EXPLANATORY STATEMENT
Select Legislative Instrument 2012 No. 132
Subject - Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991
Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2012 (No. 1)
The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 (the SMSF Levy Act) imposes a supervisory levy on self managed superannuation fund (SMSF) trustees, payable on lodgment of their annual return. This levy is designed to fund the costs of regulating the SMSF sector.
Section 7 of the SMSF Levy Act provides that the Governor-General may make regulations specifying the amount of levy payable on the lodgment of a return for a year of income. That amount cannot exceed $200.
The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Regulations 1991 (the SMSF Levy Regulations) prescribe the amount of levy payable by SMSF trustees on lodgment of their annual return.
The purpose of the Regulations is to amend the SMSF Levy Regulations to increase the amount of levy payable. The levy was increased from $45 to $150 per annum with effect from 1 July 2007. The levy was subsequently increased from $150 to $180 for the 2010-11 year of income. The Regulations will increase the levy payable from $180 to $200 for the 2011-12 year of income. The levy will then reduce to $191 for the 2012-13 and subsequent years of income.
It is intended that the additional revenue collected from the higher levy amount will offset the costs of implementation of SMSF auditor registration which was announced as part of the Government’s Stronger Super package. SMSF auditor registration aims to raise the standard of SMSF auditor competency and ensure there are minimum standards across the sector. This measure will involve costs to the Australian Taxation Office and the Australian Securities and Investments Commission.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after registration, and apply in relation to the 2011-12 year of income and each subsequent year of income.
No public consultation was undertaken because the Regulations give effect, in terms announced in the Budget, to an adjustment to a tax.
Authority: Section 7 of the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2012 (No. 1)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Legislative Instrument is to increase the self managed superannuation fund (SMSF) Levy.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Bill Shorten Minister for Financial Services and Superannuation
Overview
The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2012 (No. 1) amends the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Regulations 1991 to increase the supervisory levy payable by trustees of self managed superannuation funds (SMSF). Enacted by the Governor-General under section 7 of the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991, these Regulations aim to address the financial requirements of the Australian Taxation Office and the Australian Securities and Investments Commission for the implementation of SMSF auditor registration, introduced as part of the Government’s Stronger Super package. This measure seeks to enhance the competency of SMSF auditors and ensure consistent minimum standards across the sector. The Regulations specify that the levy will rise from $180 to $200 for the 2011-12 year of income and then reduce to $191 for subsequent years. The additional revenue generated by the increased levy is intended to offset the costs associated with the new regulatory measures. The Regulations are compatible with human rights as they do not engage any of the applicable rights or freedoms.
Scope and Application
The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 applies to trustees of self-managed superannuation funds (SMSFs) in Australia. These trustees are required to pay a supervisory levy upon the lodgment of their annual return, with the funds collected intended to cover the costs associated with regulating the SMSF sector. The levy is regulated through the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Regulations 1991, which stipulate the amount payable and have been amended to increase the levy amount over time to account for inflation and additional regulatory costs. The levy is not applicable to any other entities or industries beyond SMSF trustees, and the regulations establish a maximum levy amount of $200 per annum. The amendments to these regulations, such as the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2012 (No. 1), further specify the levy amount and its application to the 2011-12 year of income and beyond, with a gradual reduction from $200 to $191 from 2012-13 onwards. These regulations apply nationally across Australia and are subject to the Legislative Instruments Act 2003.
Key Provisions
The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2012 (No. 1) introduces changes to the amount of the supervisory levy payable by trustees of self-managed superannuation funds (SMSFs) (Section 1). Pursuant to Section 7 of the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991, the Governor-General has the authority to make regulations specifying the amount of the levy payable on the lodgment of an annual return, which cannot exceed $200. The amendment raises the levy from $180 to $200 for the 2011-12 year of income and then reduces it to $191 for the 2012-13 year of income and each subsequent year of income (Section 3). These Regulations are intended to ensure that the additional revenue collected from the higher levy will offset the costs of implementing SMSF auditor registration, a measure announced as part of the Government’s Stronger Super package, which aims to raise the standard of SMSF auditor competency and ensure minimum standards across the sector (Explanatory Statement).
The levy imposed by the Act is designed to fund the costs of regulating the SMSF sector. Trustees of SMSFs must lodge an annual return with the Australian Taxation Office, which includes payment of the supervisory levy as specified in the SMSF Levy Regulations (Section 4(1) of the SMSF Levy Act). The obligation of trustees to pay the levy is an annual requirement that must be fulfilled upon lodgment of their fund’s annual return. Trustees must ensure that the correct amount of levy, as prescribed by the Regulations, is paid to the Australian Taxation Office at the time of lodgment of their return (Section 4(2) of the SMSF Levy Act).
The Act imposes strict compliance requirements on trustees of SMSFs. Failure to comply with the levy payment provisions can lead to civil or criminal consequences. Under Section 13 of the SMSF Levy Act, trustees who fail to pay the supervisory levy when due can be liable to pay a civil penalty equal to the amount of the levy. Additionally, under Section 14, trustees who wilfully fail to comply with the Act may be subject to criminal penalties, including fines of up to $21,000 for individuals and $105,000 for bodies corporate. The Regulations also provide that non-compliance with the levy provisions may result in the disqualification of SMSF auditors, further emphasising the importance of adhering to the levy requirements (Explanatory Statement).