Commonwealth Numbered Regulations - Explanatory Statements
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SUPERANNUATION LEGISLATION AMENDMENT (2013 MEASURES NO. 2) REGULATION 2013 (SLI NO 278 OF 2013)
EXPLANATORY STATEMENT
Select Legislative Instrument No. 278, 2013
Issued by authority of the Assistant Treasurer
Retirement Savings Accounts Act 1997; the Superannuation Contributions Tax (Assessment and Collection) Act 1997; and the Superannuation Industry (Supervision) Act 1993.
Superannuation Legislation Amendment (2013 Measures No. 2) Regulation 2013
Section 200 of the Retirement Savings Accounts Act 1997 (RSA Act), section 42 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCT Act) and section 353 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) (collectively, the Principal Acts) provide that the Governor-General may make regulations prescribing matters required or permitted by the relevant Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the relevant Act.
The purpose of the Superannuation Legislation Amendment (2013 Measures No.2) Regulation 2013 (Regulation) is to:
• amend the payment restrictions in the Retirement Savings Accounts Regulations 1997 (RSA Regulations) and the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) to enable amounts to be paid from an individual's superannuation or income stream under a release authority to meet tax liabilities arising from certain superannuation contributions; and
• amend the lists of unfunded defined benefits superannuation schemes and exempt public sector superannuation schemes in the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (SCT Regulations) and the SIS Regulations by repealing listings that are spent or redundant, adding new listings and making minor corrections to listings where required.
Release authority provisions
The Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Act 2013, amended the Income Tax Assessment Act 1997 (ITAA 1997) and other tax legislation to establish a fairer system for the taxation of individuals with certain superannuation contributions from pre-tax sources (concessional contributions) in excess of their annual cap. This is achieved by including these excess concessional contributions (ECCs) in an individual's assessable income and applying a charge in respect of these ECCs.
The Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Act 2013 introduced the Division 293 tax, being a 15 per cent tax on certain superannuation contributions of very high income earners. The Division 293 tax ensures that tax concessions received by very high income earners on their superannuation contributions are more closely aligned with concessions received by average income earners.
The amendments providing for the reforms to the taxation of ECCs and for Division 293 tax also enable an amount to be released from an individual's superannuation or income stream under a release authority to meet their consequential tax liability. The Regulation makes amendments to the RSA and SIS regulations to enable superannuation providers to make these payments if they are given a release authority.
Lists of unfunded defined benefits superannuation schemes and exempt public sector superannuation schemes
Unfunded defined benefits superannuation schemes (UDBSSs) are superannuation schemes where the benefits are not financed until just before they become payable. At the time the benefits become payable, they are generally paid by an employer to the superannuation scheme or from consolidated revenue for government employee schemes. The superannuation surcharge was a tax imposed on superannuation contributions, once income reached certain thresholds. This tax is payable for the financial years between 1 July 1996 and 30 June 2005. For UDBSSs listed in Schedule 1 to the SCT Regulations, the liability for the superannuation surcharge payable by the unfunded defined benefits superannuation provider is deferred until a superannuation benefit becomes payable to a member. The Regulation updates the listings of UDBSSs and repeals listings of UDBSSs that are spent or redundant.
Exempt public sector superannuation schemes (EPSSSs) are public sector superannuation funds established for the payment of superannuation, retirement or death benefits under a law of the Commonwealth or of a State or Territory. A fund that is specified in Schedule 1AA to the SIS Regulations is deemed to be a 'complying superannuation fund' and therefore entitled to concessional tax treatment under the ITAA 1997. The Regulation updates the listings of EPSSSs and repeals listings of EPSSSs that are spent or redundant.
Consultation
Targeted consultation with stakeholder organisations was undertaken between 8 July and 11 July 2013 in relation to the amendments relating to release authorities for Division 293 tax.
No significant policy concerns were raised. Following consultation a number of minor amendments to the Regulation and related material were made to address or clarify technical matters raised in consultation.
No consultation has been undertaken on the amendments relating to the release authorities for excess concessional contributions. This is because these amendments are minor and machinery in nature and parallel those for Division 293 tax.
Consultation was undertaken with all States and Territories in respect of the amendments to lists of UDBSSs and EPSSSs.
Details
Details of the Regulation are set out in Attachment A.
A Statement of Compatibility with Human Rights has been completed for the Regulation, in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011. The Statement's assessment is that the measures in the Regulation are compatible with human rights. A copy of the Statement is at Attachment B.
Conditions and commencement
The Principal Acts do not specify any conditions that need to be met before the power to make the Regulation can be exercised.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulation commences on the day after registration. Some amendments to the lists of UDBSSs and EPSSSs apply from earlier dates to give effect to arrangements that some States already have in place.
ATTACHMENT A
Details of the Superannuation Legislation Amendment (2013 Measures No.2) Regulation 2013
Section 1 - Name of Regulation
The title of the Regulation is the Superannuation Legislation Amendment (2013 Measures No.2) Regulation 2013.
Section 2 - Commencement
This section provides that the Regulation commences on the day after it is registered.
Section 3 - Authority
This section provides that the Regulation is made under the Retirement Savings Account Act 1997, the Superannuation Contributions Tax (Assessment and Collection) Act 1997 and the Superannuation Industry (Supervision) Act 1993.
Section 4 - Schedule(s)
This section provides that each instrument that is specified in a Schedule to the proposed Regulation is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.
Schedule 1 - Amendments
Release authority provisions
Amendments to standards and definitions for pensions and annuities
The Retirement Savings Accounts Regulations 1997 (RSA Regulations) and the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) define particular types of pensions and annuities and specify applicable standards for these products.
Items 1 to 4 and 18 to 26 of Schedule 1 to the proposed Regulation would amend the standards for pension rules and annuity contracts, and the definition of 'non-commutable allocated pension' and 'non-commutable allocated annuity' to ensure that these products will allow for payments in compliance with a release authority where appropriate.
These amendments treat payments under the new release authorities set out in Division 96 (for ECCs) and 135 (for Division 293 tax) in Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) consistently with payments under other existing release authorities.
Exceptions to cashing restrictions
The RSA Regulations and the SIS Regulations specify restrictions on the amount and/or manner that a payment can be made.
Item 5 and 28 to 30 of Schedule 1 to the proposed Regulation will insert exceptions to the cashing restrictions in regulation 4.26 of the RSA Regulations and regulations 6.22, 6.26 and 6.27 of the SIS Regulations. These exceptions allow for payment to be made from superannuation directly to the Commissioner of Taxation (Commissioner) where this is required by the provisions for the new release authorities under Divisions 96 (for ECCs) and 135 (for Division 293 tax) in Schedule 1 to the TAA 1953. They also permit the cashing of benefits of less than $500 from approved deposit funds where this is required by the same provisions.
This exception is consistent with the exception for payments to the Commissioner required by other existing release authorities.
New conditions of release and cashing restrictions
Superannuation benefits that are preserved or have restricted access can only be paid from a superannuation entity if a condition of release and any applicable cashing restrictions are satisfied.
Items 6, 27, 41 and 42 of Schedule 1 to the proposed Regulation create new conditions of release and applicable cashing restrictions covering payments made under a release authority issued under Divisions 96 and 135 in Schedule 1 to the TAA 1953.
These new conditions of release will allow payments to be made from superannuation entities where required or allowed by release authorities under Division 96 (for ECCs) and 135 (for Division 293 tax) in Schedule 1 to the TAA 1953. These new conditions of release are equivalent to those that exist for payments under other existing release authorities.
Lists of unfunded defined benefits superannuation schemes and exempt public sector superannuation schemes
Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (SCT Regulations)
The Regulation updates the list of unfunded defined benefits superannuation schemes (UDBSSs) in Schedule 1 to the SCT Regulations. Regulation 2A of the SCT Regulations provides that an unfunded defined benefits superannuation scheme is a superannuation scheme that is:
• established by, or operated under a Commonwealth, State or Territory Act mentioned in Part 1 of Schedule 1 to the SCT Regulations; or
• mentioned in Part 2 of Schedule 1 to the SCT Regulations that is established by, or operated under, a trust deed.
The Regulation amends both Regulation 2A (item 7) and the heading of Part 1 of Schedule 1 (item 9) to the SCT Regulations to allow for superannuation schemes established by or operated under Commonwealth, State or Territory Regulations to be also listed as UDBSSs.
Queensland
Item 10 repeals the reference to the Parliamentary Contributory Superannuation Act 1970 (Qld) in Part 1 of Schedule 1 which is no longer required because it is spent or redundant.
Western Australia
Item 10 repeals references to the following Acts in Part 1 of Schedule 1 which are no longer required because they are spent or redundant:
• Government Employees Superannuation Act 1987 (WA); and
• Superannuation and Family Benefits Act 1938 (WA).
Item 11 inserts the State Superannuation Act 2000 (WA) in Part 1 of Schedule 1, which applies from 17 February 2001 (item 8).
South Australia
Item 12 omits an incorrect comma after 'Act' in the Governors' Pensions Act 1976 (SA).
Item 13 inserts the Southern State Superannuation Act 2009 (SA) in Part 1 of Schedule 1, which applies from 1 August 2009, the date from which this Act replaced the Southern State Superannuation Act 1994 (SA) (item 8).
Items 16 and 17 remove the reference to Police Occupational Superannuation Scheme under South Australia in Part 2 of Schedule 1 to the SCT Regulations because it is spent or redundant.
Tasmania
Item 14 repeals references to the following Acts in Part 1 of Schedule 1 which are no longer required because they are spent or redundant:
• Governor of Tasmania Act 1982 (Tas);
• Parliamentary Retiring Benefits Act 1985 (Tas);
• Parliamentary Superannuation Act 1973 (Tas); and
• Solicitor-General Act 1983 (Tas).
Item 15 inserts the Retirement Benefits (Parliamentary Superannuation) Regulations 2012 (Tas) in Part 1 of Schedule 1, which applies from 25 December 2012 (item 8).
- The schemes operating under the Parliamentary Superannuation Act 1973 (Tas) and the Parliamentary Retiring Benefits Act 1985 (Tas) moved to operating under the Retirement Benefits (Parliamentary Superannuation) Regulations 2002 (Tas), effective from 1 January 2003. These regulations became the Retirement Benefits (Parliamentary Superannuation) Regulations 2012 (Tas), effective from 25 December 2012.
Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations)
Exempt public sector superannuation schemes (EPSSSs) are entitled to concessional tax treatment under the Income Tax Assessment Act 1997. They are not subject to requirements of the Superannuation Industry (Supervision) Act 1993 or the SIS Regulations, and are instead subject to supervision by the relevant Commonwealth, State or Territory government under its enabling legislation.
EPSSSs are listed in Schedule 1AA of the SIS Regulations.
Victoria
Item 32 inserts the Police Regulation Act 1958 (Vic), which applies from 1 July 1997 (the date from which Part 3 of Schedule 1AA applies) (item 31).
South Australia
Item 33 inserts 'Other schemes' and 'Super SA Select' under the items for South Australia, which applies from 1 January 2013 (the date of operation of the fund) (item 31).
Western Australia
Item 34 repeals the reference to Superannuation and Family Benefits Act 1938 (WA), which is no longer required because it is spent or redundant.
Tasmania
Items 35, 36, 37 and 40 repeal references to the following Acts, which are no longer required because they are spent or redundant:
• Governor of Tasmania Act 1982 (Tas);
• Parliamentary Retiring Benefits Act 1985 (Tas);
• Parliamentary Superannuation Act 1973 (Tas); and
• Solicitor-General Act 1983 (Tas).
Items 38 and 39 insert the following Act and Regulations:
• Public Sector Superannuation Reform Act 1999 (Tas), which applies from 15 May 1999 (item 31).
• Retirement Benefits (Parliamentary Superannuation) Regulations 2012 (Tas), which applies from 25 December 2012 (item 31).
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation Legislation Amendment (2013 Measures No. 2) Regulation 2013
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Superannuation Legislation Amendment (2013 Measures No. 2) Regulation 2013(the Regulation) updates the lists of unfunded defined benefits superannuation schemes (UDBSSs) and exempt public sector superannuation schemes (EPSSSs) in the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997, and the Superannuation Industry (Supervision) Regulations 1994 respectively.
The lists of UDBSSs and EPSSSs are updated periodically. The Regulation amends the relevant lists by repealing listings that are spent or redundant, adding new listings and making minor corrections to listings where required.
The UDBSSs and EPSSSs amendments do not engage any applicable human rights or freedoms. These are minor and machinery in nature, and give effect to arrangements already in place.
The Regulation also makes changes to the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Accounts Regulations 1997 to facilitate the operation of release authorities that are given to superannuation providers under Divisions 96 and 135 in Schedule 1 to the Taxation Administration Act 1953. The amendments ensure that superannuation providers that receive these release authorities can pay an amount from an individual's superannuation interest despite the normal restrictions on such payments.
The provisions relating to release authorities do not engage with any applicable human rights or freedoms. These merely make consequential amendments to ensure that the release authority arrangements set out in the principal legislation do not conflict with other regulatory requirements regarding payments from superannuation interests.
Human rights implications
This Legislative Instrument does not engage any of the applicable human rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
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