Superannuation Industry (Supervision) Regulations (Amendment) 1995 No. 240
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 240
Issued by the authority of the Treasurer
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations (Amendment)
The Superannuation Industry (Supervision) Act 1993 (the Act) and the Superannuation Industry (Supervision) Regulations (the Principal Regulations) provide 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.
Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
These regulations amend the Principal Regulations by inserting a new schedule into the Principal Regulations for the purpose of listing those Public Sector superannuation schemes that are exempt from the Act and Principal Regulations in respect of their 1994/95 and 1995/96 years of income.
By way of background, the Commonwealth is negotiating with the States and Territories on the means by which State and Territory public sector superannuation schemes will conform to the principles of the Superannuation Industry (Supervision) (SIS) legislation without formally being subject to the SIS Act. This recognises that these public sector superannuation schemes are already subject to State and Territory Government supervision. Accordingly, the SIS Act contains a provision for regulations to be made specifying certain schemes as 'exempt public sector schemes'.
Public sector schemes which are not "complying superannuation funds" during a year of income do not count for superannuation guarantee (SG) purposes during that year and also lose tax concessions for the year.
In order for a public sector scheme to be a complying superannuation fund for a year of income it must either:
(i) be categorised as an exempt public sector scheme for the whole of that year of income; or
(ii) elect to be regulated under SIS.
In practice, the public sector schemes listed in Schedule 1AA have not elected to be regulated under SIS. As these funds have received contributions intended to satisfy SG obligations, they will need to be exempted from SIS. If the schemes are not exempted for the 1994/95 and 1995/96 years of income, then the SG contributions made by the relevant State and Territory employers will not count, and the employers will become liable to a further SG charge.
Negotiations between the states and Territories and the Commonwealth have not been finalised. As a temporary measure, the proposed regulation amendment ensures that the listed public sector schemes will be complying superannuation schemes for taxation and SG purposes until the end of the 1995/96 year of income.
The regulations are described in detail in the attachment.
The regulations commence on gazettal.
ATTACHMENT
Superannuation Industry (Supervision) Regulations (Amendment)
Regulation 1 - Amendment
Regulation 1 provides that the Superannuation Industry (Supervision) Regulations (the Principal Regulations) are amended as set out in these Regulations.
The Regulations will commence on gazettal.
Regulation 2 - Regulation 1.04 (Section 10 of the Act - prescribed matters)
Regulation 1.04 of the Principal Regulations prescribes matters for the purposes of various definitions in section 10 of the Act.
Subregulation 1.04(4A) provides that for the purposes of the definition of "exempt public sector scheme" in section 10 of the Act, the schemes listed in Schedule 1AA are specified.
Subregulation 1.04(4B) provides that if a scheme listed in schedule 1AA is renamed, that the reference to that scheme includes the scheme as it is renamed.
Subregulation 1.04(4C) provides that subregulation (4A) has effect in relation to the 1994-95 and 1995-96 years of income.
Regulation 3 - New Schedule 1AA
Regulation 3 inserts the new Schedule 1AA which lists those Public Sector superannuation schemes which will be exempt from the requirements of the Act and Principal Regulations in respect of their 1994-95 and 1995-96 years of income.
Overview
The Superannuation Industry (Supervision) Regulations (Amendment) 1995 No. 240 were enacted to address the transitional issue of public sector superannuation schemes in Australia. This amendment to the Superannuation Industry (Supervision) Regulations 1994 arose due to the ongoing negotiations between the Commonwealth and the states and territories regarding how state and territory public sector superannuation schemes would align with the Superannuation Industry (Supervision) Act 1993 (the Act) without being formally subject to it. These negotiations recognised the existing supervision by state and territory governments over these schemes, and thus the Act contains provisions for regulations that specify certain schemes as 'exempt public sector schemes'. The policy objective is to ensure that these schemes can maintain their compliance status for superannuation guarantee and taxation purposes during the 1994/95 and 1995/96 years of income while negotiations are finalised. The amendment inserts a new schedule listing specific public sector schemes that are exempt from the Act and the Principal Regulations for those two financial years.
Scope and Application
The Superannuation Industry (Supervision) Regulations (Amendment) 1995 No. 240 serves to modify the existing Superannuation Industry (Supervision) Regulations, enacted under the Superannuation Industry (Supervision) Act 1993, by introducing an exemption for certain public sector superannuation schemes for the 1994/95 and 1995/96 years of income. This amendment applies specifically to public sector superannuation schemes that have not elected to be regulated under the Act, which governs the prudent management and supervision of superannuation funds, approved deposit funds, and pooled superannuation trusts. By exempting these particular public sector schemes from the Act's requirements during the specified years, the regulation seeks to ensure that superannuation guarantee (SG) contributions made by employers are recognised and that these employers do not face additional SG charges. The exemption is a temporary measure while negotiations are ongoing between the Commonwealth, states, and territories regarding the formal regulation of these schemes. The amendment is intended to maintain compliance with taxation and SG obligations for the specified public sector schemes until the end of the 1995/96 year of income.
Key Provisions
The Superannuation Industry (Supervision) Regulations (Amendment) 1995 No. 240 introduces a new schedule (Schedule 1AA) to the existing Principal Regulations, detailing the public sector superannuation schemes that are exempt from the requirements of the Superannuation Industry (Supervision) Act 1993 (the Act) and its regulations for the 1994/95 and 1995/96 years of income (Regulation 3). This amendment ensures that certain public sector schemes do not need to comply with the Act and Principal Regulations during these specified years, provided they are listed in Schedule 1AA.
These amendments impose specific obligations on the parties involved. Public sector superannuation schemes listed in Schedule 1AA are exempted from the requirements of the Act and Principal Regulations for the specified years (Regulation 2, subregulation 1.04(4A)). This exemption means these schemes are not subject to the regulations governing the prudent management and supervision of superannuation funds by the Insurance and Superannuation Commissioner. Additionally, if a scheme listed in Schedule 1AA is renamed, the exemption continues to apply to the renamed scheme (Regulation 2, subregulation 1.04(4B)). Furthermore, the exemption applies specifically to the 1994/95 and 1995/96 years of income, ensuring that these schemes are treated as complying superannuation funds for superannuation guarantee (SG) and tax purposes during these years (Regulation 2, subregulation 1.04(4C)).
The regulations do not explicitly state any offences, penalties, or civil/criminal consequences for breaches in the provided text. However, it is implicit that non-compliance with the regulations, particularly failing to apply the exemptions correctly, could result in public sector schemes losing their status as complying superannuation funds. This could lead to employers being liable for additional SG charges and losing tax concessions. The consequences for such breaches would depend on the specific context and the interpretation of the Act and Principal Regulations by the relevant authorities.
The regulations are designed as a temporary measure to ensure that the public sector schemes are treated as complying superannuation funds for taxation and SG purposes until the end of the 1995/96 year of income. This is pending the finalisation of negotiations between the Commonwealth, states, and territories on how state and territory public sector superannuation schemes will conform to the principles of the Superannuation Industry (Supervision) (SIS) legislation without formally being subject to the SIS Act (Regulation 1). These regulations commence on gazettal, providing immediate effect to the amendments.