Superannuation (Salary) Regulations (Amendment) 1991 No. 167
EXPLANATORY STATEMENT
STATUTORY RULES 1991 No. 167
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 for Commonwealth employees and for certain other persons.
Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
The rates of contribution payable under the Act by members of the scheme are expressed in the Act as a percentage of the member's fortnightly rate of salary. The rates of pension payable are expressed as a percentage of the member's final annual rate of salary. The terms "fortnightly rate of salary" and "final annual rate of salary" are both defined in subsection 3(1) of the Act by reference to the member's annual rate of salary.
Subsection 5(1) of the Act provides that "salary" includes any allowance that, in accordance with the regulations, is to be treated as salary for the purposes of the Act and excludes any part of salary or wages that, in accordance with the regulations, is not to be treated as salary for the purposes of the Act. In accordance with subsection 5(2), a member's annual rate of salary for the purposes of the Act on a particular day is the amount per annum of his or her salary payable on that day. However, subsection 5(3) provides that, in a case specified in the regulations, a member's annual rate of salary is to be as specified in the regulations.
Section 168(9) of the Act provides that regulations made within a period of 12 months after 1 July 1990 by virtue of section 5 may be expressed to have taken effect from and including a day not earlier than 1 July 1990.
Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).
Part IV of the Principal Regulations (regulations 12 to 17) contains provisions in relation to the salary for the purposes of the Act of members who are on leave without pay. Regulation 13 provides that, where a member is on leave without pay in relation to which section 51 of the Act does not apply, and prescribed circumstances as described in subregulation 13(2) do not apply, the member's annual rate of salary during the period of the leave is to be the annual rate of the member's notional salary as defined in paragraph 12 (b) of the Principal Regulations. Generally, this is the salary that would have been applicable if the member had not been on leave without pay.
Section 51A of the Act as amended by section 40 of the Superannuation Legislation Amendment Act 1990 provides that a member is neither required nor permitted to pay contributions during a period of unpaid maternity or parental leave but may elect to contribute during the whole, or a part, of the leave. The Regulations amend regulation 13 of the Principal Regulations in relation to a member who is on unpaid maternity or parental leave. As a result of the amendment, regulation 13 will provide that such a member's annual rate of salary for the purposes of the Act during any part of the period of unpaid leave during which the member has elected to contribute will also be the annual rate of the member's notional salary as defined in paragraph 12 (b) of the Principal Regulations.
In accordance with subsection 168(9) of the Act, the Regulations will operate with effect from and including 1 July 1990, the date of commencement of the amendments to section 51A of the Act.
Overview
The Superannuation (Salary) Regulations (Amendment) 1991 No. 167 is an amendment to the existing Superannuation (Salary) Regulations, enacted by the Australian Parliament under the authority of the Minister for Finance, in response to the Superannuation Act 1976. This legislation was introduced to address a specific gap in the treatment of salary for superannuation contributions during periods of unpaid maternity or parental leave, as previously unaddressed by the existing regulatory framework. The policy objective behind these amendments is to ensure that members of the superannuation scheme who are on unpaid maternity or parental leave, and who choose to contribute during this leave, have their annual rate of salary accurately reflected for the purpose of calculating their contributions, aligning with their notional salary had they not been on leave.
The Superannuation Act 1976 originally defined salary in relation to superannuation contributions based on a member's annual rate of salary, with certain allowances included or excluded as per the regulations. However, the Act did not explicitly address the situation for members on unpaid maternity or parental leave. The amendments introduced by these regulations ensure that when members elect to contribute during their leave, their annual rate of salary for the purpose of these contributions is calculated based on their notional salary, thus maintaining consistency in their superannuation benefits. This change reflects the intention to provide equitable treatment for members who opt to contribute during periods of unpaid leave, aligning with the legislative intent to support occupational superannuation schemes for Commonwealth employees and others.
Scope and Application
The Superannuation (Salary) Regulations (Amendment) 1991 No. 167 pertains to the Superannuation Act 1976, which governs an occupational superannuation scheme for Commonwealth employees and certain other individuals. This amendment is specifically focused on the treatment of salary for the purposes of superannuation contributions and pensions. The regulations clarify the definition and calculation of salary, including allowances treated as salary and exclusions, as per the Act. The amendment to regulation 13 of the Principal Regulations, now addresses members on unpaid maternity or parental leave, ensuring their annual rate of salary is based on their notional salary if they elect to contribute during this leave. This amendment applies nationally, as the Superannuation Act 1976 is a Commonwealth Act. The regulations may be extended or restricted through subordinate instruments, and any such changes would be outlined in specific regulatory notices or amendments.
Key Provisions
The Superannuation (Salary) Regulations (Amendment) 1991 No. 167 amends the Principal Regulations to align with the changes introduced by the Superannuation Legislation Amendment Act 1990 regarding the calculation of annual rate of salary for members on unpaid maternity or parental leave. The principal sections that are affected by this amendment are section 5 (which defines what constitutes salary for the purposes of the Act) and section 168 (which empowers the Governor-General to make regulations under the Act) (sections 5, 168). The amendments ensure that the annual rate of salary for a member on unpaid maternity or parental leave who has elected to contribute will be based on their notional salary, rather than zero.
These Regulations impose specific obligations on members of the superannuation scheme, particularly those who are on leave without pay. If a member is on leave without pay and has not elected to contribute during that leave, their annual rate of salary will be treated as their notional salary, which is the salary they would have been earning if they had not been on leave (regulation 13). For members on unpaid maternity or parental leave who have elected to contribute, their annual rate of salary will also be treated as their notional salary during the period of the leave during which they have elected to contribute (regulation 13). These provisions ensure that the members’ contributions and benefits are calculated accurately based on their expected earnings.
Breaches of these Regulations may lead to incorrect calculation of superannuation contributions and benefits, which could result in either under- or over-contribution to the scheme. While the Regulations themselves do not specify penalties for non-compliance, incorrect calculations could potentially lead to tax implications or disputes over the correct amount of superannuation contributions. Therefore, it is crucial for members and employers to ensure compliance with these Regulations to avoid such issues.
In summary, the Superannuation (Salary) Regulations (Amendment) 1991 No. 167 modifies the Principal Regulations to accurately reflect the annual rate of salary for members on unpaid maternity or parental leave who have elected to contribute. These changes impose specific obligations on members to ensure their contributions and benefits are calculated correctly. Although the Regulations do not specify penalties for non-compliance, incorrect calculations could lead to tax implications or disputes, underscoring the importance of adhering to these provisions.