Superannuation (Salary) Regulations (Amendment) 1995 No. 275
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 275
Issued by the Authority of the Minister for Finance
Superannuation Act 1976
Superannuation (Salary) Regulations (Amendment)
The Superannuation Act 1976 (the Act) makes provision for and in relation to an occupational superannuation scheme (the CSS) for certain Commonwealth employees and other persons. Members of the CSS are referred to as eligible employees.
Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
Contributions paid by CSS members and employers and CSS benefits payable to or in respect of members are expressed as a proportion of the member's annual rate of salary. Section 5 of the Act provides that a member's annual rate of salary on any particular day is the amount per annum of salary payable to the person on that day. For this purpose salary means salary or wages and includes any allowance or value of an allowance provided for in the regulations and excludes any part of salary or wages which the regulations provide is not to be treated as salary for the purposes of the Act.
Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).
Generally, non-cash benefits, such as the use of a motor vehicle. received by members of the CSS as part of their remuneration arrangements are not included in salary for the purposes of the Act.
Remuneration arrangements are expected to be introduced for certain CSS members which will permit payment of a cash allowance in lieu of a nod-cash benefit (eg, in lieu of the use of a motor vehicle). To ensure that equity is maintained between those officers who choose the allowance and those who do not, it is appropriate that an allowance in lieu of a non-cash benefit normally should not be included in salary for the purposes of the Act.
The Superannuation (Salary) Regulations (Amendment) (the amending Regulations) amends the Principal Regulations to provide that, except where the amount would be included in salary by the operation of existing provisions of the Principal Regulations, a cash amount received in lieu of a noncash benefit would not be treated as salary for the purposes of the Act.
The amending Regulations also amend the citation of the Principal Regulations to identify their application to the CSS. This change is in keeping with similar amendments to other regulations under the Act.
The amending Regulations commenced on gazettal.
ATTACHMENT
SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)
The details of the Regulations are as follows:
Regulation 1
This provides that the Superannuation (Salary) Regulations (the Principal Regulations) are amended by these Regulations.
Regulation 2
This amends regulation 1 of the Principal Regulations which provides for the citation of the Principal Regulations. The new citation is the Superannuation (CSS) Salary Regulations.
Regulation 3 and 4
These provisions make technical amendments to Part 2E of the Principal Regulations as a consequence of the new Division to be inserted in this Part by regulation 5. Part 2E prescribes the salary arrangement for certain persons who, under their terms and conditions of appointment or employment, are able to vary the remuneration benefits in order to receive a mix of monetary and non-monetary benefits. Such arrangements are commonly referred to as flexible remuneration packages.
Regulation 5
This inserts Division 2 (which contains regulation 8QB) in Part 2E of the Principal Regulations. Regulation 8QB provides that, in certain circumstances, an amount that is payable to a CSS member is not to be treated as salary for the purposes of the Act if the person chooses to receive that amount in lieu of a non-monetary benefit,
Regulation 8QB does not apply in respect of amounts that are payable under a flexible remuneration package described in Division 1 of Part 2E. The regulation also does not apply if regulation 5 of the Principal Regulations provides that either the cash amount or the value of the non-cash benefit which has been cashed-out is to be treated as salary.
Overview
The Superannuation (Salary) Regulations (Amendment) 1995 No. 275, issued under the authority of the Minister for Finance, amends the Superannuation (Salary) Regulations, which were made under the Superannuation Act 1976. The Act provides for an occupational superannuation scheme, known as the Commonwealth Superannuation Scheme (CSS), for certain Commonwealth employees and other eligible persons. The primary problem or gap addressed by these regulations is to ensure equity among CSS members when non-cash benefits are converted to cash allowances as part of flexible remuneration arrangements. Specifically, the regulations aim to prevent a cash allowance in lieu of a non-cash benefit from being included in salary for the purposes of the Act, thereby maintaining consistency in superannuation contributions and benefits. The policy objective is to ensure fairness and maintain the integrity of the CSS by preventing the inflation of salary figures when non-cash benefits are exchanged for cash.
Scope and Application
The Superannuation (Salary) Regulations (Amendment) 1995 No. 275 pertains to the Superannuation Act 1976, which establishes and governs the Commonwealth Superannuation Scheme (CSS). This scheme applies to certain Commonwealth employees and other eligible persons, referred to as eligible employees, who contribute to and receive benefits from the CSS. The regulations are intended to ensure that superannuation contributions and benefits are calculated based on the annual rate of salary, which is defined in Section 5 of the Act. The regulations amend the existing Superannuation (Salary) Regulations to clarify that cash amounts received in lieu of non-cash benefits, such as the use of a motor vehicle, should not be treated as salary for the purposes of the Act, thereby maintaining equity among CSS members.
The amending regulations introduce specific changes to the Principal Regulations, primarily to address the inclusion of cash allowances in lieu of non-cash benefits within the salary calculations. Regulation 8QB inserted by the amending regulations stipulates that certain cash amounts should not be considered as salary unless otherwise specified by existing provisions of the Principal Regulations or if it pertains to flexible remuneration packages outlined in Division 1 of Part 2E. The regulations also update the citation of the Principal Regulations to reflect their application to the CSS, aligning them with similar amendments made to other regulations under the Act. These amendments commenced upon gazettal, ensuring that the changes are applied immediately.
Key Provisions
The Superannuation (Salary) Regulations (Amendment) 1995 No. 275 amends the existing Superannuation (Salary) Regulations under the Superannuation Act 1976. These amendments primarily concern the treatment of salary for the purpose of calculating superannuation contributions and benefits for members of the Commonwealth Superannuation Scheme (CSS). Regulation 2 modifies the title of the Principal Regulations to the Superannuation (CSS) Salary Regulations to clarify their application to the CSS. Regulation 3 and 4 make technical adjustments to Part 2E of the Principal Regulations, which pertain to flexible remuneration packages. The most significant change is introduced by Regulation 5, which adds a new Division 2 to Part 2E. Regulation 8QB, part of this new division, specifies that a cash amount received by a CSS member in lieu of a non-cash benefit, such as the use of a motor vehicle, will not be treated as salary for the purposes of the Act, thus maintaining equity among CSS members.
The Superannuation (Salary) Regulations (Amendment) imposes specific obligations on CSS members and employers. CSS members who opt for a cash allowance in place of a non-cash benefit must adhere to the provisions of the amended regulations. Employers are required to calculate superannuation contributions and benefits based on the annual rate of salary as defined by the Act. The regulations also mandate that any cash allowances provided in lieu of non-cash benefits should not be included in the calculation of salary unless specified by existing provisions of the Principal Regulations. Employers must ensure compliance with these regulations to maintain the integrity of the CSS.
Failure to comply with the Superannuation (Salary) Regulations (Amendment) may result in various consequences. While the amending regulations themselves do not explicitly state specific penalties for non-compliance, breaches of the Superannuation Act 1976 can lead to civil and criminal penalties. Under the Act, individuals and employers who fail to make the correct superannuation contributions may be liable for penalties. The maximum penalties can include fines and, in severe cases, imprisonment. Additionally, the Australian Taxation Office can pursue civil actions to recover unpaid superannuation contributions and associated penalties. It is essential for both members and employers to understand and adhere to these regulations to avoid any potential legal repercussions.