Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3)

Administered by Department of the Treasury

Legislation au F2012L01710 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Select Legislative Instrument 2012 No. 203

 

Subject - Superannuation Industry (Supervision) Act 1993

 

Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3)

 

 

Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (the SISA 1993) provides that the Governor-General may make regulations prescribing matters required or permitted by the SISA 1993 to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the SISA 1993.

 

The purpose of these amendments is to support the refund of excess concessional contributions (the refund) measure. The refund measure provides that the Commissioner of Taxation (the Commissioner) may issue a ‘release authority’ to a superannuation provider under subsection 292-420(1) of the Income Tax Assessment Act 1997 (the ITAA 1997). The release authority requires the superannuation provider to pay an amount in relation to the refund determination, made in accordance with subsection 292‑467(1) of the ITAA 1997. The money released is then used to make a refund payment to the individual. These amendments allow superannuation providers to release monies to the Commissioner to comply with the release authority.

 

These amendments are required because superannuation benefits are preserved, which means a condition of release must be met before the benefits can be paid out.  Provisions in the existing regulations do not currently allow the release of monies under the refund measure.

 

These amendments insert additional provisions in the Superannuation Industry (Supervision) Regulations 1994. Similar amendments to the Retirement Savings Accounts Regulations 1997 are also before the Executive Council.

 

The refund measure is given effect by Schedule 4 to the Tax and Superannuation Laws Amendment (2012 Measures No. 1) Act 2012, which commenced on 1 July 2011.

 

The refund measure is designed to give eligible individuals the option to have excess concessional contributions of $10,000 or less effectively refunded to them. Excess concessional contributions ineligible for the refund measure are subject to the excess contributions tax. Excess concessional contributions are concessional contributions above the concessional contributions cap. Under the refund measure those excess concessional contributions covered by the refund measure will be assessed as income at the individual’s marginal tax rate, rather than incurring the excess contributions tax.

 

Details of the regulation are set out in the Attachment.

 

The regulation would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The regulation commences on the day after registration. 

 

Public consultation on the draft regulation was conducted through the Treasury website.

 

 

 

 Authority: Subsection 353(1) of the   Superannuation Industry (Supervision) Act 1993

 

 

 

 

 

 

 

 

 

 

ATTACHMENT

 

Details of the Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3)

 

 

Section 1 – Name of regulation

This section specifies that the title of the regulation is the Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3).

 

Section 2 – Commencement

This section provides for the regulation to commence on the day after it is registered.

 

Section 3 – Amendment of Superannuation Industry (Supervision) Regulations 1994

This section provides that Schedule 1 to the regulation amends the Superannuation Industry (Supervision) Regulations 1994.

 

Schedule 1 – Amendments

Item [1]

This item inserts the new items 112A and 209A as described in Items 5 and 6 below, so that it also applies to temporary residents.

Items [2] and [3]

These items amend paragraph 6.22(4)(a) and 6.26(2)(a) to include reference to section 292-420 of the ITAA 1997.  The amendments in Items 5 and 6 below allow superannuation providers to cash benefits for the purpose of the refund release authority, but the existing regulation does not allow these benefits to be paid to persons other than the individual or their legal representative. These amendments allow benefits to be paid to the Commissioner for the purpose of the refund release authority, where the trustee has received a release authority under subsection 292-420(1) of the ITAA 1997.

Item [4]

This item amends paragraph 6.27(b) to include reference to section 292-420 of the ITAA 1997. The amendments in Items 5 and 6 below allow superannuation providers to cash benefits for the purpose of the refund release authority, but the existing regulation does not allow these benefits to be cashed if they are less than $500. This amendment allows cashing of superannuation benefits that are less than $500, where the trustee has received a release authority under subsection 292‑420(1) of the ITAA 1997.

Items [5] and [6]

 

These items insert the new items 112A and 209A to Schedule 1 to insert a new ‘condition of release’. Schedule 1 sets out the ‘conditions of release’ that must be satisfied to allow the payment of a member’s benefits from a fund, and the ‘cashing restrictions’ that apply to each conditions. These amendments allow the giving of a release authority to a superannuation provider under subsection 292‑420(1) of the ITAA 1997 to be a prescribed ‘condition of release’, subject to the restrictions in subsections 292-420(4), (5) and (7) of the ITAA 1997.

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3)

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

 

Overview of the Legislative Instrument

The purpose of the Legislative Instrument is to allow superannuation providers to comply with the release authority, issued by the Commissioner of Taxation for the purpose of the refund of excess concessional contributions.

 

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

William Richard Shorten

Minister for Financial Services and Superannuation

 

Overview

The Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3) was enacted to address a gap in the existing regulatory framework concerning the refund of excess concessional contributions. The Superannuation Industry (Supervision) Act 1993 (SISA 1993) provides a comprehensive regulatory structure for the supervision of superannuation industry, but the original regulations did not accommodate the refund measure introduced by the Tax and Superannuation Laws Amendment (2012 Measures No. 1) Act 2012. The refund measure allows eligible individuals to have excess concessional contributions of up to $10,000 refunded, assessed as income rather than incurring excess contributions tax. The amendments were made under the authority of subsection 353(1) of the SISA 1993, enabling the Governor-General to issue regulations necessary to implement the refund measure. The policy objective of these amendments is to facilitate compliance by superannuation providers with the refund measure by allowing them to release funds to the Commissioner of Taxation as required. The regulation was subject to public consultation and is compatible with human rights as it does not engage any of the applicable rights or freedoms as recognised or declared in international instruments. The amendments to the Superannuation Industry (Supervision) Regulations 1994 introduce new conditions of release and cashing restrictions, ensuring that superannuation benefits can be paid to the Commissioner for the purpose of the refund measure, thereby supporting the effective implementation of the refund mechanism.

Scope and Application

The Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3) is a legislative instrument designed to facilitate the refund of excess concessional contributions under the Superannuation Industry (Supervision) Act 1993 (SISA 1993). This regulation specifically targets superannuation providers and their obligations under the refund measure, which allows eligible individuals to have excess concessional contributions of $10,000 or less effectively refunded to them. The regulation applies to superannuation providers who must comply with the release authority issued by the Commissioner of Taxation under the Income Tax Assessment Act 1997 (ITAA 1997). These amendments ensure that the release authority is a prescribed condition of release, enabling providers to pay amounts in relation to the refund determination to the Commissioner. The regulation also amends existing provisions to allow for the cashing of superannuation benefits that are less than $500 and extends the applicability of these conditions to temporary residents. The amendments are integral to the refund measure, which provides a tax-efficient alternative to the excess contributions tax for certain contributions. This legislative instrument is compatible with human rights, as it does not engage any of the applicable rights or freedoms under the relevant international instruments.

Key Provisions

The Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3) amends the Superannuation Industry (Supervision) Regulations 1994 by inserting new items 112A and 209A into Schedule 1, establishing a new 'condition of release' that allows superannuation providers to release funds to the Commissioner of Taxation in compliance with a release authority issued under subsection 292-420(1) of the Income Tax Assessment Act 1997 (ITAA 1997). This amendment is necessary as existing regulations do not permit the release of funds under the refund measure, which enables eligible individuals to effectively refund excess concessional contributions of $10,000 or less. The new condition of release, subject to certain restrictions outlined in the ITAA 1997, facilitates the payment of benefits to the Commissioner to comply with the refund measure. The obligations imposed on superannuation providers by these amendments require them to comply with the new 'condition of release' outlined in the Superannuation Industry (Supervision) Regulations 1994. Specifically, they must be able to cash benefits and release funds to the Commissioner as per the release authority issued under subsection 292-420(1) of the ITAA 1997. This includes adhering to the restrictions specified in subsections 292-420(4), (5), and (7) of the ITAA 1997, which govern the conditions under which the release authority can be issued and the funds released. Superannuation providers must ensure that they have the necessary mechanisms in place to process these requests in compliance with the new regulatory requirements. Failure to comply with the provisions of the Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 3) may result in legal consequences. While the regulation itself does not specify particular penalties, non-compliance could potentially lead to enforcement actions under the Superannuation Industry (Supervision) Act 1993 or the ITAA 1997. This might include fines, corrective measures, or other sanctions imposed by the relevant authorities to ensure adherence to the regulatory requirements. The penalties for non-compliance would be determined in accordance with the existing legislative frameworks, and could vary depending on the nature and severity of the breach. These amendments are designed to align the regulatory framework with the refund of excess concessional contributions measure, ensuring that superannuation providers can effectively implement the refund measure as intended by the legislation. By allowing the release of funds to the Commissioner in compliance with the refund measure, the regulation aims to provide clarity and legal certainty for both superannuation providers and eligible individuals seeking to take advantage of the refund option. This regulatory change is a necessary step to facilitate the smooth operation of the refund measure and to support the broader objectives of superannuation regulation in Australia.

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