EXPLANATORY STATEMENT

Superannuation Supervisory Levy Imposition Determination 2006

This determination relates to a levy imposed by the Superannuation Supervisory Levy Imposition Act 1998 on superannuation entities.

This determination commences on 1 July 2006 and relates to the 2006‑07 financial year.  The Superannuation Supervisory Levy Imposition Determination 2005 is revoked upon commencement of this determination.  Consistent with section 50 of the Acts Interpretation Act 1901, any obligation or liability incurred in previous financial years remains valid.

Subsection 7(3) of the Superannuation Supervisory Levy Imposition Act 1998 allows the Treasurer to determine;

(a)           the maximum restricted levy amount for each financial year;

(b)          the minimum restricted levy amount for each financial year;

(c)           the restricted levy percentage for each financial year;

(ca) the unrestricted levy percentage for each financial year; and

(d)          how a superannuation entity’s asset value is to be calculated.

For superannuation funds other than small APRA funds (SAFs), this determination provides that the restricted component of the 2006‑07 levy will be calculated at 0.0340 per cent of assets held by the entity, subject to a minimum of $570 and a maximum of $150 000.  The unrestricted component of the 2006-07 levy will be calculated at 0.001490 per cent of assets held by the entity.

For SAFs, this determination provides that the restricted component of the 2006‑07 levy will be calculated at 0 per cent of assets held by the entity, subject to a minimum of $500 and a maximum of $500.  The unrestricted component of the 2006-07 levy will be calculated at 0 per cent of assets held by the entity.  In effect, SAFs will be levied a flat amount of $500.

This determination puts in place a second year of transitional arrangements for implementing the new levy determination framework (introduced for the 2005‑06 levies) for the superannuation sector, as was allowed for in the Government’s response to the Review of Financial Sector Levies.  In particular, the maximum on the restricted component is lower and the restricted levy percentage higher than full immediate implementation of the new levy framework would require.  From 2007‑08 it is expected that the superannuation sector levy calculations will be based on a full implementation of the new levy framework.

The finance sector has been consulted on the 2006‑07 supervisory levies through a Treasury and Australian Prudential Regulation Authority consultation paper released on 12 May 2006 and a number of follow-up meetings to discuss the issues in the paper.

This determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.