Commonwealth Numbered Regulations - Explanatory Statements Commonwealth Numbered Regulations - Explanatory Statements[Index] [Search] [Download] [Related Items] [Help]
SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1996 NO.344
EXPLANATORY STATEMENTSTATUTORY RULES 1996 No. 344
Issued by the authority of the Assistant Treasurer
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations (Amendment)
The Superannuation Industry (Supervision) Act 1993 (the Act) and the Superannuation Industry (Supervision) Regulations (the Principal Regulations) provide 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.
Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
The regulations amend the Principal Regulations by deferring the 'changeover day' (ie, the date on which trustees of regulated superannuation funds will change to a new system of preserving superannuation benefits) from 1 July 1997 to 1 July 1998 for most funds (Regulations 5 to 7).
This deferral, announced by the Assistant Treasurer on 15 November 1996, is necessary to enable funds and the Government to address administration problems that currently exist with this new preservation system.
As the trustees of some regulated superannuation funds had already begun implementing this new preservation system prior to this deferral announcement, it is necessary to enable those trustees to retain a changeover day in the 1996 or 1997 calendar year rather than defer until 1998, otherwise they would incur additional administration costs. If the trustee of a regulated superannuation fund makes no decision as to the choice of changeover day before 1 July 1998, the changeover day will be taken to be 1 July 1998.
The regulations (Regulation 4) also amend the Principal Regulations by providing the Commissioner the discretion to allow persons, whose religious or political beliefs do not permit them to be members of a professional accounting organisation, to audit superannuation entities. This amendment is necessary to overcome an earlier drafting error that unintentionally excluded such people from being 'approved auditors'.
The definition of 'reviewable decision' in the Principal Regulations is also expanded to include decisions made by the Commissioner to approve persons as approved auditors and to revoke such approvals. These 'reviewable decision' regulations provide for the review by the Commissioner and/or the Administrative Appeals Tribunal of certain decisions which may be made by the Commissioner (Regulations 3 and 8 to 12).
The regulations are described in detail in the attachment.
The regulations commenced on 30 December 1996.
ATTACHMENT
Regulation 1 - Commencement
Regulation 1 provides that these Regulations will commence on 30 December 1996.
Regulation 2 - Amendment
Regulation 2 provides that the Superannuation Industry (Supervision) Regulations (the Principal Regulations) are amended as set out in these Regulations.
Regulation 3 - Regulation 1.03 (Interpretation)
Regulation 3 inserts a definition of 'reviewable decision' into subregulation 1.03 (1) of the Principal Regulations, and provides that certain decisions made by the Commissioner will be reviewable decisions.
The definition of 'reviewable decision' applies to decisions relating to the approval of certain persons to be approved auditors, and those relating to the transfer of pre1 July 1988 funding credits.
The process by which reviewable decisions are reviewed is prescribed in the new Division 13.5 of the Principal Regulations (which is inserted by Regulation 12 of these Regulations) and reflects standard administrative review and natural justice considerations.
Regulation 4 - Regulation 1.04 (Section 10 of the Act - prescribed matters)
Subregulation 1.04(2) of the Principal Regulations specifies the requirements for an 'approved auditor' for the purposes of the Superannuation Industry (Supervision) legislation. This provision was amended on 22 December 1995 (Statutory Rule No 430 of 1995) to require auditors of superannuation entities, other than excluded superannuation funds, to be either an Auditor-General or both a registered auditor under the Corporations Law and a member or fellow of a specified professional accounting organisation.
The object of this amendment was to tighten the eligibility criteria for auditors of superannuation entities (other than excluded superannuation funds), with the result of requiring these auditors to abide by the professional standards of these professional accounting organisations.
An unintended consequence of this amendment was to exclude persons who are registered auditors under the Corporations Law from being able to audit non-excluded superannuation funds where their political or religious beliefs prohibit them from becoming members of professional associations, such as the accounting organisations listed in Schedule 1AAA to the SIS Regulations.
Regulation 4 amends the definition of 'approved auditor' in subregulation 1.04(2) of the Principal Regulations, and inserts new subregulations 1.04(2A), (2B) and (2C), so as to allow such persons to audit non-excluded superannuation funds provided that:
* they are, under Division 2 of Part 9.2 of the Corporations Law, registered, or taken to be registered, as an auditor; and
* they satisfy the Commissioner, following a written application, that they will audit the fund(s) specified in the application in accordance with the Australian Auditing Standards issued by the Auditing Standards Board, or some other recognised framework.
For the purposes of the approval given by the Commissioner to allow an individual to be an auditor of a superannuation entity other than an excluded superannuation fund, the Commissioner may, in writing, impose such other conditions as he or she sees fit. These conditions may include requirements such as requiring these individuals to undergo training that an approved auditor who is a member of a professional accounting organisation would reasonably be expected to undertake.
The Commissioner may also, in writing, revoke a person's approval to be an approved auditor if that person fails to comply with any of the conditions set out in the Commissioner's written approval.
It should be noted that the following decisions by the Commissioner will be 'reviewable decisions':
* a decision of the Commissioner under new subregulation 1.04(2A) to approve (subject to conditions) or not approve an application to be an approved auditor; and
* a decision of the Commissioner under new subregulation 1.04(2C) to revoke an approval to be an approved auditor.
Regulation 5 - Regulation 6.01 (Interpretation)
Part 6 of the Principal Regulations prescribes the payment standards in relation to regulated superannuation funds. At present, there are two different preservation systems prescribed in Part 6:
* the system that applied from the commencement of the 1994/95 year or the day that the fund elected to be regulated, until the 'changeover day'. Under this system, the types of benefits that make up preserved benefits are defined; and
* the system that applies from the 'changeover day' (for most funds, this is 1 July 1997). Under this system, the types of benefits that make up non-preserved benefits are defined, with preserved benefits being the residual amount of the member's benefits in the fund.
The current definition of 'changeover day' in subregulation 6.01(2) of the Principal Regulations means a day in the 1996 or 1997 calendar years that the trustee of a regulated superannuation fund fixes as the 'changeover day' for the purposes of Part 6 of the Principal Regulations, in relation to a member of the fund, or if the trustee has not fixed such a day, 1 July 1997.
Regulation 5 inserts a new definition of 'changeover day' in subregulation 6.01(2) to mean one of the following:
a) if the trustee of a regulated superannuation fund fixed a day in the 1996 or 1997 calendar years (immediately before the commencement of amended subregulation (2A)) as the 'changeover day' in relation to a member of the fund, and does not fix a day in the 1998 calendar year as the 'changeover day' under amended subregulation (2A), the 'changeover day' in relation to that member is the day so fixed;
b) if the trustee of the fund fixes a day in the 1998 calendar year (under amended subregulation (2A)) as the 'changeover day' in relation to a member, the 'changeover day' in relation to that member is the day so fixed; or
c) in any other case, the 'changeover day' is 1 July 1998.
Subregulations 6.01(2A), (2B) and (2C) are also amended. These subregulations collectively enable a trustee of a regulated superannuation fund to exercise the choice of either a day in the 1996, 1997 or 1998 calendar years, made available by the amended definition of 'changeover day' in amended subregulation 6.01(2).
Existing subregulations 6.01(2A) and (2B) are amalgamated into a new subregulation (2A). This new subregulation enables the trustee of a regulated superannuation fund to fix a day in the 1998 calendar year (before 1 July 1998) as the 'changeover day' in relation to a member of the fund, whether or not the trustee has fixed a day in either the 1996 or 1997 calendar years under the Principal Regulations in force at 29 December 1996.
Existing subregulation 6.01(2C) is renamed subregulation (2B) and amended to provide that upon a 'changeover day' being fixed under new subregulation 6.01(2A), any day fixed in the 1996 or 1997 calendar years ceases to be the 'changeover day', and if it has occurred this 'changeover day' is taken not to have occurred.
A minor technical amendment is also made to subregulation 6.01(3B) of the Principal Regulations for clarification purposes.
The intention of these amendments to the Principal Regulations is to encourage and allow trustees of regulated superannuation funds to defer implementing arrangements to administer the new preservation standards until 1998, while acknowledging that it would be unfair to those trustees who wish to retain their present 'changeover day' if they were not allowed to retain this day.
Regulation 6 - Regulation 6.04 (Preserved benefits in regulated superannuation funds -rollover or transfer between funds during 1996, 1997 or 1998)
As the term 'changeover day' is currently used in regulation 6.04 of the Principal Regulations only in respect of the 1996 or 1997 calendar years, it is necessary to also refer to the 1998 calendar year to be consistent with the new definition of changeover day' in subregulation 6.01(2). Regulation 6 makes this amendment to regulation 6.04
Regulation 7 - Regulation 6.09 (Restricted non-preserved benefits in regulated superannuation funds - rollover or transfer between funds during 1996, 1997 or 1998)
As the term 'changeover day' is currently used in regulation 6.09 of the Principal Regulations only in respect of the 1996 or 1997 calendar years, it is necessary to also refer to the 1998 calendar year to be consistent with the new definition of changeover day' in subregulation 6.01(2). Regulation 7 makes this amendment to regulation 6.09
Regulation 8 - Regulation 12.01 (Interpretation)
As a consequence of the insertion of a definition of 'reviewable decision' in subregulation 1.03(1) of the Principal Regulations by Regulation 3 of these Regulations, Regulation 8 omits the definition of 'reviewable decision' in regulation 12.01 of the Principal Regulations. The same reviewable decisions that were mentioned in the definition in regulation 12.01 are included in the definition in subregulation 1.03(1).
Regulation 9 - Regulation 12.16 (Notice of reviewable decisions and reasons for those decisions)
As a consequence of the insertion of a definition of 'reviewable decision' in subregulation 1.03(1) of the Principal Regulations by Regulation 3 of these Regulations, Regulation 9 deletes regulation 12.16 of the Principal Regulations. An equivalent provision, that will have application throughout the Principal Regulations and not just Part 12, is inserted as new regulation 13.24 by Regulation 12 of these Regulations.
Regulation 10 - Regulation 12.17 (Reconsideration of certain decisions)
As a consequence of the insertion of a definition of 'reviewable decision' in subregulation 1.03(1) of the Principal Regulations by Regulation 3 of these Regulations, Regulation 10 deletes regulation 12.17 of the Principal Regulations. An equivalent provision, that will have application throughout the Principal Regulations and not just Part 12, is inserted as new regulation 13.25 by Regulation 12 of these Regulations.
Regulation 11 - Regulation 12.18 (Review by Tribunal of reconsidered decisions)
As a consequence of the insertion of a definition of 'reviewable decision' in subregulation 1.03(1) of the Principal Regulations by Regulation 3 of these Regulations, Regulation 11 deletes regulation 12.18 of the Principal Regulations. An equivalent provision, that will have application throughout the Principal Regulations and not just Part 12, is inserted as new regulation 13.26 by Regulation 12 of these Regulations.
Regulation 12 - New Division 13.5 (Reconsideration and review of decisions)
As a consequence of the insertion of a definition of 'reviewable decision' in subregulation 1.03(1) of the Principal Regulations by Regulation 3 of these Regulations, Regulation 12 inserts a new Division 13.5 into the Principal Regulations.
The regulations in this new Division, that is, new regulations 13.24, 13.25 and 13.26, have equivalent effect as existing regulations 12.16, 12.17 and 12.18. In essence, they prescribe the procedure for the review and reconsideration of reviewable decisions made by the Commissioner. The reason for this new Division is that this procedure will now have effect in relation to reviewable decisions throughout the Principal Regulations instead of just Part 12 as currently exists.
New subregulation 13.24 provides that if the Commissioner does make a reviewable decision, they must give written notice of this decision to the person who requested the decision to be made. This notice must include a statement by the Commissioner of the Commissioner's reasons for making the decision.
The notice must also include a statement as to the person's right to ask the Commissioner to reconsider the reviewable decision and, if the Commissioner confirms or varies the decision as a result of such a reconsideration, the person's right of appeal to the Administrative Appeals Tribunal. However, if the Commissioner fails to comply with these requirements, the validity of the original decision is not affected.
New subregulation 13.25 provides that certain persons that are affected by a decision that is a reviewable decision may, by written notice given to the Commissioner within a period of 21 days after the date on which the person first receives notice of the decision, or such longer period as the Commissioner allows, request the Commissioner to reconsider the decision. This notice must include the reasons for the request.
The Commissioner must reconsider the decision and may confirm, revoke or vary a decision. However, where the Commissioner does not confirm, revoke or vary a decision within 21 days after receipt of a request to reconsider the decision, the decision is deemed to have been confirmed by the Commissioner. Where the Commissioner revokes or varies a decision in relation to pre-1 July 1988 funding credits, the Commissioner must give the Commissioner of Taxation written notice of this variation or revocation.
New subregulation 13.26 provides that application may be made to the Administrative Appeals Tribunal for a review of a decision that has been confirmed or varied by the Commissioner.
Regulation 13 - Application of amendments - reconsideration and review of decisions
Regulation 13 provides that the amendments made by these Regulations to the Principal Regulations in relation to 'reviewable decisions' have effect to decisions made by the Commissioner on or after 30 December 1996. However, the process of reconsideration of any decision under the existing regulation 12.17 that commenced before 30 December 1996 can continue to go ahead.
This will not be included as a substantive regulation into the Principal Regulations, but rather will be included for interpretation purposes as a note to the Principal Regulations.
Regulation 14 - Transitional - approved auditors
At present, regulation 8.03 of the Principal Regulations provides that an approved auditor of a superannuation entity (other than an excluded fund or public offer entity) must give to the trustee of the superannuation entity the audit report no later than six months after the end of the year of income. For example, for the year of income that ended on 30 June 1996, the audit report was required to be given by 31 December 1996.
Similarly, regulation 11.02 of the Principal Regulations provides that a superannuation entity (other than an excluded fund or public offer entity) must lodge their annual return (which will include the above mentioned audit report) with the Commissioner no later than six months after the end of the year of income. For example, for the year of income that ended on 30 June 1996, the annual return was required to be lodged by 31 December 1996.
Regulation 14 is a transitional provision which provides that:
* persons who are approved as 'approved auditors' by the Commissioner under the new subregulation 1.04(2A) (inserted into the Principal Regulations by Regulation 4 of these Regulations) before 31 January 1997 are required to give their audit report in respect of the 1995/96 year of income to the trustee of certain superannuation entities by no later than 31 March 1997; and
* certain superannuation entities, which were required to lodge their annual return with the Commissioner by 31 December 1996 in respect of the 1995/96 year of income, are required to lodge the annual return by no later than 31 March 1997.
This transitional provision only applies to those superannuation entities (other than excluded funds or public offer entities) which are specified in an approval by the Commissioner of a person to be an 'approved auditor' under the new subregulation 1.04(2A) (inserted into the Principal Regulations by Regulation 4 of these Regulations), and to the audit reports prepared by these approved auditors, in respect of year of income that ended on 30 June 1996. The provision recognises that the 1 amendment of the definition of 'approved auditor' on 22 December 1995 (see Regulation 4 above for background information) will affect certain persons' ability to be an 'approved auditor' for the 1995/96 year of income.