Superannuation Guarantee (Administration) Act 1992
Legislative Instrument
Explanatory Statement
General Outline of Instrument
This instrument revokes the instrument registered on 21 September 2005 (Legislative Instrument F2005L02718).
The instrument sets out revised written guidelines the Commissioner of Taxation (the Commissioner) must have regard to in making a decision whether to reduce the amount of the increase in an employer's individual superannuation guarantee shortfall (the 'choice shortfall') for an employee for a quarter under the Superannuation Guarantee (Administration) Act 1992.
The instrument is made under subsection 21(1) of the Superannuation Guarantee (Administration) Act 1992.
The instrument will be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
This instrument replaces Legislative Instrument F2005L02718 with effect from the date of registration.
What is this instrument about:
This instrument is made by the Commissioner pursuant to the Superannuation Guarantee (Administration) Act 1992. It contains revised written guidelines the Commissioner must have regard to in making a decision whether to reduce an employer's 'choice shortfall' for an employee for a quarter under the Act.
What is the effect of this instrument:
This instrument provides revised written guidelines the Commissioner must have regard to when deciding whether to reduce the choice shortfall.
Background:
The choice of fund requirements form part of the Superannuation Guarantee (Administration) Act 1992. The requirements took effect from 1 July 2005.
However, there are two significant changes which affect employers and the way they meet their choice of fund requirements, both with effect from 1 July 2006.
- Choice of fund has been extended to more employees.
- Some funds (including funds that are employer funds and chosen funds under choice of fund) are closing prior to the introduction of new licensing rules.
This instrument simply extends the introductory period for a further 12 months to allow employers sufficient opportunity to understand and comply with these changes.
Subsections 19(2A) and 19(2B) of the Superannuation Guarantee (Administration) Act 1992 give rise to an increase in the amount of an employer's individual superannuation guarantee shortfall for a quarter where the employer makes contributions to a complying superannuation fund or retirement savings account but does not comply with the choice of fund requirements.
Under subsection 19(2E), the Commissioner may reduce the choice shortfall in part or in full. In making a decision under subsection 19(2E), the Commissioner is required by section 21 to have regard to written guidelines.
This instrument sets out revised guidelines the Commissioner will have regard to when making a decision under subsection 19(2E).
In order to assist the public and ATO officers, the Commissioner will also revise Law Administration Practice Statement PS LA 2005/18 to explain this instrument.
Consultation:
There was no public consultation undertaken in the development of this revised instrument. However, the guidelines have been subject to targeted consultation with key industry groups. No adverse comments were received. The Commissioner has also consulted with various stakeholders within the Tax Office in relation to the contents of this instrument.
9 June 2006
Commissioner of Taxation
Subject References:
Individual superannuation guarantee shortfall
choice of fund requirements
Legislative References:
Superannuation Guarantee (Administration) Act 1992
Legislative Instruments Act 2003
Overview
The Superannuation Guarantee (Administration) Act 1992 was enacted to address the need for a robust framework to ensure employers comply with their superannuation obligations to their employees. This Act was introduced by the Parliament of Australia to provide a clear set of rules and administrative measures to oversee the collection and enforcement of superannuation contributions. The policy objective of this Act is to safeguard retirement incomes by mandating that employers contribute a specified percentage of their employees' earnings into a superannuation fund. The instrument F2006L01821, registered on 9 June 2006, is a legislative instrument that revokes a previous instrument and sets out revised guidelines for the Commissioner of Taxation to follow when deciding whether to reduce an employer's shortfall in meeting their superannuation obligations. This revision aims to assist employers in understanding and complying with recent changes to the choice of fund requirements, ensuring a smoother transition and compliance within the superannuation system.
Scope and Application
The legislative instrument F2006L01821 pertains to the Superannuation Guarantee (Administration) Act 1992, which applies to employers and their obligations in relation to superannuation contributions for their employees. This Act operates at the Commonwealth level and mandates employers to make regular contributions to their employees' superannuation funds. The instrument revokes the previous guidelines registered on 21 September 2005 and provides updated written guidelines that the Commissioner of Taxation must consider when deciding whether to reduce the amount of an employer's individual superannuation guarantee shortfall for an employee for a particular quarter. These guidelines are specifically designed to assist in managing the choice of fund requirements under the Act. The changes include an extension of the choice of fund to more employees and the closure of some funds due to the introduction of new licensing rules, which necessitated the extension of the introductory period by 12 months. The instrument is made under subsection 21(1) of the Superannuation Guarantee (Administration) Act 1992 and is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Key Provisions
The legislative instrument F2006L01821 pertains to the Superannuation Guarantee (Administration) Act 1992, specifically targeting the choice of fund requirements. The key sections involved are subsections 19(2A) and 19(2B), which address the increase in an employer's individual superannuation guarantee shortfall for a quarter if the employer fails to comply with the choice of fund requirements. Under subsection 19(2E), the Commissioner of Taxation is empowered to reduce this choice shortfall in part or in full, subject to having regard to written guidelines stipulated in section 21 of the Act.
The obligations imposed by this legislation on the parties involved, particularly employers, are centred around compliance with the choice of fund requirements. Employers must ensure that they make contributions to a complying superannuation fund or retirement savings account in accordance with these requirements. Non-compliance can lead to an increased individual superannuation guarantee shortfall, which the Commissioner may subsequently reduce based on the written guidelines provided in this legislative instrument.
Failure to adhere to the choice of fund requirements, and thereby incurring an increased individual superannuation guarantee shortfall, does not directly result in civil or criminal penalties within this legislative instrument. However, the consequences of non-compliance include the potential reduction of the choice shortfall by the Commissioner. The instrument does not specify maximum penalties but emphasises the importance of compliance to avoid financial repercussions for employers. The Commissioner's decision to reduce the choice shortfall is guided by the revised written guidelines, which aim to provide clarity and support to employers in meeting their obligations.