SUPERANNUATION INDUSTRY (SUPERVISION) (TRANSITIONAL PROVISIONS) REGULATIONS 1993 NO. 352

SUPERANNUATION INDUSTRY (SUPERVISION) (TRANSITIONAL PROVISIONS) REGULATIONS 1993 NO. 352

STATUTORY RULES 1993 No. 352

ISSUED BY THE AUTHORITY OF THE TREASURER

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) (Transitional Provisions) Regulations

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 trusts 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.

Superannuation funds are subject to the Act from the date they notify the Commissioner that they wish to be regulated. A fund that has notified the Commissioner is a 'regulated superannuation fund'. However, the main operative provisions of the Act commence from the start of a fund's 1994/95 year of income.

The regulations prescribe, pursuant to section 50 of the Act, the transitional superannuation fund conditions and regulatory system that applies to superannuation funds from the commencement of their 1994/95 year of income until the day they become a regulated superannuation fund (that is, their 'prelodgment period').

Section 50 of the Act allows funds which elect to become regulated superannuation funds after the commencement of their 1994/95 year of income to be eligible for taxation concessions for that year of income provided they meet certain conditions, including the requirements contained in the regulations. Failure to do so may result in the loss of taxation concessions for that year of income.

The regulations effectively continue the superannuation fund conditions contained in the Occupational Superannuation Standards Act 1987 and the Occupational Superannuation Standards Regulations which such funds are currently required to comply with in order to be eligible for taxation concessions for their 1993/94 year of income.

The regulations have been developed in consultation with representatives of the superannuation industry and related professional organisations.

The regulations are described in detail in the attachment.

The regulations would be taken to commence on 30 November 1993.

The retrospective effect of the regulations ensures that funds which have a 'substituted accounting period' (and may therefore commence their 1994/95 year of income as early as 1 December 1993) may comply with the requirements of the regulations from the commencement of their 1994/95 year of income. Therefore, as the regulations operate to the benefit of those concerned they do not contravene subsection 48(2) of the Acts Interpretation Act 1901.

ATTACHMENT

Superannuation Industry (Supervision) (Transitional Provisions) Regulations

Background

The regulations prescribe the transitional superannuation fund conditions and regulatory system that applies to superannuation funds during their 'pre-lodgment period'. This is the period from the commencement of the funds 1994/95 year of income to the time when the fund notifies the Insurance and Superannuation Commissioner (the Commissioner) that they wish to be a regulated superannuation fund.

Broadly, the regulations:

-       apply a modified version of the Occupational Superannuation Standards Act 1987 (the OSS Act) and Regulations (the 'applied OSS System') during a fund's prelodgement period; and

-       by reference to the applied OSS System state, for the purposes of section 50, the circumstances in which a fund would be treated as having satisfied the transitional superannuation fund conditions.

The effects of the regulations are:

•       on the fund:

-       if, during its pre-lodgment period, a fund satisfies or is treated as satisfying the 'superannuation fund conditions' under the applied OSS System then the fund would be treated as satisfying the 'transitional superannuation fund conditions' referred to in section 50 of the Act and thus be eligible for tax concessions.

•       on the Commissioner:

-       during the pre-lodgement period of a fund the Commissioner would have the same functions and powers as he has under the OSS Act and Regulations. (For example, powers to modify as in section 12A and powers to request information as in subsection 10(2)); and

-       during the pre-lodgment period of a fund the Commissioner would, with some exceptions, be subject to the same provisions as he is subject to under the OSS Act and Regulations. (For example, the Commissioner must disregard a breach under subsection 12(3A) and certain decisions will be subject to review under section 16.)

With effect from 1 July 1994 the OSS Act will no longer continue in its present form. The applied OSS Laws take this into account by stating that:

•       at any time up to and including 30 June 1994:

-       the applied OSS System would be a mirror image of the relevant provisions of the OSS Act and Regulations at that time, with several minor exceptions.

•       at any time on or after 1 July 1994:

-       the applied OSS System would be a mirror image of the relevant provisions of the OSS Act and Regulations as they existed immediately before 1 July 1994, with several minor exceptions.

In the case of instruments made under the OSS Act:

•       references to the applied OSS System 'mirroring' the OSS Act and Regulations include any instrument (including 'approvals' and 'determinations') made under the OSS Act and Regulations being considered to be part of the applied OSS System. That is, any instrument made under the OSS Act and Regulations is considered to be an instrument which also has application in the pre-lodgment period (for example, any modification order made under section 12A of the OSS Act is part of the Modified OSS System and therefore would apply in the pre-lodgment period).

Essentially, in the pre-lodgment period of a fund, it would be, from both the fund's and Commissioner's perspective, as if the OSS Act and Regulations (as modified) and not the Act was the regulatory legislation.

Regulation 1 - Citation

Regulation 1 provides that the regulations may be cited as the Superannuation Industry (Supervision) (Transitional Provisions) Regulations.

Regulation 2 - Commencement

Regulation 2 provides that the regulations will be taken to have commenced on 30 November 1993.

Regulation 3 - Interpretation

Subregulation 3(1) provides definitions of:

-       'Act' to mean the Superannuation Industry (Supervision) Act 1993;

-       'applied OSS Act' has the meaning given to it by subregulation 2;

-       'applied OSS Laws' means the applied OSS Act and the applied Regulations;

-       'applied OSS Regulations' has the meaning given to it by subregulation 3;

-       'lodgment day' means in relation to a fund, the day on which the trustee of the fund lodges an election under section 19 of the Act;

-       'pre-lodgment period' means in relation to a fund, the period beginning at the beginning of the fund's 1994-1995 year of income and ending at the end of the lodgement day of the fund; and

-       'the transitional superannuation fund conditions' means the transitional superannuation fund conditions referred to in section 50 of the Act.

Subregulation 3(2) defines the Applied OSS Act as consisting of those provisions of the OSS Act which are specified in Schedule 1.

The provisions listed in Part 1 of Schedule 1 are unmodified provisions and are 'flexible', in that if there is a change to the OSS Act provision then the equivalent provision in the Applied OSS Act will also change. This is provided in subparagraph 3(2)(a)(i). This 'fexibility' ceases on 30 June 1994 because from that date the relevant provisions of the OSS Act are repealed. Therefore at any time on or after 1 July 1994 the provisions listed in Part 1 of Schedule 1 are to be equivalent to those provisions in the OSS Act on 30 June 1994. This is provided in subparagraph 3(2)(a)(5).

The provisions listed in Part 2 of Schedule 1 are modified provisions. They are not the same as their equivalent provisions in the OSS Act and are not flexible. This is provided in paragraph 3(2)(b). The modifications are necessary to ensure that the Applied OSS Act works appropriately. The modifications do not impose on funds any requirements which were not already in existence under the OSS Act.

Subregulation 3(3) defines applied OSS Regulations as consisting of those provisions of the OSS Regulations which are specified in Schedule 2.

The provisions listed in Part 1 of Schedule 2 are unmodified provisions and are 'flexible', in that if there is a change to the OSS Regulations then the equivalent provision in applied OSS Regulations will also change. This is provided in subparagraph 3(3)(a)(i). This 'flexibility' ceases on 30 June 1994 because from that date the relevant provisions of the OSS Regulations are repealed. Therefore at any time on or after 1 July 1994 the provisions listed in Part 1 of Schedule 2 are to be equivalent to those provisions in the OSS Regulations on 30 June 1994. This is provided in subparagraph 3(3)(a)(ii).

The provisions listed in Part 2 of Schedule 2 are modified provisions. They are not the same as their equivalent provisions in the OSS Regulations and are not flexible. This is provided in paragraph 3(3)(b). The modifications are necessary to ensure that the Applied OSS Regulations work appropriately. The modifications do not impose on funds any requirements which were not already in existence under the OSS Regulations.

Regulation 4 - Purposes

Regulation 4 provides that the regulations are made for the purposes of paragraphs 50(1)(c), 2(c), 3(c) and 4(e) of the Act.

Regulation 5 - Transitional superannuation fund conditions

Regulation 5 provides that a superannuation fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the fund's pre-lodgment period if the fund satisfied the superannuation fund conditions under the applied OSS Act in relation to the fund's pre-lodgment period, or the Commissioner treats the fund, in accordance with the applied OSS Act, as satisfying the superannuation fund conditions.

Regulation 6 - Application of applied OSS Laws

Regulation 6 provides that the applied OSS Laws apply to a fund during the fund's prelodgment period.

Schedule 1 - Applied OSS Act

Part 1 - Unmodified Provision

Specified sections of the Occupational Superannuation Standards Act 1987 will apply without modification to superannuation funds during their pre-lodgment period. Those sections are listed in this Part of the Schedule.

Part 2 - Modified Provisions

Specified sections of the Occupational Superannuation Standards Act 1987 will apply with modification to superannuation funds during their pre-lodgment period. Those sections, and modifications, are listed in this Part of the Schedule.

Schedule 2 - Applied OSS Regulations

Part 1 - Unmodified Provisions

Part 1 of Schedule 2 introduces unmodified transitional arrangements for superannuation funds in their pre-lodgment period. Specified regulations in the Occupational Superannuation Standards Regulations will apply without modification to superannuation funds during their pre-lodgment period. Those regulations are listed in this Part of the Schedule.

Part 2 - Modified Provisions

Part 2 of the Schedule introduces modified transitional arrangements for superannuation funds in their pre-lodgment period. Specified regulations of the Occupational Superannuation Standards Regulations will be modified to apply to superannuation funds during their pre-lodgment period. Those regulations, and modifications, are listed in this Part of the Schedule.