Commonwealth Numbered Acts

SOCIAL SECURITY AND VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT 1988 No. 135, 1988 - SECT 8

8. After section 12A of the Principal Act the following Division is inserted
in Part I:

"Division 2-Investment Income Interpretation etc.

"12B. (1) In this Division, unless the contrary intention appears:
'accruing return investment' means an arrangement by a person that consists of
or includes an investment of money, being an investment:

   (a)  that produces:

        (i)    a fixed rate or quantifiable rate of return, whether or not
               that rate varies from time to time; or

        (ii)   a rate of return that may be reasonably approximated; and

   (b)  the value of which from time to time is unlikely to decrease as a
        result of market changes;
'approved deposit fund' means a fund that is an approved deposit fund for the
purposes of Subdivision AA of Division 2 of Part III of the Assessment Act;
'Assessment Act' means the Income Tax Assessment Act 1936;
'deferred annuity' means an annuity that is a deferred annuity for the
purposes of Subdivision AA of Division 2 of Part III of the Assessment Act;
'determination of entitlement', in relation to a person, means a
determination:

   (a)  whether the person is qualified to receive a pension, benefit or
        allowance under this Act; or

   (b)  of the rate at which a pension, benefit or allowance under this Act is
        payable to the person;
'eligible investment' means an investment that satisfies all of the following
conditions:

   (a)  money or property invested is paid or transferred by the investor
        directly or indirectly to a body corporate or into a trust fund;

   (b)  the assets that represent money or property invested (in this
        definition called the 'investment assets') are held otherwise than in
        the names of investors;

   (c)  the investor does not, either alone or jointly with a relative or
        relatives of the investor, have effective control over the management
        of the investment assets;

   (d)  the investor has a legally enforceable right to share in any
        distribution of the income or profits derived from the investment
        assets;
'friendly society' means:

   (a)  a society registered as a friendly society under a law in force in a
        State or Territory; or

   (b)  a society that had, before 13 December 1987, been approved for the
        purpose of the definition of 'friendly society' in subsection 115 (1);
and, for the purpose of the definition of 'market-linked investment' in this
subsection, includes a society that has been approved for the purpose of the
definition of 'friendly society' in subsection 115 (1) on or after 13 December
1987;
'fund manager', in relation to an investment product, means the person or body
specified, in relation to that investment product, in a notice under
subsection (2);
'investment product' means a class of market-linked investments specified in a
notice under subsection (2);
'market-linked investment' means:

   (a)  an investment in:

        (i)    an approved deposit fund;

        (ii)   a deferred annuity;

        (iii)  a public unit trust; or

        (iv)   an insurance bond;

   (b)  an investment with a friendly society; or

   (c)  an eligible investment other than an investment referred to in
        paragraph (a) or (b);
not being:

   (d)  an accruing return investment; or

   (e)  an investment consisting of the acquisition of real property, stock or
        shares;
'public unit trust' means a unit trust that:

   (a)  except where paragraph (b) applies-was, in relation to the unit
        trust's last year of income, a public unit trust for the purposes of
        Division 6B of Part III of the Assessment Act; or

   (b)  where the first year of income of the unit trust has not yet
        finished-has, at some time since the trust was established, satisfied
        at least one of the paragraphs of subsection 102G (1) of the
        Assessment Act;
'return', in relation to an investment, means any increase, whether of a
capital or income nature and whether or not distributed, in the value or
amount of the investment;
'statutory rate of return' means 11% per annum or such lower percentage per
annum as is specified in a notice in force under subsection 12E (1).

"(2) The Secretary, by notice in writing published in the Gazette:

   (a)  may specify a class of market-linked investments that constitute an
        investment product; and

   (b)  shall, in relation to each investment product so identified, specify a
        person or body for the purposes of the definition of 'fund manager' in
        subsection (1).

"(3) Where the value or amount at a particular time of a market-linked
investment included in an investment product is equal to or less than the
value or amount of that market-linked investment 12 months previously, the
annual rate of return at that first-mentioned time for market-linked
investments included in that investment product shall be taken for the
purposes of a determination under this Act to be 0%.

"(4) A reference in this Division to the Secretary refusing, on application
under subsection 12F (2), to make a determination under subsection 12F (1)
does not include a reference to the Secretary refusing, pursuant to subsection
12F (11), to consider such an application. Accruing return investments

"12C. (1) Where a person has made, or makes, whether before, on or after 13
December 1987, an accruing return investment, being an investment to which
subsections (2) and (3) do not apply, the person shall, for the purposes of
this Act, be taken to receive the current annual rate of return on that
investment as income of the person from the day on which that investment was
made.

"(2) Where a person makes, on or after 1 January 1988, an accruing return
investment:

   (a)  with a friendly society; or

   (b)  of a kind where a return is not available until the end of a period of
        at least 12 months after that investment was made or until realisation
        of that investment; the person shall, for the purposes of this Act, be
        taken to receive the current annual rate of return on that investment
        as income of the person from the day on which that investment was
        made.

"(3) Where a person has made, at any time before 1 January 1988, an accruing
return investment:

   (a)  with a friendly society; or

   (b)  of a kind where a return is not available until the end of a period of
        at least 12 months after that investment was made or until realisation
        of that investment; and the person becomes entitled to receive an
        amount by way of a return on that investment, the person shall, for
        the purposes of this Act, be taken to receive one fifty-second of that
        amount as income of the person during each week in the period of 12
        months commencing on the day on which the person becomes entitled to
        receive that amount.

"(4) For the purposes of this section, the current annual rate of return on an
investment of the kind referred to in subparagraph (a) (ii) of the definition
of 'accruing return investment' in section 12B is a reasonable approximation
of that rate of return.

"(5) A reference in subsection (3) to a person becoming entitled to receive an
amount includes a reference to the person becoming entitled to receive an
amount under an arrangement of the kind referred to in the definition of
'accruing return investment' in section 12B to the extent that subsection (1)
or (2) does not apply to that entitlement. Market-linked investments

"12D. (1) Where, on or after 9 September 1988, a person makes a market-linked
investment, the person shall, for the purposes of this Act, be taken to
receive the product rate of return on that investment as income of the person
from:

   (a)  the day on which that investment was made; or

   (b)  the commencement of this section; whichever is later.

"(2) For the purposes of this Division, the product rate of return on a
market-linked investment is:

   (a)  except where paragraph (b) applies-the statutory rate of return for
        that investment; or

   (b)  if a determination by the Secretary under subsection 12F (1) is in
        force in relation to that investment-the percentage per annum
        specified in that determination. Statutory rate of return for
        market-linked investments

"12E. (1) The Minister may from time to time, by notice in writing, determine
a rate of return for market-linked investments that is less than 11% but not
less than 0% per annum.

"(2) A notice by the Minister under subsection (1) is a disallowable
instrument for the purposes of section 46A of the Acts Interpretation Act
1901. Secretary may determine rate of return for market-linked investments

"12F. (1) Where the Secretary is satisfied, either on application made under
subsection (2) or otherwise, that the current annual rate of return on
market-linked investments included in an investment product is less than the
statutory rate of return on those market-linked investments, the Secretary
shall determine the current annual rate of return on market-linked investments
included in that investment product.

"(2) An application for a determination of the current annual rate of return
on market-linked investments included in an investment product may be made in
writing by:

   (a)  the fund manager in relation to the investment product; or

   (b)  a natural person who holds a market-linked investment included in the
        investment product.

"(3) Where the Secretary:

   (a)  is considering an application under subsection (2) in relation to an
        investment product; or

   (b)  otherwise than on application under subsection (2), proposes to make a
        determination under subsection (1) in relation to an investment
        product; the Secretary shall notify the fund manager, in writing,
        accordingly.

"(4) In making a determination under subsection (1) of a current annual rate
of return on market-linked investments included in that investment product,
the Secretary shall have regard to all information that is available to the
Secretary about the return (if any) on those market-linked investments during
the immediately preceding period of 12 months.

"(5) A determination by the Secretary under subsection (1) comes into force,
or shall be taken to have come into force:

   (a)  except where paragraph (b) applies-on the date of the determination;
        or

   (b)  where the determination is made on application under subsection (2)-on
        the day when the application was received by the Secretary.

"(6) The Secretary shall cause a determination made under subsection (1) to be
notified in the Gazette, but a failure to do so does not invalidate the
determination.

"(7) The Secretary may revoke a determination under subsection (1) of the
current annual rate of return on market-linked investments included in an
investment product if and only if the Secretary ceases to be satisfied that
the current annual rate of return on those investments is lower than the
statutory rate of return on those investments.

"(8) Where the Secretary:

   (a)  makes or revokes a determination under subsection (1) in relation to
        an investment product; or

   (b)  on application under subsection (2), refuses to make a determination
        under subsection (1) in relation to an investment product; the
        Secretary shall give notice in writing accordingly to the fund manager
        in relation to that investment product.

"(9) A determination by the Secretary under subsection (1) in relation to an
investment product remains in force until:

   (a)  the Minister determines a new rate of return under section 12E that is
        lower than the rate of return provided for by the Secretary's
        determination;

   (b)  a new determination by the Secretary under subsection (1) in relation
        to that investment product comes into force; or

   (c)  the determination is revoked by the Secretary under subsection (7);
        whichever happens first.

"(10) Subsection (11) applies in relation to an investment product where:

   (a)  on application under subsection (2), the Secretary has made or refused
        to make a determination under subsection (1) in relation to the
        investment product; or

   (b)  in any other case, the Secretary has made a determination under
        subsection (1) in relation to the investment product.

"(11) Where this subsection applies in relation to an investment product, the
Secretary is not required to consider any application made in relation to that
investment product that is made:

   (a)  within the period of 3 months after the making of the application
        referred to in paragraph (10) (a), or of the determination referred to
        in paragraph (10) (b), as the case requires; or

   (b)  if, within that period of 3 months, the Minister determines a new rate
        of return as mentioned in paragraph (9) (a) in relation to that
        investment product-within the period of 3 months after the date of the
        Minister's determination. Special provisions about certain investments
        made before 9 September 1988

"12G. (1) Where:

   (a)  before 9 September 1988, a person has made a market-linked investment;
        and

   (b)  under an agreement made before 9 September 1988, dividends payable to
        the person in respect of that investment are not paid to the person
        directly but are invested in the person's name in market-linked
        investments included in the same investment product; any market-linked
        investment arising from the investment of a dividend pursuant to that
        agreement on or after 9 September 1988 shall, for the purposes of this
        Division, be taken to have been made before 9 September 1988.

"(2) Subsections (3) and (4) apply where, at any time after 9 September 1988:

   (a)  a person held, or holds, 2 or more market-linked investments included
        in the same investment product;

   (b)  at least one of the investments was made before 9 September 1988 and
        at least one of the investments was made on or after that day; and

   (c)  the person disposed, or disposes, of any of those investments.

"(3) If the amount received in respect of the disposal is or was greater than
or equal to:

   (a)  the value or amount, at the time of the disposal, of the investment
        made before 9 September 1988; or

   (b)  the sum of the values or amounts, at the time of the disposal, of the
        investments made before 9 September 1988; as the case requires, the
        person shall, for the purposes of this Division, be taken to have
        disposed of the whole of that investment or those investments.

"(4) If the amount received in respect of the disposal (in this subsection
called the 'disposal amount') is or was less than:

   (a)  the value or amount, at the time of the disposal, of the investment
        made before 9 September 1988; or

   (b)  the sum of the values or amounts, at the time of the disposal, of the
        investments made before 9 September 1988; as the case requires, the
        person shall, for the purposes of this Division, be taken to have
        disposed of so much of that investment or those investments as is
        equal to the disposal amount. Conversion of certain investments

"12H. (1) Where an investment that was not an accruing return investment (in
this subsection called the 'original investment') is converted into an
accruing return investment, whether or not it was able to be so converted
because of a provision of the agreement relating to the making of the original
investment, then, for the purposes of this Division:

   (a)  the accruing return investment shall be taken to have been made on the
        day the original investment was so converted; and

   (b)  the original investment shall be taken to have been realised on that
        day.

"(2) Where an investment that was not a market-linked investment (in this
subsection called the 'original investment') is converted into a market-linked
investment, whether or not it was able to be so converted because of a
provision of the agreement relating to the making of the original investment,
then, for the purposes of this Division:

   (a)  the market-linked investment shall be taken to have been made on the
        day the original investment was so converted; and

   (b)  the original investment shall be taken to have been realised on that
        day. Determinations of entitlement of persons holding market-linked
        investments

"12J. (1) When a determination of entitlement is made in relation to a person
who has a market-linked investment that was made on or after 9 September 1988,
the Secretary shall:

   (a)  make that determination having regard to the current product rate of
        return for that market-linked investment; and

   (b)  re-assess the rate at which pension, benefit or allowance under this
        Act should have been payable to the person in respect of any period
        since the immediately preceding determination of the person's
        entitlement during which the product rate of return for that
        market-linked investment was less than the product rate of return that
        was used for the purposes of that immediately preceding determination
        of entitlement.

"(2) Where, under paragraph (1) (b), the Secretary re-assesses the rate at
which pension, benefit or allowance under this Act should have been payable to
a person in respect of a period, there is payable to the person the amount
worked out using the formula:
A1-A2 where:
A1 is the amount of pension, benefit or allowance that should have been
payable to the person in respect of the period;
A2 is the amount of that pension, benefit or allowance that was paid to the
person in respect of the period. Treatment of costs of investments

"12K. (1) Where, under another provision of this Division, a person is to be
taken to receive a rate of return on an investment as income, the amount that
the person is taken to receive shall, during each week in the period of 12
months after the day from which the person is to be taken to receive a rate of
return on the investment as income, be reduced by one fifty-second of the
total amount of the investment costs.

"(2) Subsection (1) does not apply in respect of investment costs incurred in
respect of investments made before 9 September 1988.

"(3) In this section:
'investment costs', in relation to an investment made by a person, means such
reasonable costs as would be required to be paid by any person making an
identical investment as a condition of being permitted to make that
investment. Certain capital amounts taken to be received over 12 months

"12L. (1) Where a person becomes entitled, whether before or after the
commencement of this section, to receive an amount of income, being an amount
of a capital nature but not being:

   (a)  income from remunerative work undertaken by the person;

   (b)  a return from an accruing return investment; or

   (c)  a return from a market-linked investment made on or after 9 September
        1988; the person shall, for the purposes of this Act, be taken to
        receive one fifty-second of that amount as income of the person during
        each week in the period of 12 months commencing on the day on which
        the person becomes entitled to receive that amount.

"(2) A reference in subsection (1) to a person becoming entitled to receive an
amount includes a reference to the person becoming entitled to receive an
amount under an arrangement of the kind referred to in the definition of
'accruing return investment' in section 12B to the extent that subsection 12C
(1) or (2) does not apply to that entitlement. Operation of Part XIX

"12M. (1) For the purposes of Part XIX, the fund manager in relation to an
investment product shall be taken to be a person affected by a rate of return
decision in relation to the investment product.

"(2) Sections 173, 174 and 175 do not apply in relation to a rate of return
decision.

"(3) Where an application is made to the Social Security Appeals Tribunal
under section 177 for review of a rate of return decision, being an
application by a person other than the fund manager in relation to the
investment product concerned, the National Convener shall give written notice
to the fund manager of the making of that application.

"(4) In spite of anything in this Act, a person is not entitled to apply to
the Social Security Appeals Tribunal for review of a rate of return decision
more than 3 months after the decision came into force.

"(5) A person who applies to the Social Security Appeals Tribunal for review
of a rate of return decision when an application has already been made to that
Tribunal for review of that decision but before the review has been determined
shall be taken to have applied to the National Convener under section 181 to
be made a party to the review.

"(6) Section 183 does not apply in relation to a decision by the Social
Security Appeals Tribunal where the decision under review was a rate of return
decision.

"(7) A decision by the Social Security Appeals Tribunal affirming a rate of
review decision comes into operation immediately on the giving of the decision
by the Tribunal.

"(8) A decision by the Social Security Appeals Tribunal varying a rate of
review decision, or setting aside a rate of review decision and making a new
decision, comes into force on such day, and remains in force for such period,
as is specified by the Tribunal, but the Tribunal is not empowered to specify
a day or a period such that the decision as varied, or the new decision, would
be taken to have effect at any time after the rate of return resulting from
the decision under review had been replaced by a new rate of return, whether
because of a later rate of return decision or otherwise.

"(9) Section 187 does not apply in relation to an application to the Social
Security Appeals Tribunal for review of a rate of return decision.

"(10) The Social Security Appeals Tribunal is not empowered to review a rate
of return decision except on application that is made within the time limit
imposed by subsection (4) and expressed to be an application for review of the
rate of return decision.

"(11) A reference in this section to an application having been made to the
Social Security Appeals Tribunal does not include a reference to an
application that has been withdrawn.

"(12) A decision constituted by a refusal, on application under subsection 12F
(2), to make a determination under subsection 12F (1) shall for the purposes
of this section be taken to have come into force on the day when the fund
manager concerned is notified of that refusal.

"(13) In this section:
'rate of return decision', in relation to an investment product, means a
decision under this Division constituted by:

   (a)  a refusal, on application under subsection 12F (2), to make a
        determination under subsection 12F (1) of a rate of return on
        market-linked investments included in the investment product;

   (b)  a determination under subsection 12F (1) of a rate of return on
        market-linked investments included in the investment product; or

   (c)  the revocation under subsection 12F (7) of a determination of a rate
        of return on market-linked investments included in the investment
        product. Operation of Administrative Appeals Tribunal Act

"12N. (1) For the purposes of the AAT Act, the fund manager in relation to an
investment product shall be taken to be a person affected by an SSAT rate of
return decision in relation to the investment product.

"(2) Where an application is made to the Tribunal under section 205 for review
of an SSAT rate of return decision, being an application by a person other
than the fund manager in relation to the investment product concerned, the
Registrar of the Tribunal shall give written notice to the fund manager of the
making of the application.

"(3) A person who applies to the Tribunal for review of an SSAT rate of return
decision when an application has already been made to the Tribunal for review
of that decision but before proceedings for the review of the decision have
been determined shall be taken to have applied to the Tribunal under
subsection 30 (1A) of the AAT Act to be made a party to the proceeding for the
review of the decision.

"(4) The Tribunal is not empowered to review a rate of return decision except
on application that is expressed to be an application for review of an SSAT
rate of return decision.

"(5) A reference in this section to an application having been made to the
Tribunal does not include a reference to an application that has been
dismissed under section 42A of the AAT Act.

"(6) In this section:
'AAT Act' means the Administrative Appeals Tribunal Act 1975;
'rate of return decision' has the same meaning as it has in section 12M;
'SSAT rate of return decision' means a decision of the Social Security Appeals
Tribunal referred to in section 205, being a decision that is, or is made in
substitution for, a rate of return decision;
'Tribunal' means the Administrative Appeals Tribunal.". Commencement: 1
December 1988