OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) 1990 NO. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) 1990 NO. 185 - TABLE OF PROVISIONS 1. Commencement 2. Principal Regulations 3. Interpretation 4. 5. Preservation standards 6. Preservation and portability standards 7. Preservation standards not to apply in certain cases 8. Investment standards 9. 10. 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 1 Commencement 1. (1) Regulations 3 and 4, paragraph 5 (b) and regulations 6, 7, 8, 9 and 10 commence on 1 July 1990. (2) Paragraph 5 (a) commences on 2 July 1990. 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 2 Principal Regulations 2. In these Regulations, "Principal Regulations" means the Occupational Superannuation Standards Regulations. 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 3 Interpretation 3. Regulation 3 of the Principal Regulations is amended: (a) by inserting the following definition: "business income" means the income of a business run by a person either alone or in partnership;"; (b) by adding at the end the following subregulation: "(6) For the purposes of these Regulations: (a) a person is gainfully employed if the person is employed for earnings including business income, bonuses, commissions, fees, gratuities, salary or wages; (b) a person is employed part time if the person is gainfully employed for 10 hours or more weekly but less than 30 hours weekly; (c) a person is employed full time if the person is gainfully employed for 30 hours or more weekly.". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 4 4. Before regulation 5 of the Principal Regulations the following regulations are inserted in Part II: Standards: acceptance of contributions by superannuation funds "5AA. (1) For the purposes of subsection 7 (1) of the Act, the standards in subregulations (2) and (3) are prescribed. "(2) A superannuation fund must not commence accepting contributions in respect of a new member: (a) unless the member is employed part time or full time; or (b) unless the contributions are made by the employer in relation to the member in accordance with a prescribed agreement or award. "(3) A superannuation fund must not accept contributions in respect of a member: (a) if the member: (i) has ceased for a continuous period of 2 years to be employed part time or full time; but (ii) has not retired from the workforce; unless the contributions are made by the employer in accordance with a prescribed agreement or award; or (b) if the member has retired from the workforce. Standards: payment of benefits "5AB. (1) For the purposes of subsection 7 (1) of the Act, the standards in subregulation (2) are prescribed. "(2) The rights of members of a superannuation fund and their dependants to receive benefits from the fund: (a) must be set out in the governing rules of the fund; and (b) must be fully secured. Standards: ages for payment of benefits "5AC. (1) For the purposes of subsection 7 (1) of the Act, the standards in subregulations (2), (3) and (4) are prescribed. "(2) Subject to subregulations (3) and (4), benefits to a member of a superannuation fund: (a) who: (i) is gainfully employed but not employed part time or full time; or (ii) is not gainfully employed but has not retired from the workforce; must commence to be paid, or be paid, at age 65; or (b) who is employed part time: (i) may commence to be paid, or be paid, on or after age 65; and (ii) must commence to be paid, or be paid, at age 70; or (c) who is employed full time may commence to be paid, or be paid, on or after age 65; or (d) who retires from the workforce must, subject to subparagraph 11 (a) (ii), commence to be paid, or be paid, when the member so retires. "(3) Benefits to a member of a superannuation fund, of a kind referred to in paragraph 23 (ja) of the Tax Act as in force immediately before the commencement of section 7 of the Taxation Laws Amendment Act (No. 4) 1987, who reached age 55 before 1 July 1990 must commence to be paid, or be paid, when the person reaches a retirement age nominated by the person but not exceeding age 75. "(4) Benefits to a member of a superannuation fund, of a kind referred to in section 23F of the Tax Act as in force immediately before the commencement of section 8 of the Taxation Laws Amendment Act (No. 4) 1987, who reached age 65 before 1 July 1990: (a) may commence to be paid, or be paid; and (b) must commence to be paid, or be paid, when the person retires from the workforce.". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 5 Preservation standards 5. Regulation 9 of the Principal Regulations is amended: (a) by omitting paragraph (c) and substituting the following paragraph: "(c) in relation to each member of a superannuation fund, the amount of member-financed benefits that relates to any contributions made to the fund during any period: (i) in the case of a private sector fund-on or after 13 March 1989; or (ii) in the case of a public sector fund-on or after 1 July 1990; during which the member did not have employer support in the fund, must be preserved."; (b) by adding at the end the following subregulations: "(2) For the purposes of subsection 7 (1) of the Act, the standard in subregulation (3) is prescribed. "(3) Benefits arising from a superannuation fund: (a) that is of a kind referred to in paragraph 23 (ja) of the Tax Act as in force immediately before the commencement of section 7 of the Taxation Laws Amendment Act (No. 4) 1987; or (b) that is of a kind referred to in section 23FB of the Tax Act as in force immediately before the commencement of section 8 of the Taxation Laws Amendment Act (No. 4) 1987; the governing rules of which have been approved by the Commissioner or by the Commissioner of Taxation, must be preserved. "(4) For the purposes of paragraph (1) (c), a member does not have employer support in a superannuation fund in a period if the member does not, under the governing rules of the fund, acquire in that period an entitlement to employer-financed benefits, other than benefits to which regulation 8 applies.". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 6 Preservation and portability standards 6. Regulation 11 of the Principal Regulations is amended by inserting after sub-subparagraph (a) (iii) (C) the following sub-subparagraph: "(CA) because of the operation of paragraph 5AC (2) (a), (b) or (c);". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 7 Preservation standards not to apply in certain cases 7. Regulation 12 of the Principal Regulations is amended by omitting "in respect of a person where the total amount of the benefits" and substituting "that are payable in respect of a member of a superannuation fund under the governing rules of the fund where the total amount of the benefits to which regulations 9, 10 and 11 apply". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 8 Investment standards 8. Regulation 16 of the Principal Regulations is amended: (a) by omitting from paragraph (1) (c) "a prescribed investment" and substituting "an investment in an in-house asset within the meaning of regulation 16A"; (b) by omitting subregulation (4). 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 9 9. After regulation 16 of the Principal Regulations the following regulation is inserted: Investment standards: in-house assets "16A. (1) In this regulation, unless the contrary intention appears: 'agreement' means any agreement, arrangement or understanding, formal or informal, express or implied, whether or not it is enforceable, or intended to be enforceable, by legal proceedings; 'employee' includes: (a) in relation to a company-a director of the company; or (b) in relation to a public authority constituted by or under a law of the Commonwealth or of a State or Territory-any officer of the public authority; 'in-house asset', in relation to a superannuation fund, means an asset of the fund that is a loan to, or an investment in, an employer sponsor, or an associate of an employer sponsor, of the fund, but: (a) if: (i) the employer sponsor is a life assurance company; and (ii) the contributions made by the employer sponsor are in respect of an employee, or dependants of an employee, of the employer sponsor; does not include an asset that is a life policy on the life of that employee; or (b) if the fund is a public sector fund, does not include an investment in securities issued under the authority of: (i) the Commonwealth or the government of a State or Territory; or (ii) a public authority constituted by or under a law of the Commonwealth or of a State or Territory that is not an employer sponsor, or an associate of an employer sponsor, of the fund. "(2) For the purposes of this regulation, a person is an associate of an employer sponsor of a superannuation fund other than a public sector fund if the person is an associate, within the meaning of subsection 26AAB (14) of the Tax Act, of the employer sponsor, the reference in that subsection to 'taxpayer' being read as a reference to the employer sponsor. "(3) For the purposes of this regulation, a body corporate, including a public authority constituted by or under a law of the Commonwealth or of a State or Territory, is an associate of an employer sponsor of a public sector fund: (a) if the body corporate has a controlling interest in, or directs the operations of, the employer sponsor; or (b) if the employer sponsor has a controlling interest in, or directs the operations of, the body corporate. "(4) For the purposes of this regulation, where the investment income of a superannuation fund in a year of income is or includes income arising from an asset: (a) the asset is taken to be an asset of the fund; and (b) the cost of the asset at any time during that year of income is taken to be an amount that the Commissioner is satisfied is reasonable in the circumstances. "(5) For the purposes of this regulation, where a member of a superannuation fund has, or dependants of a member have, a right to receive benefits from the fund: (a) an employer of the member; or (b) a company in which an employer of the member has a controlling interest; or (c) if an employer of the member is a company-a person who is connected with that company; who contributes to the fund in respect of the member or his or her dependants is an employer sponsor of the fund. "(6) For the purposes of paragraph (5) (c), a person is connected with a company that is an employer of a member only if: (a) the person has a controlling interest in the employer; or (b) the person is a company in which a controlling interest is held by a person who also has a controlling interest in the employer; or (c) the person is a beneficial owner of shares in the employer. "(7) For the purposes of this regulation, where: (a) an asset of a superannuation fund was acquired: (i) without consideration; or (ii) for a consideration other than the value of the asset when it was acquired; or (b) the whole or a part of the consideration for which an asset of a superannuation fund was acquired was not money; the cost of the asset is the amount that the Commissioner is satisfied is reasonable in the circumstances. "(8) For the purposes of this regulation, where: (a) but for this subregulation, an asset of a superannuation fund would be taken to be a loan, or investment, other than an in-house asset; and (b) that loan or investment was made as the result of entering into or carrying out an agreement; and (c) any of the persons who entered into or carried out the agreement did so for the purpose, or for purposes that included the purpose, of achieving the result that a loan or investment would be made to or in, or to or in an associate of, an employer sponsor of the fund; the asset is an in-house asset of the fund. "(9) For the purposes of this regulation, where: (a) an asset of a superannuation fund is a loan to, or investment in, a person other than: (i) an employer sponsor of the fund; or (ii) an associate of an employer sponsor of the fund; and (b) the person has a financial link with an employer sponsor of the fund or an associate of an employer sponsor of the fund; and (c) subregulation (8) does not apply in relation to the asset; the cost of the in-house assets of the fund is to be increased to an amount that the Commissioner is satisfied is a reasonable cost for the asset. "(10) For the purposes of subregulation (9) and this subregulation, a person has a financial link with a second person: (a) if an asset of the first-mentioned person is a loan to, or an investment in, the second person; or (b) if the first person has a financial link with a third person who has a financial link with the second person (including a financial link with the second person by another application or other applications of this paragraph). "(11) For the purposes of this regulation and subject to subregulation (12), the cost of the in-house assets of a superannuation fund is taken to be increased by an amount equal to the sum of: (a) the amount of any subsisting guarantee given by the trustee of the fund (whether jointly or otherwise) in relation to, or in relation to an associate of, an employer sponsor of the fund; and (b) the amount of any subsisting mortgage given in respect of an asset of the fund for the benefit of, or for the benefit of an associate of, an employer sponsor of the fund (whether or not the mortgage was also given for the benefit of other persons); and (c) the amount of payments by way of calls in respect of shares in, or in an associate of, an employer sponsor of the fund, that the trustee of the fund is, or could become, liable to pay (whether jointly or otherwise). "(12) For the purposes of paragraph (11) (c), where: (a) the trustee of a superannuation fund could become liable (whether jointly or otherwise) to pay an amount by way of calls in respect of shares in, or in an associate of, an employer sponsor of the fund; and (b) the Commissioner is satisfied that the assets of the employer sponsor or the associate of the employer sponsor, as the case may be, are sufficient to enable it to pay any debts that it has incurred, or is reasonably likely to incur, without requiring any of those calls to be paid; the Commissioner may determine that the amount referred to in paragraph (a) must be disregarded. "(13) For the purposes of this regulation, where: (a) an employer of a member is a company; and (b) the member has, or dependants of the member have, a right to receive benefits from a superannuation fund; and (c) the member, or a dependent of the member, is a beneficial owner of shares in the employer; and (d) an asset of the fund is a loan to the member, or the dependant, referred to in paragraph (c); and (e) but for this subregulation, the asset would be taken to be an in-house asset of the fund; the asset is not taken as an in-house asset of the fund if the Commissioner, having regard to: (f) the amount of the loan; and (g) the value of the shares; and (h) any other matters that the Commissioner considers relevant; is satisfied that it would be reasonable to treat the asset as not being an in-house asset. "(14) For the purposes of sub-subparagraph (17) (b) (i) (A), where as at 11 March 1985 the total cost of the in-house assets of a superannuation fund other than a public sector fund exceeded 70% of the cost of all the assets of the fund, the cost of the in-house assets of the fund as at 11 March 1985 is taken to be equal to 70% of the cost of all the assets of the fund as at 11 March 1985. "(15) Nothing in this regulation permits the doing of an act or thing by, or in relation to, a superannuation fund that could not be so done without contravening another provision of these Regulations that applies to the fund. "(16) Where a superannuation fund is in existence during part only of a year of income, this regulation has effect as if a reference to a time during the year of income were a reference to a time during the part of that year of income in which the superannuation fund was in existence. "(17) For the purposes of subsection 7 (1) of the Act, the following standards are prescribed in relation to the investment of the assets of superannuation funds other than public sector funds: (a) the cost of the in-house assets of a fund established after 11 March 1985 is not to exceed at any time during a year of income 10% of the cost of all the assets of the fund; (b) the cost of the in-house assets of a fund established before 12 March 1985 is not to exceed at any time during a year of income: (i) in a year of income commencing on 1 July 1990, 1991, 1992, 1993 or 1994: (A) the cost of the in-house assets of the fund as at 11 March 1985; or (B) 10% of the cost of all the assets of the fund; whichever is the greater; and (ii) in any other later year of income-10% of the cost of all the assets of the fund. "(18) For the purposes of subsection 7 (1) of the Act, the following standards are prescribed in relation to the investment of the assets of public sector funds: (a) the cost of the in-house assets of a fund established on or after 1 July 1990 is not to exceed at any time during a year of income 10% of the cost of all the assets of the fund; (b) the cost of the in-house assets of a public sector fund established before 1 July 1990 is not to exceed at any time during a year of income: (i) in a year of income commencing on 1 July 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998 or 1999: (A) the cost of the in-house assets of the fund as at 1 July 1990; or (B) 10% of the cost of all the assets of the fund; whichever is the greater; and (ii) in any other later year of income-10% of the cost of all the assets of the fund.". 1990 No. 185 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 10 10. After regulation 17 of the Principal Regulations the following regulation is inserted: Standards-members of superannuation fund ceasing to be entitled to benefits "17A. For the purposes of subsection 7 (1) of the Act, the following standard are prescribed where the right of a member of a fund or of the dependants of a member to receive benefits from the fund ceases during a year of income: (a) if, at the time of the cessation of the right, a specific part of the amount of the fund was appropriated for the provision of benefits for the member or his or her dependants-the amount of those benefits must be applied in the year of income, or in the period of 6 months after the year of income, for: (i) the provision of the benefits that other members or their dependants have rights to receive from the fund; or (ii) the provision for other members or their dependants who have rights to receive benefits from the fund of additional benefits on a basis that the Commissioner is satisfied is reasonable having regard to all the circumstances; or (iii) any other purpose approved in writing by the Commissioner; (b) if, at the time of the cessation of the right, a specific part of the amount of the fund was not appropriated for the provision of benefits for the member or his or her dependants-any additional benefits that have been, or are to be, provided from the fund for other members of the fund or their dependants because of the cessation of the right must have been, or must be, provided on a basis that the Commissioner is satisfied is reasonable having regard to all the circumstances.". - NOTES 1990 No. 185*1* OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS*2* (AMENDMENT) *1* Notified in the Commonwealth of Australia Gazette on 29 June 1990. *2* Statutory Rules 1987 No. 322 as amended by 1988 No. 255; 1989 Nos. 24, 281 and 356.