Small Superannuation Accounts Regulations 2002 2002 No. 216
EXPLANATORY STATEMENT
STATUTORY RULES 2002 No. 216
Issued by authority of the Minister for Revenue and Assistant Treasurer
Small Superannuation Accounts Act 1995
Small Superannuation Accounts Regulations 2002
Section 94 of the Small Superannuation Accounts Act 1995 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act established the Superannuation Holding Accounts Reserve (SHAR). Employers can make superannuation contributions into a SHAR account for employees if they are unable to find a fund willing to accept the contribution (e.g. if the contribution is too small).
Recent amendments to the Family Law Act 1975 and related legislation will in future allow superannuation to be split between couples on the breakdown of marriage. Pursuant to amendments made to the Act by the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001 accounts in SHAR will also be able to be split.
The Act provides that in splitting the account of an account holder (the 'member spouse') the amount to be allocated to the other party to the marriage breakdown (the 'non-member spouse') is to be worked out in accordance with the regulations.
The purpose of the regulations is to provide that the balance of the new account for the nonmember spouse is to be an amount determined from the superannuation agreement flag lifting agreement or splitting order served on the Commissioner of Taxation (who administers SHAR).
Details of the Regulations are set out in the Attachment.
The Regulations would commence on the commencement of the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001, which received Royal Assent on 18 September 2001, and which is expected to commence in late December 2002.
ATTACHMENT
Small Superannuation Account Regulations 2002
Explanation of the amendments
Regulation 1 - specifies the name of the Regulations as the Small Superannuation Accounts Regulations 2002.
Regulation 2 - provides that the Regulations would commence on the commencement of the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001. That Act in turn commences at the same time as commencement of the Family Law Legislation Amendment (Superannuation) Act 2001 which commences on a date to be proclaimed or 18 months after Royal Assent (which would be 28 December 2002).
Regulation 3 - provides definitions for certain terms used in the Regulations. In particular the terms member spouse, non-member spouse, payment split superannuation agreement, flag lifting agreement, and splitting order, have the same meaning as in Part VIIIB of the Family Law Act 1975.
Regulation 4 - sets out how the Commissioner of Taxation (Commissioner) is to determine the balance of the new SHAR account for the non-member spouse when the member spouse's SHAR account is split on marriage breakdown. The balance of the new account for the nonmember spouse is to be ascertained from the superannuation agreement flag lifting agreement or splitting order (whichever is relevant) that has been served on the Commissioner. These documents will either specify the actual amount for the non-member spouse's account or a means by which the Commissioner can determine an amount (e.g. it may specify a percentage that can be applied for the purposes of splitting the account).
Paragraph 4(2)(b) ensures that the new account for the non-member spouse cannot exceed the amount in the member spouse's account at the time the account is split.
Under section 15(5) of the Act the member spouse's account will be reduced by the amount that is allocated to the non-member spouse's account.
Overview
The Small Superannuation Accounts Regulations 2002 were introduced to address the need for clear guidelines on the distribution of superannuation funds from the Superannuation Holding Accounts Reserve (SHAR) upon the breakdown of a marriage. Enacted by the Minister for Revenue and Assistant Treasurer, these regulations were necessary to provide clarity and enforceability in line with recent amendments to the Family Law Act 1975, which allow for the splitting of superannuation between divorcing couples. The regulations, issued under the authority of the Small Superannuation Accounts Act 1995, aim to ensure that the balance allocated to the non-member spouse's SHAR account is accurately determined and does not exceed the original amount held by the member spouse at the time of account splitting. This legislative measure helps to maintain fairness and legal certainty in superannuation distribution post-divorce, complementing the broader family law reforms introduced in 2001.
Scope and Application
The Small Superannuation Accounts Regulations 2002 applies to the Small Superannuation Accounts Act 1995, which facilitates the establishment of Superannuation Holding Accounts Reserve (SHAR) accounts. These regulations are particularly pertinent to employers who make superannuation contributions into SHAR accounts for employees when they are unable to find a superannuation fund willing to accept the contribution, typically due to the amount being too small. The regulations also pertain to individuals involved in marriage breakdowns, enabling the splitting of superannuation accounts in accordance with the Family Law Act 1975. The Act and its associated regulations apply across Australia, administered by the Commissioner of Taxation. These regulations do not exclude any specific entities or industries but are designed to provide a clear framework for the splitting of SHAR accounts during marriage breakdowns. The regulations extend the application of the Act through the provision of detailed rules regarding the calculation and allocation of account balances during the splitting process, thereby ensuring compliance with the legislative intent.
Key Provisions
The Small Superannuation Accounts Regulations 2002 primarily address the process of splitting superannuation accounts under the Small Superannuation Accounts Act 1995 (the Act). According to Regulation 4, when a member spouse's SHAR account is divided due to a marriage breakdown, the balance for the new account of the non-member spouse must be determined from either the superannuation agreement, flag lifting agreement, or splitting order served on the Commissioner of Taxation. These documents will either specify the amount for the non-member spouse's account directly or provide a method for the Commissioner to ascertain it, such as a percentage to be applied. Regulation 4(2)(b) ensures that the new account for the non-member spouse cannot exceed the amount in the member spouse's account at the time of the split.
The regulations impose specific obligations on employers and the Commissioner of Taxation. Employers who are unable to find a superannuation fund willing to accept contributions must comply with the Act by making contributions into a SHAR account. The Commissioner of Taxation, who administers SHAR, is required to determine the balance of the new SHAR account for the non-member spouse using the information provided in the relevant superannuation agreement, flag lifting agreement, or splitting order. These obligations are crucial for ensuring that the superannuation contributions and splits are handled correctly and fairly.
Breach of the provisions set out in the Small Superannuation Accounts Regulations 2002 could lead to various consequences. Although the explanatory statement does not specify the exact offences or penalties, it is reasonable to assume that non-compliance with the Act and these regulations could result in civil or criminal penalties. These penalties could include fines, imprisonment, or other legal repercussions, as typically stipulated by Australian legislation. The exact penalties would depend on the nature and severity of the breach, but it is clear that adherence to these regulations is essential to avoid legal ramifications.