Superannuation Contributions Tax (Member of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1) 2002 No. 218
EXPLANATORY STATEMENT
STATUTORY RULES 2002 No. 218
Issued by authority of the Minister for Revenue and Assistant Treasurer
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997
Superannuation Contributions Tax (Member of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1)
Section 37 of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (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 specifies how the superannuation contributions surcharge is applied to members of constitutionally protected superannuation funds. Members of constitutionally protected superannuation funds are liable to pay any surcharge liability at the time a benefit is payable to the member.
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 a marriage. Amendments made to the Act by the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001 (the amending Act) ensure that the split of a benefit will not affect either the liability of the member to pay surcharge when the benefit is paid from the fund or the amount of that liability.
The purpose of the Regulations is to make minor technical corrections to the regulations to reflect the renumbering of certain provisions within the Act by the amending Act and to clarify reporting obligations of the 15% of the employer financed component of a benefit that has been split.
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
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1)
Explanation of the amendments
Regulation 1 - specifies the name of the Regulations as the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1).
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 the 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 that Schedule 1 amends the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Regulations 1997.
Schedule 1 amendments
Item 1 of Schedule 1 - makes a technical amendment to paragraph 4(2)(a) to reflect the renumbering of the provisions in the Act that are referred to in that paragraph.
Item 2 of Schedule 1 - makes a technical amendment to paragraph 4(2)(b) to reflect the renumbering of the provisions in the Act that are referred to in that paragraph.
Item 3 of Schedule 1 - makes a technical amendment to Regulation 5 to reflect the renumbering of the provisions in the Act that are referred to in that regulation.
Item 4 of Schedule 1 - clarifies the reporting obligations on funds when reporting payment of a benefit that has been subject to a split due to marriage breakdown.
Funds are currently required to report 15% of the employer financed component of that part of the benefit that accrued after 20 August 1996. This information is used to calculate the cap that applies to the surcharge for members of constitutionally protected funds.
Consistent with changes made by the amending Act, item 4 ensures that when funds report the amount that is 15% of the employer financed component of that part of the benefit that accrued after 20 August 1996, the impact of the benefit being split with the other party to the marriage breakdown is ignored. That is, the 15% is based on the benefit that would have been payable to the member but for the payment split, without any reduction for that part of the benefit that may now be payable to the other party to the marriage breakdown.
Overview
The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1) were enacted to make technical amendments to the existing regulations under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. This Act was introduced to address the application of the superannuation contributions surcharge to members of constitutionally protected superannuation funds, specifically ensuring that these members remain liable for any surcharge liability when a benefit is payable. The Regulations were issued by authority of the Minister for Revenue and Assistant Treasurer and are intended to reflect changes made by the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001, which allows for the splitting of superannuation benefits between couples upon the breakdown of a marriage. The policy objective of these amendments is to ensure that the liability for the surcharge remains with the member and is not altered by the division of benefits, thereby maintaining the integrity of the surcharge framework.
Scope and Application
The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1) pertains to the regulation of superannuation contributions tax for members of constitutionally protected superannuation funds. These Regulations apply to trustees and members of such funds, ensuring compliance with the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. The Act, which applies across Australia as federal legislation, mandates the payment of any applicable surcharge at the time a benefit is payable to the member. The Regulations aim to make technical corrections and clarify reporting obligations following amendments to the Family Law Act 1975 and related legislation, which allow for the splitting of superannuation benefits between spouses in the event of a marriage breakdown. The Regulations reflect the renumbering of certain provisions within the Act and ensure that the liability for the surcharge remains unaffected by the splitting of benefits. These Regulations commence upon the commencement of the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001, expected in late December 2002.
Key Provisions
The Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1) amend existing regulations under the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997. These amendments are necessary to address technical adjustments resulting from renumbering certain provisions within the Act, as directed by the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001. Regulation 1 identifies these amendments as the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Amendment Regulations 2002 (No. 1). Regulation 2 ensures that these Regulations will commence on the same day as the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001, expected to be in late December 2002. Schedule 1 contains the substantive changes, with Item 1 adjusting paragraph 4(2)(a) to reflect the new numbering in the Act. Similarly, Item 2 amends paragraph 4(2)(b), and Item 3 modifies Regulation 5, all to align with the renumbered sections of the Act. Item 4 provides clarification on the reporting obligations for superannuation funds when dealing with benefits split due to a marriage breakdown.
The Regulations impose specific obligations on superannuation funds regarding the reporting of benefits that have been split due to a marriage breakdown. Funds are required to report 15% of the employer financed component of the benefit that accrued after 20 August 1996, irrespective of the split. This ensures that the calculation of the cap on the surcharge for members of constitutionally protected funds remains accurate and unaffected by the split. The amendments clarify that the 15% calculation should be based on the full benefit that would have been payable to the member without considering the part now payable to the other party involved in the marriage breakdown.
Failure to comply with the requirements set forth in these Regulations may result in various civil or criminal consequences. While the explanatory statement does not specify particular offences or penalties, non-compliance with superannuation reporting requirements can typically lead to fines and potential legal action. The exact penalties would depend on the specific breach and the relevant provisions of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997, which may include fines for incorrect reporting or failure to report. It is important for superannuation funds to adhere strictly to these obligations to avoid any legal repercussions.