trust which have a notice of compliance, will be eligible to hold units in a pooled superannuation trust during the third or subsequent years of income of their fund or trust.
• New regulation 23H lists the circumstances in which the trustees of a superannuation fund, an approved deposit fund or another pooled superannuation trust which do not have a notice of compliance or non-compliance, will be eligible to hold units in a pooled superannuation trust during the third or subsequent years of income of their fund or trust.
• New regulation 23J provides for the trustees of a pooled superannuation trust to seek from a holder of units in their trust, prior to 1 March 1990 and at regular intervals, an eligible investor statement.
• New regulation 23K provides that where the trustees of a pooled superannuation trust request a person, who holds units in their trust, to supply them with an eligible investor statement, and the person fails to comply with that request within 30 days after the date of that request, the person ceases to be an eligible investor.
• New regulation 23L outlines action which the trustees of a pooled superannuation trust must take where a unit holder ceases to be an eligible investor.
• New regulation 23M requires the trustees of a pooled superannuation trust to maintain a register of holders of units in their trust showing particulars such as the name and business address of, and the number of units held by, each holder.
• New regulation 23N requires the trustees of a pooled superannuation trust to arrange for the accounts and records of the trust for each year of income to be audited by an approved auditor, and for the auditor’s report to be given to them not later than the day on which the trust’s annual return is to be submitted to the Insurance and Superannuation Commissioner.
• New regulation 23P requires the governing rules of a pooled superannuation trust on or after 30 June 1991 to include the requirements of the operating standards prescribed by the regulations.
REGULATION 7 - This regulation amends regulations 24 and 25 of the Principal Regulations:
(i) by extending the form of the trustees’ certificate (Form 1 in the Schedule to the Principal Regulations) to accompany an annual return by the trustees of a superannuation fund or an approved deposit fund to include the certificate of the trustees of a pooled superannuation trust;
(ii) by prescribing a new form of certificate by an approved auditor (Form 4 in the Schedule to the Principal Regulations) related specifically to the annual return by the trustees of pooled superannuation trusts; and
(iii) by prescribing the application fee payable by the trustees of a pooled superannuation trust to be the same as the amount payable by the trustees of a superannuation fund or an approved deposit fund, ie $30.
REGULATION 8 - This regulation amends the Schedule to the Principal Regulations substituting a new Form 1 (certificate to be provided by the trustees of a superannuation fund, approved deposit fund or pooled superannuation trust), and inserting a new Form 4 (certificate to be provided by the approved auditor of a pooled superannuation trust).