Superannuation Industry (Supervision) Amendment Regulations 2000 (No. 4) 2000 No. 280
EXPLANATORY STATEMENT
Statutory Rules 2000 No. 280
Issued by the Authority of the Minister for Financial Services and Regulation
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Amendment Regulations 2000 (No. 4)
Section 353 of the Superannuation Industry (Supervision) Act 1993 (the Act) provides that the GovernorGeneral may make regulations for the purposes of the Act.
The Act and the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations) provide for the regulation of certain superannuation funds, approved deposit funds and pooled superannuation trusts by the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, and the Australian Taxation Office.
The purpose of the Regulations is to make amendments to the definition of "pooled superannuation trust" (PST) in the Principal Regulations, to update the existing definition by removing references to repealed provisions of the Income Tax Assessment Act 1936 ('the 1936 Tax Act'), and replacing them with references to provisions of the Income Tax Assessment Act 1997 ('the 1997 Tax Act').
The Regulations commence on 1 July 2000.
PSTs are taxed on a concessional basis. Under the current definition in the Principal Regulations, in order to qualify as a PST, a unit trust must be used only for investing certain specified kinds of assets, including certain assets of life insurance companies. The assets that can be invested by life insurance companies are currently defined by reference to definitions contained in the 1936 Tax Act.
The New Business Tax System (Miscellaneous) Act (No. 2) 2000 included amendments to change the taxation treatment of life insurance companies with effect from 1 July 2000. One of the amendments repealed the definitions contained in the 1936 Tax Act that are referred to in the Principal Regulations. The equivalent new definitions are now contained in the 1997 Tax Act. If the amendments to the Regulations do not apply until the date of Gazettal, then from 1 July 2000 to the date of Gazettal, a unit trust that holds any assets invested by life insurance companies will not qualify as a PST and will be ineligible for concessional tax treatment. In order to restore the concessional taxation treatment for these unit trusts (by bringing them back within the definition of PST), it is imperative that the Regulations take effect from 1 July 2000.
Subsection 48(2) of the Acts Interpretation Act 1901 provides that a regulation, or a provision of regulations, which purports to take effect retrospectively (i.e. prior to the date of notification) will have no effect, unless it can be shown that it will not disadvantage any person (other than the Commonwealth or an authority of the Commonwealth).
No person, other than the Commonwealth or an authority of the Commonwealth, will be disadvantaged by the Regulations commencing on 1 July 2000.
Details of the Regulations are set out in the Attachment.
ATTACHMENT
Amendments to the Superannuation Industry (Supervision) Regulations 1994
Regulation 1 - Name of Regulations
Regulation 1 provides that these Regulations are the Superannuation Industry (Supervision) Amendment Regulations 2000 (No. 4).
Regulation 2 - Commencement
Regulation 2 provides that the Regulations commence on 1 July 2000.
Regulation 3 - Amendment
Regulation 3 provides that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations).
Schedule 1
Item [1] - Definition of 1997 Tax Act
Item 1 inserts a new definition to distinguish the Income Tax Assessment Act 1997 (now defined as the 1997 Tax Act), from the Income Tax Assessment Act 1936 (defined as the Tax Act), as both Acts are referred to in the Principal Regulations.
Item [2] - New subparagraphs 1.04(5)(a)(iv) and (v)
In the Treasurer's Press Release No 58 of 21 September 1999 (Attachment N), the Government announced its support of the Review of Business Taxation recommendations to reform the tax treatment of life insurers, including the recommendation to limit investors in PSTs to entities, or parts of entities, that have complying superannuation business (Recommendation 14.9 of A Tax System Redesigned).
As a consequence of this recommendation and other changes made to the taxation of life insurance companies, item 2 replaces existing subparagraphs 1.04(5)(a)(iv), (v) and (vi) of the definition of PST with two new subparagraphs.
New notes are also inserted after the subparagraphs to give guidance as to where PST is defined in the Principal Regulations, and where the definitions of virtual PST asset, segregated exempt assets and insurance company can be found in the Income Tax Assessment Act 1997.
Item [3] - Notes omitted
Item 3 omits the existing notes that appear after subregulation 1.04(8). These notes are no longer required as they refer to provisions of the Income Tax Assessment Act 1936 that have been repealed.