Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) (TRANSITIONAL PROVISIONS) REGULATIONS (AMENDMENT) 1994 NO. 190

STATUTORY RULES 1994 No. 190

ISSUED BY THE AUTHORITY OF THE TREASURER

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) (Transitional Provisions) Regulations (Amendment)

The Superannuation Industry (Supervision) Act 1993 (the Act) provides for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by the Insurance and Superannuation Commissioner.

The basis for supervision is that those funds and trust are subject to regulation under the Commonwealth's powers with respect to corporations or pensions (for example, because the trustee is a corporation). In return, the supervised funds and trusts may become eligible for concessional taxation treatment under the Income Tax Assessment Act 1936.

Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.

In order to obtain taxation concessions for the 1994/95 and later years of income a superannuation fund must be a regulated superannuation fund under the Act. To become a regulated superannuation fund a fund must give a notice to-the Insurance and Superannuation Commissioner. To obtain taxation concessions for the 1994/95 year of income a fund would normally be required to give this notice before commencement of its 1994/95 year of income.

The exception to this general rule is where a fund gives its notice after commencement of its 1994/95 year of income but before the dates specified in section 50 of the Act. This allowance for funds to give late notifications ensures that funds have appropriate time to prepare for the new regulatory regime introduced by the Act. This exception only applies, however, if, in the period from commencement of the fund's 1994/95 year of income to the date they make their notification (the pre-lodgement period), the fund complies with the requirements specified in the regulations.

These requirements are specified in the Superannuation Industry (Supervision) (Transitional Provisions) Regulations (the Principal Regulations) and effectively require a fund to continue complying with the superannuation fund conditions contained in the Occupational Superannuation Standards Act 1987 and Occupational Superannuation Standards Regulations (OSS Regulations) during its pre-lodgement period.

These regulations amend the Principal Regulations by removing, with effect from 1 July 1994, the requirement that a fund must continue to comply with the requirements of OSS Regulation 18B (other than OSS subregulations 18B(1) and (3)). This is because from 1 July 1994 those provisions, which relate to the maximum amount of contributions that can be made to a superannuation fund, are replaced by provisions in the Income Tax Assessment Act 1936.

The regulations also amend the Principal Regulations to prescribe, pursuant to paragraph 50(4)(d) of the Act, the form of notice that must be given to members if a fund wishes to make use of the special provision in subsection 50(4) of the Act. That special provision allows funds in 'special circumstances', and which have complied with the requirements regarding notifying members specified in the regulations, to not give a notice to the Insurance and Superannuation Commission (ISC) electing to become a regulated superannuation fund until possibly as late as 31 December 1994 (rather than 28 July 1994 which would normally be the case).

The regulations are described in the attachment.

The regulations commence on 1 July 1994.

ATTACHMENT

Superannuation Industry (Supervision) (Transitional Provisions) Regulations (Amendment)

Regulation 1 - Commencement

Regulation 1 provides that these regulations commences on 1 July 1994.

Regulation 2 - Amendment

Regulation 2 provides that the Superannuation Industry (Supervision) (Transitional Provisions) Regulations (the Principal Regulations) are amended as set out in these Regulations.

Regulation 3 - New Regulation 3A

Regulation 3 inserts a new regulation into the Principal Regulations

All superannuation funds with five or more members that wish to obtain taxation concessions are, generally, required to give a notice to the Insurance and Superannuation Commission by 28 July 1994. The notice must state that the fund wishes to become a regulated superannuation fund. However, where there are 'special circumstances' existing, and where a fund has complied with the requirements specified in the regulations regarding notifying members of the delay in giving the notice to the ISC, then a fund may be able to give its notice as late 31 December 1994.

New regulation 3A prescribes the requirements that, pursuant to section 50 of the Act, apply in relation to notifying members. The requirements are that a notice (in the form specified in the new Schedule 3, which is inserted into the Principal Regulations by regulation 6 of these Regulations) must be provided to members before the fund gives its notice to the ISC. The notice to members must be contained on one side of A4 paper and be packaged or presented in such a manner that, on receipt, the notice is more prominent than any other material with which is it is packaged or presented.

Regulation 4 - Regulation 4 (Purposes)

Regulation 4 of the Principal Regulations is amended to make a minor amendment necessary as a result of the insertion of new regulation 3A.

Regulation 5 - Schedule 2 (Applied OSS Regulations)

Regulation 5 amends the Principal Regulations so that, with effect from 1 July 1994, a superannuation fund will not be required to comply in full with OSS Regulation 18B during its pre-lodgement period. Rather the fund will only be required to comply with the requirements of OSS Subregulations 18B(1) and (3).

Regulation 6 - New Schedule 3

Regulation 6 inserts a new Schedule into the Principal Regulations. The new Schedule is Schedule 3 and it prescribes the form of the notice that is required to be given to members pursuant to paragraph 50(4)(d) of the Act and new regulation 3A (which is to be inserted into the Principal Regulations by proposed regulation 3 of these regulations).