Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]


SUPERANNUATION (SELF MANAGED SUPERANNUATION FUNDS) SUPERVISORY LEVY IMPOSITION AMENDMENT REGULATION 2013 (NO. 1) (SLI NO 116 OF 2013)

EXPLANATORY STATEMENT

 

Select Legislative Instrument 2013 No. 116

Issued by authority of the Minister for Financial Services and Superannuation

Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991

Superannuation (Self Managed Superannuation Funds) Taxation Act 1987

Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2013 (No. 1)

 

The Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 (Imposition Act) and the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 (Taxation Act) impose a supervisory levy on self managed superannuation funds (SMSFs) to recover the costs of regulating the sector.  The Australian Taxation Office (ATO) is the primary regulator of SMSFs.

Section 7 of the Imposition Act provides that the Governor-General has authority to make regulations for the purposes of section 6 of the Imposition Act. 

Section 22 of the Taxation Act provides that the Governor-General has authority to make regulations, not inconsistent with the Taxation Act, prescribing matters required or permitted by the Taxation Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Taxation Act.

The Regulation amends the Superannuation (Self Managed Superannuation Funds) Imposition Regulations 1991 (Imposition Regulations) and the Superannuation (Self Managed Superannuation Funds) Taxation Regulations 1999 (Taxation Regulations).

The purpose of the amendments to the Imposition Regulations and the Taxation Regulations is to increase the amount of the SMSF supervisory levy payable for the 2013-14 income year and following income years to $259.

The amendments also bring forward the payment of the SMSF supervisory levy so that it is both levied and collected in the same income year.  Under the current arrangements, the levy is collected in the income year after it is levied.  The amendments also put in place transitional arrangements to facilitate this change by providing that the levy for the 2013-14 income year will be paid in instalments over two income years.

All SMSFs are subject to the SMSF supervisory levy, which is designed to recover the costs of ensuring compliance with superannuation legislation.  The current levy does not recover all of the ATO's costs of regulating the sector.  The Government announced in the 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO) that it would increase and bring forward payment of the SMSF supervisory levy so that the ATO could fully recover its costs in a more timely way.

Details of the amendments are set out in the Attachment

The Imposition Act and the Taxation Act specify no conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003

The Regulation commences on 1 July 2013.

No public consultation was undertaken in respect of the Regulation as the amendments give effect, in the terms announced in MYEFO, to an adjustment to a tax.  Amendments to the principal legislation required to increase and bring forward payment of the SMSF supervisory levy were the subject of inquiry by the Parliamentary Joint Committee on Corporations and Financial Services completed on 19 March 2013.

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2013 (No. 1)

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

The Regulation increases the amount of the SMSF supervisory levy to $259 for the income year ending on 30 June 2014 and later income years.  The Regulation also changes the timing of collection of the SMSF supervisory levy so that it is levied and collected in the same income year, and puts in place transitional arrangements to facilitate this change.

All superannuation funds are subject to a supervisory levy to fund the regulatory costs of ensuring compliance with the superannuation legislation.  Regulation of the SMSF sector is compliance based and on a cost-recovery basis.  The SMSF supervisory levy is imposed to cover the costs of regulating the sector by the ATO, for example annual compliance activities to ensure trustees comply with rules on contributions, benefit payments and superannuation investments.

The number of SMSFs has increased rapidly between the 2007-8 and 2011-12 income years.  Over that period, the number of SMSFs increased from almost 376,000 to over 478,000 (approximately 27 per cent).  The money collected from the SMSF supervisory levy is designed to recover the costs incurred by the ATO in regulating the rapidly growing and diverse SMSF sector.  Currently, the SMSF supervisory levy does not fully recover the ATO's costs of regulating the sector, and these amendments ensure that the ATO's costs of regulating the SMSF sector are fully recovered.

The Government also announced in MYEFO that the SMSF supervisory levy would be levied and collected in the same income year.  Collection of the SMSF supervisory levy in the income year in which it is levied is appropriate for a cost-recovery levy.  This ensures consistency within the superannuation industry as superannuation funds regulated by the Australian Prudential Regulation Authority pay the superannuation supervisory levy in the same income year that it is levied.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.


 

ATTACHMENT

 

 

Details of the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2013 (No. 1)

Section 1 - Name of Regulation

This section provides that the title of the Regulation is the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Amendment Regulation 2013 (No. 1).

Section 2 - Commencement

This section provides that the Regulation will commence on 1 July 2013.

Section 3 - Authority

This section provides that the Regulation is made under the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 and the Superannuation (Self Managed Superannuation Funds) Taxation Act 1987 (Taxation Act). 

Section 4 - Schedule

This section provides that each instrument that is specified in the Schedule to the Regulation is amended or repealed as set out in the applicable items in the Schedule concerned, and that any other item in the Schedule to the Regulation has effect according to its terms. 

Schedule 1 - Amendments

Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Regulations 1991 (Imposition Regulations)

Item 1 of the Regulation repeals subregulation 4(2) of the Imposition Regulations, which currently specifies that the self managed superannuation fund (SMSF) supervisory levy is $200 for the income year ending on 30 June 2012, and $191 for each income year after that.

Item 1 of the Regulation inserts a new subregulation 4(2) which provides that the amount of the levy for the income year ending on 30 June 2014 and each later income year will be $259.

Superannuation (Self Managed Superannuation Funds) Taxation Regulations 1999 (Taxation Regulations)

Part 1 - Preliminary

Item 2 of the Regulation inserts the words 'Part 1 - Preliminary' before regulation 1 of the Taxation Regulations.

Item 3 of the Regulation inserts a definition of 'return lodgement day' into regulation 3 of the Taxation Regulations.  The return lodgement day means the day when a return is lodged under section 35D of the Superannuation Industry Supervision Act 1993 (SIS Act).  Section 35D of the SIS Act provides that each trustee of an SMSF must ensure that the Commissioner of Taxation is given a return during the reporting period, or within such longer period as the Commissioner of Taxation allows.

Part 2 - When levy due for payment

Item 4 of the Regulation repeals regulation 4 of the Taxation Regulations, which currently provides that, for subsection 15DB(1) of the Taxation Act, the day for payment of levy on the lodgement of a particular return is the day on which the return is lodged.

Item 4 of the Regulation substitutes 'Part 2 - When levy due for payment', which consists of regulations 4, 5 and 6.

Regulation 4 provides that Part 2 is made for subsection 15DB(1) of the Taxation Act.

Levy for the income year ending on 30 June 2015 and later years

Regulation 5 specifies the due date of payment of the levy for the income year ending on 30 June 2015, and later income years.  The levy for an income year will be due and payable on the return lodgement day for the preceding income year.  This means that the levy will be paid in the same income year that the liability arises. 

Example 1

For the income year ending on 30 June 2015, ABC SMSF's return lodgement day is 15 May following the end of the income year.  ABC SMSF will pay the levy for the income year ending on 30 June 2016 ($259) when it lodges its return for the income year ending on 30 June 2015 on 15 May 2016.

First year funds

Subregulation 5(3) specifies that the levy for the income year in which an SMSF elects to be regulated (pursuant to section 19 of the SIS Act) is due and payable on the return lodgement day for that income year.  This means that when an SMSF lodges its annual return for the first time, it will pay the levy for the first and second income years for which it is regulated.

            Example 2

JKL SMSF is regulated from 10 August 2016.  The fund's return lodgement day is 28 February following the end of the income year.  JKL SMSF will therefore pay $518 on 28 February 2018 when it lodges its first return, i.e. $259 for the income year ending on 30 June 2017 + $259 for the income year ending on 30 June 2018.

Transitional arrangements - levy for the income year ending on 30 June 2014

Regulation 6 provides for transitional arrangements for the income year ending on 30 June 2014, to ease the burden on existing SMSFs resulting from the timing change.  The transitional arrangements require SMSFs to pay the levy for the income year ending on 30 June 2014 in two instalments:

-        $130 is due and payable on the return lodgement day for the income year ending on 30 June 2013; and

-        $129 is due and payable on the return lodgement day for the income year ending on 30 June 2014.

Example 3

RST SMSF has been a regulated fund since 2010.  The fund's return lodgement day is 15 May following the end of the income year:

-        On lodgement of its return on 15 May 2014 for the income year ending on 30 June 2013, RST SMSF will pay $321, i.e. $191 for the income year ending on 30 June 2013 and $130 for the income year ending on 30 June 2014. 

-        On lodgement of its return on 15 May 2015 for the income year ending on 30 June 2014, RST SMSF will pay $388, i.e. $129 for the income year ending on 30 June 2014 + $259 for the income year ending on 30 June 2015.

Subregulation 6(3) provides that for SMSFs that elect to be regulated during the income year ending on 30 June 2014, the levy will be due and payable on the return lodgement day for the income year ending on 30 June 2014.  This means that these funds will pay the SMSF supervisory levy in accordance with the first year funds rule in subregulation 5(3) for the income year ending on 30 June 2014.

Example 4

XYZ SMSF is regulated from 10 January 2014. The fund's return lodgement day is 28 February following the end of the income year.  On lodgement of its first return on 28 February 2015, it will pay $518, i.e. $259 for the income year ending on 30 June 2014 + $259 for the income year ending on 30 June 2015.

 

 

 


AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback