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SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993 - SECT 66

Acquisitions of certain assets from members of regulated superannuation funds prohibited

Prohibition

             (1)  Subject to subsection (2), a trustee or an investment manager of a regulated superannuation fund must not intentionally acquire an asset from a related party of the fund.

Exception--acquisitions of business real property and listed securities

             (2)  Subsection (1) does not prohibit a trustee or investment manager acquiring an asset from a related party of the fund if:

                     (a)  the asset is a listed security acquired at market value; or

                     (b)  if the fund is a superannuation fund with fewer than 5 members--the asset is business real property of the related party acquired at market value; or

                     (c)  the trustee of a regulated superannuation fund acquired the asset under a merger between regulated superannuation funds; or

                     (d)  the asset is an asset of a kind which the Regulator, by legislative instrument, determines may be acquired by:

                              (i)  any fund; or

                             (ii)  a class of funds in which the fund is included.

Exception--certain in-house assets

          (2A)  Subsection (1) does not prohibit the acquisition of an asset by a trustee or investment manager of a superannuation fund from a related party of the fund if:

                     (a)  the acquisition of the asset constitutes an investment that:

                              (i)  is an in-house asset of the fund within the meaning of subsection 71(1); or

                             (ii)  would be an in-house asset of the fund within the meaning of subsection 71(1) apart from the operation of Subdivision D of Part 8; or

                            (iii)  is a life insurance policy issued by a life insurance company (other than a policy acquired from a member of the fund or from a relative of a member); or

                            (iv)  is referred to in paragraph 71(1)(b), (ba), (c), (d), (e), (f), (h) or (j); and

                     (b)  the asset is acquired at market value; and

                     (c)  the acquisition of the asset would not result in the level of in-house assets of the superannuation fund exceeding the level permitted by Part 8.

Exception--breakdown of relationships

          (2B)  Subsection (1) does not prohibit a trustee or investment manager acquiring an asset from a related party of the fund (the acquiring fund ) if:

                     (a)  the asset is acquired:

                              (i)  for the benefit of a particular member of the acquiring fund; and

                             (ii)  from a trustee or investment manager of another regulated superannuation fund (the transferring fund ); and

                     (b)  at the time of the acquisition:

                              (i)  the member and his or her spouse or former spouse are separated; and

                             (ii)  there is no reasonable likelihood of cohabitation being resumed; and

                     (c)  the acquisition occurs because of reasons directly connected with the breakdown of the relationship between the spouses or former spouses; and

                     (d)  the asset represents the whole, or a part, of either:

                              (i)  the member's own interests in the transferring fund; or

                             (ii)  the member's entitlements as determined under Part VIIIB of the Family Law Act 1975 in relation to the interests of the member's spouse, or former spouse, in the transferring fund.

          (2C)  For the purposes of subsection (2B), the question whether the spouses, or former spouses, have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).

Prohibition of avoidance schemes

             (3)  A person must not enter into, commence to carry out, or carry out a scheme if the person entered into, commenced to carry out, or carried out the scheme or any part of the scheme with the intention that:

                     (a)  the scheme would result, or be likely to result, in the acquisition of an asset by a trustee or an investment manager of a regulated superannuation fund, where the asset is acquired from a person who has a connection (either direct or indirect through one or more interposed companies, partnerships or trusts) with a related party of the fund; and

                     (b)  that acquisition would avoid the application of subsection (1) to the fund.

Offence

             (4)  A person who contravenes subsection (1) or (3) commits an offence punishable on conviction by imprisonment for a term not exceeding 1 year.

Definitions

             (5)  In this section:

"acquire an asset " does not include accept money.

"business " includes any profession, trade, employment, vocation or calling carried on for the purposes of profit, including:

                     (a)  the carrying on of primary production; and

                     (b)  the provision of professional services;

but does not include occupation as an employee.

"business real property " , in relation to an entity, means:

                     (a)  any freehold or leasehold interest of the entity in real property; or

                     (b)  any interest of the entity in Crown land, other than a leasehold interest, being an interest that is capable of assignment or transfer; or

                     (c)  if another class of interest in relation to real property is prescribed by the regulations for the purposes of this paragraph--any interest belonging to that class that is held by the entity;

where the real property is used wholly and exclusively in one or more businesses (whether carried on by the entity or not), but does not include any interest held in the capacity of beneficiary of a trust estate.

"listed security " means a security listed for quotation in the official list of any of the following:

                     (a)  a licensed market within the meaning of section 761A of the Corporations Act 2001 ; or

                     (b)  an approved stock exchange within the meaning of the Income Tax Assessment Act 1997 ; or

                     (c)  a market exempted under section 791C of the Corporations Act 2001 .

"primary production business " has the same meaning as in the Income Tax Assessment Act 1997 .

"scheme " means:

                     (a)  any agreement, arrangement, understanding, promise or undertaking:

                              (i)  whether express or implied; or

                             (ii)  whether or not enforceable, or intended to be enforceable, by legal proceedings; and

                     (b)  any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

Real property used in primary production business

             (6)  For the purposes of the definition of business real property in subsection (5), real property used in one or more primary production businesses does not cease to be used wholly and exclusively in that business or those businesses only because:

                     (a)  an area of the real property, not exceeding 2 hectares, contains a dwelling used primarily for domestic or private purposes; and

                     (b)  the area is also used primarily for domestic or private purposes;

provided that the use for domestic or private purposes referred to in paragraphs (a) and (b) is not the predominant use of the real property.



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