EXPLANATORY STATEMENT
ISSUED BY THE MINISTER FOR FINANCE AND DEREGULATION
Superannuation (Productivity Benefit) Act 1988
DETERMINATION UNDER SECTION 4G
SUPERANNUATION (PRODUCTIVITY BENEFIT) (PENALTY INTEREST) AMENDMENT DETERMINATION 2009 (NO. 1)
The Superannuation (Productivity Benefit) Act 1988 (the PB Act) provides superannuation arrangements, based on the minimum employer superannuation requirements in the Superannuation Guarantee (Administration) Act 1992, for certain Australian Government employees, office holders and contractors (employees).
The superannuation arrangements under the PB Act were closed to new employees from 1 July 2006. However, they continue to apply to persons who were covered by the Act on 30 June 2006 until they cease relevant employment or become a member of an Australian Government superannuation scheme.
Sections 4E, 4EA and 4F of the PB Act provide for the employer superannuation contributions that are to be paid to a fund in respect of an employee under the Act. Where the payment is made late, the employer is also required to pay extra amounts, as penalty interest, to take account of interest foregone because the employer has delayed paying contributions on behalf of the employee. Penalty interest is payable in respect of any period of delay between the date when an amount should have been paid into a fund and the date when it was paid.
Section 4G of the PB Act provides that the interest for the purposes of sections 4E, 4EA and 4F is calculated in a way determined by the Minister. The Superannuation (Productivity Benefit) (Penalty Interest) Determination 1995 (the Principal Determination), made under section 4G of the PB Act, provides that penalty interest is a daily rate calculated by dividing an annual interest rate for the relevant financial year specified in the Determination by 365.
The Determination, cited as the Superannuation (Productivity Benefit) (Penalty Interest) Amendment Determination 2009 (No. 1), amends the Principal Determination to provide that the interest rate for the 2009-2010 financial year is 6.57 per cent. This is 2 percentage points higher than the 10 year Treasury Bond rate for April 2009, as published by the Reserve Bank of Australia.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LI Act).
No consultation was undertaken in relation to the Determination. In accordance with paragraph 18(2)(a) of the LI Act, consultation was considered to be unnecessary because the instrument is of a minor or machinery nature.
The Determination commences on 1 July 2009.
Overview
The Superannuation (Productivity Benefit) Act 1988 was enacted to establish superannuation arrangements for specific Australian Government employees, office holders, and contractors, in line with the minimum employer superannuation requirements outlined in the Superannuation Guarantee (Administration) Act 1992. This legislation was designed to address the gap in superannuation coverage for these particular groups of employees. The enactment of this Act was overseen by the Parliament, with a policy objective to ensure that certain Australian Government employees receive a minimum level of superannuation benefits. The Superannuation (Productivity Benefit) (Penalty Interest) Amendment Determination 2009 (No. 1) was introduced to adjust the penalty interest rates for late employer superannuation contributions as stipulated in the PB Act, ensuring that any delays in contributions are adequately accounted for by increasing the penalty interest rate for the 2009-2010 financial year to 6.57 per cent.
Scope and Application
The Superannuation (Productivity Benefit) (Penalty Interest) Amendment Determination 2009 (No. 1) amends the existing penalty interest calculation under the Superannuation (Productivity Benefit) Act 1988, applying to superannuation arrangements for certain Australian Government employees, office holders, and contractors who were covered by the Act on 30 June 2006. The determination specifically modifies the interest rate applicable for the 2009-2010 financial year to 6.57 per cent, which is calculated by reference to the 10 year Treasury Bond rate for April 2009 as published by the Reserve Bank of Australia. The amendment is effective from 1 July 2009 and is a legislative instrument under the Legislative Instruments Act 2003. Notably, no consultation was undertaken for this amendment as it was deemed to be of minor or machinery nature.
Key Provisions
The Superannuation (Productivity Benefit) (Penalty Interest) Amendment Determination 2009 (No. 1) amends the calculation of penalty interest under the Superannuation (Productivity Benefit) Act 1988 (PB Act) (sections 4E, 4EA and 4F) by setting the interest rate for the 2009-2010 financial year at 6.57 per cent. This amendment follows the formula outlined in the Superannuation (Productivity Benefit) (Penalty Interest) Determination 1995, where the penalty interest rate is calculated based on an annual interest rate for the relevant financial year divided by 365. This amendment specifies that the rate for the 2009-2010 financial year is 2 percentage points higher than the 10-year Treasury Bond rate for April 2009, as published by the Reserve Bank of Australia. The interest is payable for any period of delay between the due date and the actual payment of superannuation contributions by the employer.
The Act imposes obligations on employers to ensure that superannuation contributions for employees under the PB Act are made on time. If contributions are made late, employers must also pay penalty interest at the specified rate. This penalty interest is intended to compensate for the interest that would have been earned if the contributions had been paid on time. Employers must calculate and remit these penalty interest payments in addition to the superannuation contributions themselves.
Failure to make timely superannuation contributions or to calculate and remit penalty interest correctly can result in civil and administrative consequences. The Act does not explicitly outline specific offences or penalties for non-compliance in the Determination itself, but general provisions under the PB Act or related legislation may apply. Typically, penalties for non-compliance with superannuation obligations can include financial penalties, interest on unpaid amounts, and in severe cases, legal action to recover the unpaid contributions and interest. The exact penalties can vary based on the circumstances and other relevant legislation, such as the Superannuation Guarantee (Administration) Act 1992.