Superannuation Industry (Supervision) (Approval of Trustees) Regulations 1993 No. 373
EXPLANATORY STATEMENT STATUTORY RULES 1993 No. 373
ISSUED BY THE AUTHORITY OF THE TREASURER
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) (Approval of Trustees) Regulations
The Superannuation Industry (Supervision) Act 1993 (the Act) provides for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by the Insurance and Superannuation Commissioner. The basis for supervision is that those funds and trusts are subject to regulation under the Commonwealth's powers with respect to corporations or pensions (for example, because the trustee is a corporation). In return, the supervised funds and trusts may become eligible for concessional taxation treatment under the Income Tax Assessment Act 1936.
Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
All approved deposit funds, and public offer entities that wish to accept new members, must have an approved trustee. Section 23 of the Act provides that a constitutional corporation may apply to the Commissioner for approval as a trustee. An application must be in the approved form, contain the information required by the form, and be accompanied by an application fee of the prescribed amount. The regulations would prescribe a $500 application fee. This amount is calculated to recover the costs associated with processing the applications.
The regulations would also prescribe, for the purposes of subparagraphs 26(1)(b)(i) and (ii) of the Act, $5 million as the minimum net tangible assets (NTA) that the applicant should have, or a bank guarantee or equivalent Government commitment for this amount.
The regulations have been developed in consultation with representatives of the superannuation industry and related professional organisations.
The regulations are described in detail in the attachment. The regulations commence on gazettal.
ATTACHMENT
Superannuation Industry (Supervision) (Approval of Trustees) Regulations
Regulation 1 - Citation
Regulation 1 provides that the regulations may be cited as the Superannuation Industry (Supervision) (Approval of Trustees) Regulations. The proposed regulations commence on gazettal.
Regulation 2 - Interpretation
Regulation 2 provides that the term 'the Act' in the regulations means the Superannuation Industry (Supervision) Act 1993.
Regulation 3 - Application for approval of trustee
Regulation 3 provides, for the purposes of paragraph 23(2)(c) of the Act, that the prescribed application fee is $500.
Background
Pursuant to section 23 of the Act, an application for approval as a trustee for the purposes of the Act must be in the approved form contain the information required by the form and be accompanied by an application fee of the prescribed amount.
The regulation specifies a fee of $500.
Regulation 4 - Deciding an application for approval as a trustee
Regulation 4 provides, for the purposes of subparagraphs 26(1)(b)(i) and (ii) of the Act, the amount of $5,000,000 is prescribed.
Background
The Act, requires all approved deposit funds, and public offer entities that wish to accept new members, to have an approved trustee.
The Treasurer announced in his 'Strengthening Super Security' statement that trustees of approved deposit funds would be required to have minimum net tangible assets (NTA) of $5 million, or a bank guarantee or equivalent Government commitment for this amount.
Overview
The Superannuation Industry (Supervision) (Approval of Trustees) Regulations 1993 were introduced to provide a framework for the regulation of trustees within the superannuation industry, as mandated by the Superannuation Industry (Supervision) Act 1993. This legislative framework was enacted by the Commonwealth Parliament to address the need for prudent management and supervision of certain superannuation funds, approved deposit funds, and pooled superannuation trusts. The regulations were developed in consultation with representatives of the superannuation industry and related professional organisations to ensure they met the needs of all stakeholders. One of the key aspects of the regulations is the requirement for a constitutional corporation to apply for approval as a trustee, which must include a specified application fee of $500 to cover processing costs, and a minimum net tangible asset requirement of $5 million, or an equivalent government commitment, to ensure financial stability and reliability. These regulations are designed to maintain the integrity and efficiency of the superannuation system, thereby safeguarding the financial interests of superannuation fund members.
Scope and Application
The Superannuation Industry (Supervision) (Approval of Trustees) Regulations 1993 apply to constitutional corporations seeking approval as trustees for superannuation funds, approved deposit funds, and pooled superannuation trusts under the Superannuation Industry (Supervision) Act 1993. This Act governs the prudent management of these funds and their supervision by the Insurance and Superannuation Commissioner. These regulations establish the administrative framework for applications to the Commissioner, including the requirement for a $500 application fee and a minimum net tangible asset requirement of $5 million or an equivalent bank guarantee. The regulations, which have been developed in consultation with industry stakeholders, are designed to ensure that trustees meet certain financial stability criteria, thus safeguarding the interests of superannuation fund members. The regulations apply across the Commonwealth and are not limited to specific states or territories, thereby providing a uniform standard for trustee approval.
Key Provisions
The Superannuation Industry (Supervision) (Approval of Trustees) Regulations 1993 (the Regulations) detail the procedures and requirements for trustees of certain superannuation funds, approved deposit funds, and pooled superannuation trusts to be approved under the Superannuation Industry (Supervision) Act 1993 (the Act). According to section 23 of the Act, any constitutional corporation seeking to become an approved trustee must submit an application in the approved form, include the requisite information, and pay an application fee of $500 as stipulated in Regulation 3. The application process is governed by Regulation 4, which mandates that the applicant must have a minimum of $5 million in net tangible assets or a bank guarantee or equivalent government commitment for this amount, as outlined in subparagraphs 26(1)(b)(i) and (ii) of the Act.
The Regulations impose specific obligations on trustees applying for approval. They must adhere to the prescribed application form and include all required information. Furthermore, they must ensure they meet the financial criteria, either by holding a minimum of $5 million in net tangible assets or securing a bank guarantee or an equivalent government commitment. Failure to comply with these requirements could result in the rejection of the application, thereby preventing the entity from becoming an approved trustee and potentially affecting their eligibility for concessional taxation treatment.
Breaches of the provisions within the Regulations can lead to civil or criminal consequences. Although the specific penalties are not detailed within the explanatory statement, under the broader framework of the Act, penalties may include fines or imprisonment for serious or repeated violations. The maximum penalties can vary based on the nature and severity of the breach, with potential civil penalties aligning with the Act's provisions for non-compliance and criminal penalties for deliberate or reckless contraventions. The regulations aim to ensure the prudent management and supervision of superannuation funds, thus protecting the interests of fund members.