Occupational Superannuation Standards Regulations (Amendment) 1993 No. 323
EXPLANATORY STATEMENT
STATUTORY RULES 1993 No. 323
ISSUED BY AUTHORITY OF THE TREASURER
Occupational Superannuation Standards Act 1987
Occupational Superannuation Standards Regulations (Amendment)
The Occupational Superannuation Standards Act 1987 (the OSS 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 OSS Act provides that the Governor-General may make Regulations for the purposes of the OSS Act.
The regulations amend the Occupational Superannuation Standards Regulations (the Principal Regulations). They cover amendments to the following regulations:
Regulation 18BB - This amendment modifies Regulation 188B of the Principal Regulations to reflect the amendments made by the Senate to section 64 in the Superannuation Industry (Supervision) Act 1993 (SIS Act) during the passage of the Bill. It ensures that all superannuation funds are subject to the same restrictions regarding the acquisition of assets from members, regardless of whether they remain subject to the SIS Act or the OSS Act in the period between Royal Assent to the SIS Act (30 November 1993) and the commencement of their 1994-95 year of income.
Regulation 3(1) - This amendment corrects an incorrect reference in the definition of "shortfall component" that is, the reference should be section 64 of the Superannuation Guarantee Administration Act 1992 not section 59.
The amendments have retrospective effect. However, as they operate to the benefit of those concerned they do not contravene subsection 48(2) of the Acts Interpretation Act 1901.
The regulations are described in detail in the attachment.
Details of the commencement dates are contained in the attachment.
Authority: Section 22 of the Occupational Superannuation Standards Act 1987
ATTACHMENT
Occupational Superannuation Standards Regulations (Amendment)
Regulation 1
Subregulation 1.1 provides that Regulation 4 is taken to have commenced on 29 November 1993.
Subregulation 1.2 provides that the remainder of these Regulations are taken to have commenced on 1 July 1992.
Background
Regulation 4 modifies Regulation 188B of the Principal Regulations to reflect the amendments made to section 64 of the SIS Act By providing that the amendment commences on 30 November 1993, the date from which the limit on assets applies in the SIS Act, all superannuation funds will be subject to the same restrictions, regardless of whether they remain subject to the SIS Act or the OSS Act.
Regulation 3 corrects an incorrect reference in the definition of "shortfall component" which occurred at time of insertion of the definition, on 1 July 1992.
Regulation 2
Subregulation 2.1 provides that the Principal Regulations are amended by these regulations.
Regulation 3
Subregulation 3.1 substitutes the reference in the definition of "shortfall component' to section 59 of the Superannuation Guarantee Administration Act 1992 with section 64.
Background
The definition of shortfall component was inserted into the Principal Regulations by Statutory Rules 1992 No 223, effective 1 July 1992. "Shortfall component" is presently defined as meaning a shortfall component within the meaning of section 59 of the Superannuation Guarantee Administration Act 1992. Amendments were made to this Act in the course of its passage through the Senate which changed the numbering of the sections, such that section 59 became section 64, rendering the definition meaningless.
References to "shortfall component" in the Principal Regulations operate to the benefit of persons affected by those sections. For example, Regulation 8(1A) provides that superannuation guarantee benefits, including any shortfall component, vests in the member on the day on which the benefits accrue - making the correction retrospective to the commencement of the Superannuation Guarantee provisions operates to the advantage of beneficiaries because it ensures that ownership of any shortfall amounts passes directly to the beneficiaries as originally intended. Other references to the term "shortfall component" are: 3(4), 5AA(2)(b)(ii), 5AA(3)(a)(iv), 8(1)(b) and 18B(3)(b)(iv).
Regulation 4
Subregulation 4.1 provides that subregulation 18BB(2) of the Principal Regulations is subject to subregulation (2A).
Subregulation 4.2 inserts subregulation (2A) into the Principal Regulations. Subregulation (2A) provides an exception to the prohibition on intentional acquisition by superannuation funds of assets from members or their relatives by allowing the acquisition of listed securities and business real property. Where business real property is acquired by an excluded superannuation fund (that is a fund that has less than 5 members) the acquisition must not bring the total of such property acquired by excluded funds after 30 November 1993 to more than 40% of the total value of assets in the funds.
Subregulation 4.3 inserts the following definitions:
'acceptable percentage' means for an excluded superannuation fund - 40% and otherwise 0%;
'acquire an asset' does not include accept money;
'business' includes any profession, trade, employment, vocation or calling carried on for the purposes of profit, including:
(a) the carrying on of primary production; and
(b) the provision of professional services;
but does not include occupation as an employee;
'business real property' of a person means any freehold or leasehold interest in real property which is used wholly and exclusively in the person's business;
'excluded superannuation fund' means a superannuation fund of which there are fewer than 5 members
'listed security' means:
(a) a share; or
(b) a unit; or
(c) a bond or debenture; or
(d) a right or option; or
(e) any other security;
listed for quotation in the official list of a stock exchange in Austral..
Background
Regulations 18BA and 18BB of the Principal Regulations were amended by Statutory Rules 1993 No 189, gazetted 30 June 1993, to give effect to the Treasurer's announcement of 27 May 1993 that the Government would introduce measures in the SIS legislation prohibiting funds from giving financial assistance to, or acquiring assets from, members or their relatives and that the Principal Regulations would be amended to cover the period until the commencement date of the new legislation.
The SIS Act was passed by the Senate on 17 November 1993 with a number of amendments. Section 64 which contains the prohibition on the acquisition of assets by superannuation funds from members or their relatives, was amended to allow, as an exception, the acquisition of business real property and listed securities. The exception allows business real property to be acquired provided the acquisition does not bring the total of such property acquired by excluded funds since Royal Assent to the SIS Act to more than 40 per cent of the total value of assets in the fund.
Generally, superannuation funds will cease to be subject to the OSS Act from the beginning of their l994/95 year of income and will become subject to the provisions in section 64 of the SIS Act. As it is equitable for all superannuation funds to be governed by the same rules, the amendment to the OSS Regulation should came into effect at the same time as the corresponding SIS provision. Although the SIS Act applies from 1 December 1993, the limit on the acquisition of assets applies to assets acquired after Royal Assent, that is after 30 November 1993, which is the date of effect of the amendment to Regulation 18BB. As the amendment represents a relaxation of the current rules in Regulation 18BB, retrospectivity does not contravene the rights of a person existing at the date of commencement.