Superannuation Industry (Supervision) Amendment Act 2010

Administered by Department of the Treasury

Legislation au C2010A00100 In force Act

Legislation content

 

 

 

 

 

 

Superannuation Industry (Supervision) Amendment Act 2010

 

No. 100, 2010

 

 

 

 

 

An Act to amend the Superannuation Industry (Supervision) Act 1993, and for related purposes

 

 

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Limited recourse borrowing arrangements

Superannuation Industry (Supervision) Act 1993

 

 

 

Superannuation Industry (Supervision) Amendment Act 2010

No. 100, 2010

 

 

 

An Act to amend the Superannuation Industry (Supervision) Act 1993, and for related purposes

[Assented to 6 July 2010]

The Parliament of Australia enacts:

1  Short title

  This Act may be cited as the Superannuation Industry (Supervision) Amendment Act 2010.

2  Commencement

  This Act commences on the day after this Act receives the Royal Assent.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


Schedule 1—Limited recourse borrowing arrangements

 

Superannuation Industry (Supervision) Act 1993

1  Subsection 10(1)

Insert:

acquirable asset has the meaning given by section 67A.

2  Subsection 10(1) (paragraph (a) of the definition of excluded instalment trust)

Omit “(within the meaning of subsection 66(5))”.

3  Subsection 10(1)

Insert:

instalment receipt means an investment under which:

 (a) a listed security is held in a trust until the purchase price of the security is fully paid; and

 (b) the security, and property derived from the security, is the only trust property.

4  Subsection 10(1)

Insert:

listed security has the meaning given by subsection 66(5).

5  Subsection 67(1)

After “this section”, insert “and section 67A”.

6  At the end of subsection 67(1)

Add:

Note: Section 67A contains an exception for certain limited recourse borrowing arrangements.

7  Subsection 67(4A)

Repeal the subsection.

8  After section 67

Insert:

67A  Limited recourse borrowing arrangements

Exception

 (1) Subsection 67(1) does not prohibit a trustee of a regulated superannuation fund (the RSF trustee) from borrowing money, or maintaining a borrowing of money, under an arrangement under which:

 (a) the money is or has been applied for the acquisition of a single acquirable asset, including:

 (i) expenses incurred in connection with the borrowing or acquisition, or in maintaining or repairing the acquirable asset (but not expenses incurred in improving the acquirable asset); and

Example: Conveyancing fees, stamp duty, brokerage or loan establishment costs.

 (ii) money applied to refinance a borrowing (including any accrued interest on a borrowing) to which this subsection applied (including because of section 67B) in relation to the single acquirable asset (and no other acquirable asset); and

 (b) the acquirable asset is held on trust so that the RSF trustee acquires a beneficial interest in the acquirable asset; and

 (c) the RSF trustee has a right to acquire legal ownership of the acquirable asset by making one or more payments after acquiring the beneficial interest; and

 (d) the rights of the lender or any other person against the RSF trustee for, in connection with, or as a result of, (whether directly or indirectly) default on:

 (i) the borrowing; or

 (ii) the sum of the borrowing and charges related to the borrowing;

  are limited to rights relating to the acquirable asset; and

Example: Any right of a person to be indemnified by the RSF trustee because of a personal guarantee given by that person in favour of the lender is limited to rights relating to the acquirable asset.

 (e) if, under the arrangement, the RSF trustee has a right relating to the acquirable asset (other than a right described in paragraph (c))—the rights of the lender or any other person against the RSF trustee for, in connection with, or as a result of, (whether directly or indirectly) the RSF trustee’s exercise of the RSF trustee’s right are limited to rights relating to the acquirable asset; and

 (f) the acquirable asset is not subject to any charge (including a mortgage, lien or other encumbrance) except as provided for in paragraph (d) or (e).

Meaning of acquirable asset

 (2) An asset is an acquirable asset if:

 (a) the asset is not money (whether Australian currency or currency of another country); and

 (b) neither this Act nor any other law prohibits the RSF trustee from acquiring the asset.

 (3) This section and section 67B apply to a collection of assets in the same way as they apply to a single asset, if:

 (a) the assets in the collection have the same market value as each other; and

 (b) the assets in the collection are identical to each other.

Example: A collection of shares of the same class in a single company.

 (4) For the purposes of this section and section 67B, the regulations may provide that, in prescribed circumstances, an acquirable asset ceases to be that particular acquirable asset.

RSF trustee

 (5) Paragraphs (1)(d) and (e) do not apply to a right of:

 (a) a member of the regulated superannuation fund; or

 (b) another trustee of the regulated superannuation fund;

to damages against the RSF trustee for a breach by the RSF trustee of any of the RSF trustee’s duties as trustee.

 (6) A reference in paragraph (1)(d) or (e) (but not in subsection (5)) to a right of any person against the RSF trustee includes a reference to a right of a person who is the RSF trustee, if the person holds the right in another capacity.

67B  Limited recourse borrowing arrangements—replacement assets

 (1) Subsection (2) applies to:

 (a) a reference in paragraph 67A(1)(b), (c), (d), (e) or (f) to an acquirable asset (the original asset); or

 (b) a reference in subsection 71(8) to an acquirable asset (the original asset) mentioned in paragraph 67A(1)(b);

(including a reference resulting from a previous application of subsection (2) of this section).

 (2) Treat the reference as being a reference to another single acquirable asset (the replacement asset) if:

 (a) the replacement asset replaces the original asset; and

 (b) subsection (3), (4), (5), (6), (7) or (8) applies.

 (3) This subsection applies if:

 (a) the original asset consists of:

 (i) a share in a company, or a collection of shares in a company; or

 (ii) a unit in a unit trust, or a collection of units in a unit trust; and

 (b) the replacement asset consists of:

 (i) a share in that company, or a collection of shares in that company; or

 (ii) a unit in that unit trust, or a collection of units in that unit trust; and

 (c) at the time the replacement occurs, the original asset and the replacement asset have the same market value.

 (4) This subsection applies if:

 (a) the original asset consists of an instalment receipt that confers a beneficial interest in:

 (i) a share in a company; or

 (ii) a collection of shares in a company; and

 (b) the replacement asset consists of that share or collection.

 (5) This subsection applies if:

 (a) the original asset consists of:

 (i) a share in a company, or a collection of shares in a company; or

 (ii) a unit in a unit trust, or a collection of units in a unit trust; and

 (b) the replacement asset consists of:

 (i) a share in another company, or a collection of shares in another company; or

 (ii) a unit in another unit trust, or a collection of units in another unit trust; and

 (c) the replacement occurs as a result of a takeover, merger, demerger or restructure of the company or unit trust mentioned in paragraph (a).

 (6) This subsection applies if:

 (a) the original asset consists of a share in a company, or a collection of shares in a company; and

 (b) the replacement asset consists of a stapled security, or a collection of stapled securities; and

 (c) each of those stapled securities consists of a single share, or a single collection of shares of the same class, stapled together with a single unit, or a single collection of units of the same class, in a unit trust; and

 (d) the replacement occurs under a scheme of arrangement of the company.

 (7) This subsection applies if:

 (a) the original asset consists of a unit in a unit trust, or a collection of units in a unit trust; and

 (b) the replacement asset consists of a unit in that unit trust, or a collection of units in that unit trust; and

 (c) the replacement occurs as a result of an exercise of a discretion granted under the trust deed of that unit trust to the trustee of that unit trust.

 (8) This subsection applies in the circumstances (if any) prescribed by the regulations for the purposes of this subsection.

9  Paragraph 71(1)(g)

Omit “(within the meaning of subsection 66(5))”.

10  Paragraph 71(8)(b)

Omit “paragraph 67(4A)(b)”, substitute “paragraph 67A(1)(b)”.

11  Paragraph 71(8)(b)

Omit “subsection 67(4A)”, substitute “subsection 67A(1)”.

12  Paragraph 71(8)(c)

Omit “original asset or replacement described in that subsection”, substitute “acquirable asset mentioned in that paragraph”.

13  Subsection 71(8)

Omit “if the original asset or replacement described in subsection 67(4A)”, substitute “if the acquirable asset mentioned in that paragraph”.

14  Application provision

The amendments made by this Schedule apply to an arrangement entered into on or after the commencement of this item (including an arrangement that is a refinancing of a borrowing of money under an arrangement entered into before, on or after that commencement).

 

 

 

 

 

[Minister’s second reading speech made in—

House of Representatives on 26 May 2010

Senate on 24 June 2010]

(107/10)

 

Overview

The Superannuation Industry (Supervision) Amendment Act 2010 was enacted by the Parliament of Australia to amend the Superannuation Industry (Supervision) Act 1993. The Act addresses the need to clarify and expand the scope of limited recourse borrowing arrangements for regulated superannuation funds. This amendment was introduced to ensure that trustees of such funds have the flexibility to undertake certain borrowings without contravening existing prohibitions, provided these borrowings adhere to specific criteria aimed at protecting the fund's assets. The policy objective of the Act is to balance the need for liquidity and investment opportunities for superannuation funds with the imperative to safeguard the financial interests of fund members. The Act provides a clear exception for limited recourse borrowing arrangements, allowing trustees to borrow or maintain borrowings for the acquisition of a single acquirable asset, provided the asset is held in trust and the rights of lenders are limited to that asset. This amendment ensures that the borrowing activities of superannuation funds are transparent and do not expose fund members to undue risk. The Act came into effect following its Royal Assent on 6 July 2010, and it applies to arrangements entered into on or after this date, including refinancing of pre-existing borrowings.

Scope and Application

The Superannuation Industry (Supervision) Amendment Act 2010 (C2010A00100) amends the Superannuation Industry (Supervision) Act 1993, providing specific provisions for limited recourse borrowing arrangements in the context of regulated superannuation funds. This Act applies to trustees of regulated superannuation funds, particularly in relation to their borrowing activities for the acquisition or refinancing of single acquirable assets. The Act specifies the conditions under which such borrowings can occur without contravening the general prohibition on borrowing by trustees. The amendments apply to arrangements entered into on or after the Act's commencement, including those that refinance borrowings existing before or on the commencement date. The Act's provisions extend nationally, as it is a Commonwealth Act, and it supersedes any conflicting provisions in state or territory laws. However, the Act does not alter existing rights of fund members or other trustees to seek damages for breaches of trustee duties. The Act may be further extended or modified by subordinate instruments, such as regulations, which can specify circumstances under which an acquirable asset ceases to be considered such.

Key Provisions

The Superannuation Industry (Supervision) Amendment Act 2010 introduces several amendments to the Superannuation Industry (Supervision) Act 1993, particularly focusing on the provisions relating to limited recourse borrowing arrangements. Section 10 of the Act amends the definitions within the existing Act, clarifying terms such as "instalment receipt" and "listed security" to better define the scope of permissible investments and borrowings by trustees of regulated superannuation funds (RSF). Section 67A introduces a new subsection that allows trustees of regulated superannuation funds to engage in certain limited recourse borrowing arrangements for the acquisition of specific assets, subject to several conditions. These conditions include that the borrowed funds must be used for the acquisition of a single acquirable asset, which is defined as an asset that is not money and that the trustee is legally permitted to acquire. The Act imposes specific obligations on trustees of regulated superannuation funds, requiring them to ensure that any borrowing arrangements comply with the provisions outlined in the amended Act. Trustees must ensure that the borrowed funds are applied strictly for the acquisition of the specified acquirable assets, and that the asset is held in trust such that the trustee acquires a beneficial interest. Additionally, the rights of lenders against the trustee must be strictly limited to the acquirable asset, and the asset must not be subject to any charge other than those specified in the Act. Breaches of the provisions outlined in the amended Act can result in various penalties and consequences. While the Act does not specify maximum penalties, it is clear that any unauthorised borrowing or misuse of borrowed funds could lead to serious repercussions, including potential legal action against the trustee for breach of trust or mismanagement of funds. Trustees found to be in breach of these provisions could also face disciplinary actions from the Australian Prudential Regulation Authority (APRA), including fines, orders to rectify the breach, or even revocation of their authorisation to act as a trustee. The Act ensures that trustees must adhere strictly to the outlined borrowing provisions to maintain the integrity and security of superannuation funds.

Legal classification tags

Area of Law
Corporate Law & Governance
Finance & Banking Law
Instrument
Act
Concepts
Commencement Provisions
Regulatory Standards
Limited Recourse Borrowing

Interactions

Authorises

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.