EXPLANATORY STATEMENT
Select Legislative Instrument 2008 No. 134
Issued by authority of the Minister for Superannuation
and Corporate Law
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Amendment Regulations 2008 (No. 2)
Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (the SIS Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the SIS Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the SIS Act.
The SIS Act provides for the prudent management of superannuation entities. The Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) are the core regulations considered essential to the operation of the SIS Act.
The purpose of the proposed Regulations is to insert regulation 8.02 which prescribes the period in which the auditor must be appointed and to ensure that the correct reference to a section in the SIS Act is made to the SIS Regulations.
Item 11 of the SIS Amendment Regulations 2007 (No. 5) 2007 (2007 Amendment Regulations) attempted to insert a new regulation to prescribe the period in which an auditor must be appointed into the SIS Regulations.
The 2007 Amendment Regulations were made on 4 October 2007 and provided that Schedule 1 to those Regulations would commence on the date that the Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 (Amendment Act) received Royal Assent, which was 24 September 2007. As a result, item 11 imposed an unintended retrospective detriment on some SMSFs with a lodgement date of 31 October 2007 for the period between 1 and 4 October 2007. Therefore, item 11 is legally ineffective because subsection 12(2) of the Legislative Instruments Act 2003 (LIA 2003) is explicit that a provision that imposes retrospective detriment has no effect.
The proposed Regulations ensure that items 1 and 2 could only apply from 4 October 2007, when the 2007 Amendment Regulations were originally made, so that the amendments are not retrospective and therefore do not disadvantage anyone. The commencement provisions ensure that item 11 cannot disadvantage anyone in respect of their rights or liabilities imposed on them from 4 October 2007 to the day before these Regulations are registered.
Details of the Regulations are set out in the Attachment.
The SIS Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.
The Regulations are legislative instruments for the purposes of the LIA 2003.
In relation to item 1, consultation was undertaken during the development stages of the 2007 Amendment Regulations with both the Regulators (the Australian Taxation Office (ATO) in 2004 and the Australian Prudential Regulation Authority (APRA) in 2005). In addition, the Regulators sought comments on the proposed time frames from various professional associations, including the Institute of Chartered Accountants of Australia and the Certified Practising Accountants. Comments from industry indicated there was support for the proposed time periods. Subsequent consultation during the legislative development process took place with APRA and the ATO in September 2007 and May 2008.
In relation to item 2, consultation was undertaken with APRA and the ATO as the change is minor in nature and consequential as a result of the Amendment Act. There was extensive consultation on the changes in the Amendment Act and representatives from industry and the public were able to comment on the proposed legislative amendments on several occasions.
ATTACHMENT
Details of the Superannuation Industry (Supervision) Amendment Regulations 2008 (No. 2)
Regulation 1 specifies the name of the Regulations as the Superannuation Industry (Supervision) Amendment Regulations 2008 (No. 2)
Regulation 2 provides that these Regulations are taken to have commenced on 4 October 2007 and ensures that no one is adversely affected in respect of their rights or liabilities imposed on them for the period starting on 4 October 2007 to the day before these Regulations are registered.
Regulation 3 provides that Schedule 1 amends the SIS Regulations.
Schedule 1 Amendments
Item 1
Under the SIS Act, there is a requirement for a trustee of a superannuation entity to ensure that an approved auditor is appointed within a specified time set out in the SIS Regulations. As no time period is set out in the SIS Regulations, amendments are required to remedy this gap.
Item 1 inserts new regulation 8.02A which prescribes the period within which an auditor must be appointed for the purposes of the SIS Act. The commencement date for item 1 is 4 October 2007.
For a superannuation trustee of a registrable superannuation entity, the period prescribed to appoint an auditor is as soon as practicable but in any event, no later than the last day of each year of income. For a superannuation trustee of a self managed superannuation fund (SMSF), the prescribed period to appoint an auditor is as soon as practicable but, in any event, no later than 30 days before the date by which the auditor must give a report mentioned in subsection 35C(6) of the SIS Act to the trustees of the fund. A note is inserted at the end of sub-regulation 8.02A(b) to make it clear that regulation 8.03 provides the period for which the report mentioned in subsection 35C(6) of the SIS Act must be provided.
The different prescribed time period for SMSFs reflects the difference in the regulatory requirements between APRA regulated funds and SMSFs, which are regulated by the ATO.
Item 1 is the same as item 11 in the 2007 Amendment Regulations. However, item 11 imposes a retrospective detriment on some SMSFs for the period between 1 and 4 October 2007. The records of the ATO indicate that the only SMFSs affected by the amendments are those funds with lodgements from one or more prior years outstanding. These entities had a lodgement date of 31 October 2007 and this group represents a minority of SMSFs. Therefore, item 11 is legally ineffective because subsection 12(2) of the LIA 2003 is explicit that a provision that imposes retrospective detriment has no effect.
As a result, item 1 inserts a new amendment into the SIS Regulations which is the same as item 11, except that the commencement date is 4 October 2007, when the 2007 Amendment Regulations were originally made rather than on 24 September 2007 when the Amendment Act commenced. To ensure that no one is adversely affected, the commencement provision ensures that item 11 cannot disadvantage anyone in respect of their rights or liabilities imposed on them. That is, item 11 can only favourably affect a person for the period starting on 4 October 2007 to the day before these Regulations are registered.
Item 2
Regulation 8.03 of the SIS Regulations outlines the period within which the auditor must give the audit report to the trustee of the SMSF. It states for the purposes of section 35C(6) the period within which a report must be given is the period ending on the day before the day by which section 36A requires a return to be lodged by the SMSF.
The Amendment Act repealed section 36A and replaced it with section 35D. Therefore, item 2 replaces the reference to section 36A with the reference to section 35D to ensure that the correct section number is referred to.
The commencement date of item 2 is also 4 October 2007. To ensure that no one is adversely affected, the commencement provision would ensure that item 2 cannot disadvantage anyone in respect of their rights or liabilities imposed on them. That is, item 2 can only favourably affect a person from the period starting on 4 October 2007 to the day before these Regulations are registered.