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Superannuation Industry (Supervision) Act 1993

Authoritative Version
  • - C2004A04633
  • In force - Superseded Version
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Act No. 78 of 1993 as made
An Act to make provision for the supervision of certain entities engaged in the superannuation industry, and for related purposes
Administered by: Treasury
Date of Assent 30 Nov 1993

Superannuation Industry (Supervision) Act 1993

No. 78 of 1993

TABLE OF PROVISIONS

PART 1—PRELIMINARY

Section

Division 1Preliminary

1.    Short title

2.    Commencement

3.    Object of Act

4.    Summary of provisions

5.    Outline of key concepts

6.    General administration of Act

7.    Application of Act not to be excluded or modified

8.    Act extends to external Territories

9.    Crown to be bound

Division 2Interpretation

10.      Definitions

11.      Approvals, determinations etc. by Commissioner

12.      Associates

13.      Single trustees and groups of trustees

14.      Indefinitely continuing fund—application of rules against perpetuities

15.      Payments for purchase of annuities


TABLE OF PROVISIONS—continued

Section

16.         Definitions associated with employer-sponsorship

17.         Persons involved in contravention

18.         Public offer superannuation fund

19.         Regulated superannuation fund

20.         Related bodies corporate

PART 2—APPROVAL OF TRUSTEES

21.         Object of Part

22.         Interpretation

23.         Application for approval

24.         Further information may be requested

25.         Period within which application for approval is to be decided

26.         Deciding an application for approval

27.         When an approval is in force

28.         Revocation of approval

29.         Notification of change in circumstances or breach of conditions

PART 3—OPERATING STANDARDS FOR SUPERANNUATION ENTITIES

30.         Object of Part

31.         Operating standards for regulated superannuation funds

32.         Operating standards for approved deposit funds

33.         Operating standards for pooled superannuation trusts

34.         Prescribed operating standards must be complied with

PART 4—TRUSTEE OF SUPERANNUATION ENTITY TO LODGE ANNUAL RETURNS WITH THE COMMISSIONER

35.         Object of Part

36.         Trustee to lodge annual returns

PART 5—NOTICES ABOUT COMPLYING FUND STATUS

Division 1Objects and interpretation

37.         Objects of Part

38.         Meaning of “entity”

Division 2Commissioner may give notices about complying fund status

39.         Meaning of “contravention”

40.         Notices by Commissioner to trustee

41.         When Commissioner obliged to give notice of compliance

42.         Complying superannuation fund

43.         Complying approved deposit fund

44.         Pooled superannuation trust

Division 3Complying fund status for tax purposes

45.         Complying superannuation fund

46.         Complying superannuation scheme—superannuation guarantee charge

47.         Complying approved deposit fund

48.         Pooled superannuation trust

49.         Transitional—notices under the repealed provisions of the Occupational Superannuation Standards Act 1987

50.         Transitional—late lodgment of elections by trustees of superannuation funds


TABLE OF PROVISIONS—continued

Section

PART 6—PROVISIONS RELATING TO GOVERNING RULES OF SUPERANNUATION ENTITIES

51.         Object of Part

52.         Covenants to be included in governing rules

53.         Covenants to repay amounts to beneficiaries in approved deposit funds

54.         Prerequisites to variation of repayment period

55.         Consequences of contravention of covenant

56.         Indemnification of trustee from assets of entity

57.         Indemnification of directors of trustee from assets of entity

58.         Trustee not to be subject to direction

59.         Exercise of discretion by person other than trustee

60.         Amendment of governing rules

PART 7—PROVISIONS APPLYING ONLY TO REGULATED SUPERANNUATION FUNDS

61.         Object of Part

62.         Sole purpose test

63.         Commissioner may direct trustees of certain regulated superannuation funds not to accept employer contributions

64.         Superannuation contributions—deductions from salary or wages to be remitted promptly

65.         Lending to members of regulated superannuation fund prohibited

66.         Acquisitions of certain assets from members of regulated superannuation funds prohibited

67.         Borrowing

68.         Victimisation of trustees etc.

PART 8—IN-HOUSE ASSET RULES APPLYING TO REGULATED SUPERANNUATION FUNDS

Division 1Object and interpretation

69.         Object of Part

70.         Associate of employer-sponsor

71.         Meaning of “in-house asset”

72.         How this Part applies if there are 2 or more unrelated employer-sponsors

73.         Cost of in-house asset

74.         Historical cost ratio of fund’s in-house assets

75.         Market value ratio of fund’s in-house assets

Division 2Historical cost ratio of fund’s in-house assets

76.         Private sector funds established on or after 12 March 1985—historical cost ratio for the 1994-95 year of income

77.         Private sector funds established before 12 March 1985—historical cost ratio for the 1994-95 year of income

78.         Public sector funds established on or after 1 July 1990—historical cost ratio for the 1994-95 year of income

79.         Public sector funds established before 1 July 1990—historical cost ratio for the 1994-95 year of income

80.         All funds—historical cost ratio for the 1995-96 year of income, the 1996-97 year of income and the 1997-98 year of income

Division 3Market value ratio of fund’s in-house assets

81.         All funds—market value ratio for the 1998-99 year of income and the 1999-2000 year of income


TABLE OF PROVISIONS—continued

Section

82.         All funds—market value ratio for the 2000-2001 year of income and later years of income

83.         Certain new in-house asset investments prohibited

Division 4Enforcement

84.         In-house asset rules must be complied with

Division 5—Anti-avoidance

85.         Prohibition of avoidance schemes

PART 9—EQUAL REPRESENTATION OF EMPLOYERS AND MEMBERS—EMPLOYER-SPONSORED FUNDS

86.         Object of Part

87.         Consequences of non-compliance with this Part

88.         This Part does not apply if acting trustee appointed under Part 17

89.         Basic equal representation rules

90.         Pre-1 July 1995 rules—funds with fewer than 200 members

91.         Pre-1 July 1995 rules—funds with 200 or more members

92.         Post-30 June 1995 rules—funds with more than 4, but fewer than 50, members

93.         Post-30 June 1995 rules—funds with more than 49 members

PART 10—PROVISIONS APPLYING ONLY TO APPROVED DEPOSIT FUNDS

94.         Object of Part

95.         Borrowing

PART 11—PROVISIONS APPLYING ONLY TO POOLED SUPERANNUATION TRUSTS

96.         Object of Part

97.         Borrowing

98.         Lending to unit-holders prohibited

99.         Civil penalty provisions

PART 12—DUTIES OF TRUSTEES AND INVESTMENT MANAGERS OF SUPERANNUATION ENTITIES

100.       Object of Part

101.       Duty to establish arrangements for dealing with inquiries or complaints

102.       Duty to seek information from investment manager

103.       Duty to keep minutes and records

104.       Duty to keep records of changes of trustees

105.       Duty to keep reports

106.       Duty to notify Commissioner of significant adverse events

107.       Duty of trustee of employer-sponsored fund to establish procedure for appointing member representatives

108.       Duty of trustee of employer-sponsored fund to establish procedure for appointing independent trustee or independent member of board of directors of corporate trustee

109.       Investments of superannuation entity to be made on an arm’s length basis

PART 13—ACCOUNTS OF SUPERANNUATION ENTITIES

110.       Object of Part


TABLE OF PROVISIONS—continued

Section

111.       Accounting records

112.       Accounts

113.       Audit of accounts

PART 14—OTHER PROVISIONS APPLYING TO SUPERANNUATION ENTITIES

114.       Object of Part

115.       Trustee of superannuation entity may maintain reserves

116.       Agreement between trustee and investment manager

117.       Circumstances in which amounts may be paid out of an employer-sponsored fund to an employer-sponsor

118.       Consents to appointments

PART 15—STANDARDS FOR TRUSTEES, CUSTODIANS AND INVESTMENT MANAGERS OF SUPERANNUATION ENTITIES

119.       Object of Part

120.       Disqualified persons

121.       Disqualified persons not to be trustees of superannuation entities

122.       Investment manager must not appoint or engage custodian without the trustee’s consent

123.       Persons who may be appointed to be custodians of superannuation entities

124.       Investment managers must be appointed in writing

125.       Individuals not to be investment managers of superannuation entities

126.       Disqualified persons not to be investment managers of superannuation entities

127.       Non-compliance not to invalidate appointment or transaction

PART 16—ACTUARIES AND AUDITORS OF SUPERANNUATION ENTITIES

128.       Object of Part

129.       Obligations of actuaries and auditors—compliance

130.       Obligations of actuaries and auditors—solvency

131.       Auditors—disqualification orders

PART 17—SUSPENSION OR REMOVAL OF TRUSTEE OF SUPERANNUATION ENTITY

132.       Object of Part

133.       Suspension or removal of trustee of superannuation entity

134.       Commissioner to appoint acting trustee in cases of suspension or removal

135.       Terms and conditions of appointment of acting trustee

136.       Termination of appointment of acting trustee

137.       Resignation of acting trustee

138.       Property vesting orders

139.       Powers of acting trustee

140.       Acting trustee to notify appointment to beneficiaries

141.       Commissioner may give directions to acting trustee

142.       Commissioner may formulate a scheme for the winding-up or dissolution, or both, of a superannuation entity

PART 18—PROHIBITED CONDUCT IN RELATION TO SUPERANNUATION INTERESTS

143.       Object of Part

144.       Regulated acts

145.       Fraudulently inducing a person to engage in a regulated act—criminal liability


TABLE OF PROVISIONS—continued

Section

146.       Misleading conduct in connection with a regulated act—civil liability

147.       Misleading conduct by trustees of entities—civil liability

148.       Civil liability where section 146 or 147 contravened

149.       Contravention of Part does not affect validity of issue of superannuation interest etc.

PART 19—PUBLIC OFFER ENTITIES—PROVISIONS RELATING TO SUPERANNUATION INTERESTS AND DISCLOSURE OF INFORMATION

Division 1Preliminary

150.       Object of Part

151.       Contravention of Part does not affect validity of issue of superannuation interest etc.

Division 2Issuing, offering etc. superannuation interests in public offer entities

152.       Limitation on issuing, offering etc. superannuation interests in public offer entities

153.       Trustee must not issue interests, or permit persons to become standard employer-sponsors, except pursuant to applications

154.       Commission and brokerage

155.       Fair dealing on issue or redemption of a superannuation interest

156.       Civil liability where subsection 155(2) contravened

Division 3Provisions relating to information given to prospective beneficiaries etc. of public offer entities

Subdivision ACertain information to be given to prospective beneficiaries etc.

157.       Information to be given before superannuation interests issued otherwise than to standard employer-sponsored member

158.       Information to be given before persons become standard employer-sponsors

159.       Regulations and determinations requiring the giving of information

160.       Documents taken to contain information referred to

Subdivision B—Limitations on issuing regulated documents

161.       Regulated documents not to be false or misleading—criminal liability

162.       Regulated documents not to be false or misleading—civil liability

163.       Statements by experts

Division 4Stop orders

164.       Order to stop contracts etc. for issue of superannuation interests in public offer entities

165.       When a stop order is in force

166.       Revocation of stop order

167.       Effect of stop order

Division 5—Application money to be held on trust

168.       Situation to which Division applies—application money received but superannuation interest not issued immediately

169.       Trustee to comply with requirements of the regulations in relation to the money

Division 6Cooling-off—redemption of interests

170.       Situation to which Division applies—superannuation interest issued in certain circumstances


TABLE OF PROVISIONS—continued

Section

171.       Governing rules taken to confer right to have interest redeemed

172.       Consequences of contravening provisions taken to be included in governing rules

PART 20—PUBLIC OFFER ENTITIES—INSIDER TRADING

Division 1Preliminary

173.       Object of Part

174.       Superannuation interest means interest in public offer entity

Division 2Interpretation

175.       Definitions

176.       When information is generally available

177.       When information has a material effect on price or value of superannuation interests

178.       Information in possession of officer of body corporate

Division 3Insider trading rules

179.       When a person contravenes the insider trading rules in relation to superannuation interests

180.       Exception to insider trading rules—Chinese wall arrangements by bodies corporate

181.       Exception to insider trading rules—knowledge of person’s own intentions or activities

182.       Exceptions to insider trading rules—special rules relating to bodies corporate

183.       Exception to insider trading rules—officers or agents of bodies corporate

Division 4Offence of contravening the insider trading rules

184.       Offence of contravening the insider trading rules

Division 5Civil liability for contravention of the insider trading rulesrecovery of loss or damage

185.       Civil liability where plaintiff suffers loss or damage because of a contravention of the insider trading rules

Division 6Civil liability for contravention of the insider trading rulesrecovery of price differential

186.       Civil liability—trustee may recover price differential

187.       Commissioner may bring an action in the name of a trustee

188.       Special defence where information made known in a certain manner

189.       Amounts recovered to be held on trust for certain interest-holders

190.       Offset of amounts recovered in other proceedings

Division 7—Special powers of Court to make orders in cases of contravention of the insider trading rules

191.       Special powers of Court

PART 21—CIVIL AND CRIMINAL CONSEQUENCES OF CONTRAVENING CIVIL PENALTY PROVISIONS

Division 1Preliminary

192.       Object of Part


TABLE OF PROVISIONS—continued

Section

193.       Civil penalty provisions

194.       Person involved in contravening a provision taken to have contravened the provision

195.       When a court is taken to find a person guilty of an offence

Division 2Civil penalty orders

196.       Court may make civil penalty orders

197.       Who may apply for civil penalty order

198.       Time limit for application

199.       Application for civil penalty order is a civil proceeding

200.       Enforcement of order to pay monetary penalty

201.       Commissioner may require a person to give assistance in connection with application for civil penalty order

Division 3Criminal proceedings

202.       When contravention of civil penalty provisions is an offence

203.       Application for civil penalty order precludes later criminal proceedings

Division 4Effect of criminal proceedings on application for civil penalty order

204.       When Division applies

205.       Effect during criminal proceedings

206.       Final outcome precluding applications for civil penalty order

207.       Final outcome not precluding application for civil penalty order

208.       After unsuccessful committal proceeding, court may preclude application for civil penalty order

209.       Application for civil penalty order based on alternative verdict at jury trial

210.       Application for civil penalty order based on alternative finding by court of summary jurisdiction

211.       Application for civil penalty order based on alternative finding by appeal court

212.       After setting aside declaration, court may preclude application for civil penalty order

213.       On unsuccessful appeal against declaration, Court may make civil penalty orders

214.       Appeals under this Division

Division 5Compensation for loss suffered by superannuation entity

215.       On application for civil penalty order, Court may order compensation

216.       Criminal court may order compensation

217.       Enforcement of order under section 215 or 216

218.       Recovery of profits, and compensation for loss, resulting from contravention

219.       Effect of sections 215, 216 and 218

220.       Certificates evidencing contravention

Division 6Miscellaneous

221.       Relief from liability for contravention of civil penalty provision

222.       Part does not limit power to award punitive damages

PART 22—UNCLAIMED MONEY

223.       Object of Part

224.       Definition of “fund”

225.       Trustee to pay unclaimed money to the Commissioner

226.       Register of unclaimed money


TABLE OF PROVISIONS—continued

Section

PART 23—FINANCIAL ASSISTANCE TO CERTAIN FUNDS

Division 1Preliminary

227.       Object of Part

228.       Interpretation

229.       Application for assistance

230.       Minister may request additional information

Division 2Determination of applications for financial assistance

231.       Minister may grant financial assistance

232.       Maximum amount of financial assistance

233.       Financial assistance to be subject to conditions

Division 3How financial assistance is to be paid

234.       Superannuation Protection Account

235.       Minister to decide the source from which financial assistance is to be paid

236.       Purposes of Account

237.       Separate notional accounts to be kept within the Account

238.       Financial assistance to be repaid in certain circumstances

239.       Minister may remit liability

240.       Repayable grant to have priority over other debts

PART 24—ROLLOVER OF CERTAIN BENEFITS BETWEEN FUNDS

241.       Object of Part

242.       Interpretation

243.       Declaration of eligible funds

244.       Rollover of benefits from superannuation fund

245.       Trustee to give information to eligible rollover fund

246.       Reports to include reports sent before commencement of Part

247.       Notice to members and beneficiaries of circumstances in which benefits may be rolled-over

248.       What happens if benefits are below minimum amount

249.       Trustee of eligible rollover fund to notify Commissioner of receipt of payments

250.       Register of rolled-over benefits

251.       Rights of beneficiary to rolled-over benefits

252.       Claims to rolled-over benefits

PART 25—MONITORING AND INVESTIGATING SUPERANNUATION ENTITIES

Division 1Objects of Part

253.       Objects of Part

Division 2Monitoring superannuation entities

254.       Information to be given to Commissioner

255.       Commissioner may require production of books

256.       Access to premises

Division 3Commissioner may require trustee of superannuation entity to appoint an individual, or a committee, to investigate the financial position of the entity

257.       Investigation of financial position of superannuation entity

258.       Qualifications of investigator or investigators

259.       Commissioner may veto appointment of investigator or investigators


TABLE OF PROVISIONS—continued

Section

260.       Deadline for receipt of report

261.       Contents of report etc.

262.       Trustee must comply with this Division

Division 4Investigations by Commissioner

263.       Investigation of superannuation entity

264.       Power of Commissioner to obtain information or freeze assets

265.       Inspectors

266.       Delegation by inspector

267.       Commissioner may exercise powers of inspector

268.       Inspector may enter premises for purposes of an investigation

269.       Inspector may require production of books

270.       Powers of inspector to require assistance from, and examine, relevant persons

271.       Application for warrant to seize books not produced

272.       Grant of warrant

273.       Powers if books produced or seized

274.       Powers if books not produced

275.       Power to require person to identify property of superannuation entity

Division 5Examinations

276.       Application of Division

277.       Requirements made of an examinee

278.       Examination to be in private

279.       Examinee’s lawyer may attend

280.       Record of examination

281.       Giving copies of record to other persons

282.       Copies given subject to conditions

283.       Record to accompany report

Division 6Reports

284.       Report of inspector

Division 7Offences

285.       Persons to comply with requirements made under this Act

286.       Concealing books relevant to investigation

287.       Self-incrimination

288.       Legal professional privilege

289.       Powers of Court where non-compliance with this Act

Division 8Evidentiary use of certain material

290.       Statements made at an examination: proceedings against examinee

291.       Statements made at an examination: other proceedings

292.       Weight of evidence admitted under section 291

293.       Objection to admission of statements made at examination

294.       Copies of, or extracts from, certain books

295.       Report under Division 6

296.       Exceptions to admissibility of report

297.       Material otherwise admissible


TABLE OF PROVISIONS—continued

Section

Division 9Miscellaneous

298.       Commissioner may cause civil proceeding to be begun

299.       Person complying with requirement not to incur liability to another person

PART 26—OFFENCES RELATING TO STATEMENTS, RECORDS ETC.

300.       Object of Part

301.       Interpretation

302.       False or misleading statements

303.       Incorrectly keeping records etc.

304.       Recklessly making false or misleading statements

305.       Intentionally making false or misleading statements

306.       Intentionally or recklessly incorrectly keeping records etc.

307.       Incorrectly keeping records with intention of deceiving or misleading etc.

308.       Falsifying or concealing identity with intention of deceiving or misleading etc.

PART 27—POWERS OF COURT

309.       Object of Part

310.       Power to grant relief

311.       Power of Court to give directions with respect to meetings ordered by the Court

312.       Irregularities

313.       Power of Court to prohibit payment or transfer of money or property

314.       Court may order the disclosure of information or the publication of advertisements—contravention of provisions relating to issue of superannuation interests etc.

315.       Injunctions

316.       Effect of sections 313, 314 and 315

317.       Power of Court to punish for contempt of court

318.       Court may resolve transitional difficulties

PART 28—PROCEEDINGS

319.       Object of Part

320.       Power of Commissioner to intervene in proceedings

321.       Civil proceedings not to be stayed

322.       Standard of proof

323.       Relief from civil liability for contravention of certain provisions

324.       Evidence of contravention

325.       Vesting of property

PART 29—EXEMPTIONS AND MODIFICATIONS

326.       Object of Part

327.       Interpretation

328.       Commissioner’s powers of exemption—modifiable provisions

329.       Commissioner’s powers of exemption—temporarily modifiable provisions

330.       Commissioner’s powers of exemption—general issues

331.       Enforcement of conditions to which exemption is subject

332.       Commissioner’s powers of modification—modifiable provisions

333.       Commissioner’s powers of modification—temporarily modifiable provisions

334.       Commissioner’s powers of modification—general issues

335.       Revocation of exemptions and modifications

336.       Publication of exemptions and modifications etc.


TABLE OF PROVISIONS—continued

Section

PART 30—MISCELLANEOUS

337.       Object of Part

338.       Conduct by directors, servants and agents

339.       Conviction does not relieve defendant from civil liability

340.       Liability for damages

341.       Civil immunity where defendant was complying with this Act

342.       Pre-1 July 88 funding credits and debits

343.       Rules against perpetuities not to apply to superannuation entity

344.       Review of certain decisions

345.       Statements to accompany notification of decisions

346.       Secrecy

347.       How information may be given to the Commissioner of Taxation

348.       Commissioner may publish statistical information

349.       This Act and the regulations have effect subject to the Crimes (Superannuation Benefits) Act 1989

350.       Concurrent operation of State/Territory laws

351.       Delegation

352.       Annual reports

353.       Regulations

PART 31—TRANSITION TO SCHEME PROVIDED FOR IN THIS ACT

Division 1Object of Part

354.       Object of Part

Division 2Entities that have a management company and a trustee

Subdivision AGeneral

355.       Entity to which Division applies

356.       Interpretation

Subdivision BExisting management company may retire

357.       Existing management company may give notice of retirement

358.       Effect of notice under section 357

359.       Action to be taken by existing trustee on receipt of notice under section 357

360.       Commissioner to appoint new trustee if receives notice under subsection 359(2)

361.       Effect of notice under subsection 359(2)

362.       What happens if existing trustee fails to give a notice under subsection 359(2) or (3)

Subdivision CExisting trustee may retire

363.       Existing trustee may give notice of retirement

364.       Action to be taken by existing management company on receipt of notice under section 363

365.       Commissioner to appoint new trustee

366.       Effect of notice under section 363 on trustee

367.       Effect of notice under section 363 on management company

368.       Notices under sections 363 and 364 have no effect except as provided in this Division

369.       What happens if existing management company fails to give a notice under subsection 364(2) or (3)


TABLE OF PROVISIONS—continued

Section

Subdivision DWhat happens if existing management company or existing trustee stops holding office otherwise than under this Division

370.       Existing management company ceases to hold office first

371.       Existing trustee ceases to hold office first

372.       Existing trustee cannot cease to hold office at same time as existing management company

Subdivision ESpecial provisions in relation to the transitional period

373.       Interpretation

374.       Existing trustee taken to be an approved trustee

375.       Application of section 153 during the transitional period

376.       Regulations may modify application of Act and apply provisions of the Corporations Law etc.

Subdivision F—Miscellaneous

377.       New trustee to notify appointment to members

378.       Civil immunity for actions under Division

379.       Division has effect despite anything in any other Part of this Act etc.

Division 3Regulations may make other transitional provisions

380.       Regulations may make other transitional provisions

PART 32—ADDITIONAL TRANSITIONAL PROVISIONS—TAX FILE NUMBERS

381.       Object of Part

382.       Quotation of tax file number

383.       Pre-1 July 1994 quotation of tax file number to be treated as if made under provisions commencing on 1 July 1994

384.       Pre-1 July 1994 quotation of tax file number—request for quotation, or recording, of number not prohibited by the Taxation Administration Act 1953

385.       Pre-1 July 1994 quotation of tax file number—objects of tax file number system


Superannuation Industry
(Supervision) Act 1993

No. 78 of 1993

 

An Act to make provision for the supervision of certain
entities engaged in the superannuation industry,
and for related purposes

[Assented to 30 November 1993]

The Parliament of Australia enacts:

PART 1—PRELIMINARY

Division 1Preliminary

Short title

1.    This Act may be cited as the Superannuation Industry (Supervision) Act 1993.

Commencement

2.(1) Subject to this section, Parts 1, 2, 21, 27, 28, 29, 30, 31 and 32 commence on the day on which this Act receives the Royal Assent.


(2)  Part 1 (in so far as it relates to section 117) and section 117 are taken to have commenced on 21 October 1992.

(3)  Parts 18, 19, 20, 22, 23 and 24 and section 342 commence on 1 July 1994.

(4)  The remaining provisions commence on 1 December 1993, but do not apply to a fund, scheme or trust in relation to a year of income of the fund, scheme or trust earlier than the 1994-95 year of income.

Object of Act

Supervision of certain superannuation entities

3.(1)           The object of this Act is to make provision 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.

Basis for supervision

(2)  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.

Whole industry not covered

(3)  The Act does not regulate other entities engaged in the superannuation industry.

Summary of provisions

4.    The Act contains provisions dealing with the following matters:

Part No.

Matter dealt with

1

interpretation

2

approval of trustees

3

operating standards for funds and trusts

4

lodgment of annual returns by trustees of superannuation entities

5

notices about complying fund status

6

governing rules of funds and trusts

7

rules applying only to regulated superannuation funds

8

in-house asset rules applying to regulated superannuation funds


 

Part No.

Matter dealt with

9

equal representation of employers and members in relation to employer-sponsored funds

10

rules applying only to approved deposit funds

11

rules applying only to pooled superannuation trusts

12

statutory duties of trustees of superannuation entities

13

accounts of superannuation entities

14

other provisions relating to funds and trusts

15

standards for trustees, custodians and investment managers of superannuation entities

16

actuaries and auditors of superannuation entities

17

suspension or removal of trustees of superannuation entities

18

false and misleading conduct in relation to superannuation interests

19

rules about dealing with superannuation interests in public offer entities and about the disclosure of information about such entities

20

rules relating to insider trading of superannuation interests in public offer entities

21

civil and criminal consequences of serious breaches of the Act

22

how funds are to deal with unclaimed money

23

financial assistance to funds that suffer loss as a result of fraud or theft

24

rollover of benefits to certain funds when beneficiaries cannot be located

25

monitoring and investigating superannuation entities

26

offences relating to statements and records

27

powers of courts

28

judicial and other proceedings under the Act

29

exemption and modification provisions

30

miscellaneous provisions

31

transition to scheme provided for in the Act

32

additional transitional provisions relating to tax file numbers


Outline of key concepts

Entities

5.(1)         The following superannuation entities are involved:

Complying superannuation fund

(2)  The complying superannuation fund requirements may be summarised as follows:


Complying approved deposit fund

(3)  The complying approved deposit fund requirements may be summarised as follows:

Pooled superannuation trust

(4)  The pooled superannuation trust requirements may be summarised as follows:


General administration of Act

6.(1) Subject to subsection (2), the Commissioner has the general administration of this Act.

(2)  The Minister may give directions to the Commissioner about the performance or exercise of the Commissioner’s functions or powers under this Act.

Application of Act not to be excluded or modified

7.  This Act applies to a superannuation entity despite any provision in the governing rules of the entity, including any provision that purports to substitute, or has the effect of substituting, the provisions of the law of a State or Territory or of a foreign country for all or any of the provisions of this Act.

Act extends to external Territories

8.  This Act extends to all the external Territories.

Crown to be bound

9.(1) This Act binds the Crown in all its capacities.

(2)  The Crown is not liable to be prosecuted for an offence against, or arising out of, this Act.

Division 2Interpretation

Definitions

10.  In this Act, unless the contrary intention appears:

“actuary” means a person who is a Fellow or an Accredited Member of the Institute of Actuaries of Australia;

“adopted child”, in relation to a person, means a person adopted by the first-mentioned person:

(a)  under the law of a State or Territory relating to the adoption of children; or

(b)  under the law of any other place relating to the adoption of children, if the validity of the adoption would be recognised under the law of any State or Territory;

“amend”, in relation to the governing rules of a superannuation entity, includes the insertion of a provision in, or the omission of a provision from, those rules;

“annuity” includes a benefit provided by a life insurance company or a registered organisation, if the benefit is taken, under the regulations, to be an annuity for the purposes of this Act;

“approved auditor” means a person included in a class of persons specified in regulations made for the purposes of this definition, but does not include a person in respect of whom a disqualification order is in force under section 131;


“approved bank” means:

(a)  a body corporate authorised under Part II of the Banking Act 1959 to carry on banking business in Australia; or

(b)  the Commonwealth Bank of Australia, the Commonwealth Savings Bank of Australia or the Commonwealth Development Bank of Australia; or

(c)  a State bank;

“approved deposit fund” means a fund that:

(a)  is an indefinitely continuing fund; and

(b)  is maintained by an approved trustee solely for approved purposes; and

(c)  has approved rules;

“approved form” means a form approved by the Commissioner, in writing, for the purposes of the provision in which the expression appears;

“approved guarantee” means a guarantee given by an approved bank or given by or on behalf of the Commonwealth, a State or a Territory;

“approved purposes”, in relation to a fund, means the purposes of:

(a)  receiving on deposit:

(i)  amounts that will be taken by section 27D of the Income Tax Assessment Act to have been expended out of eligible termination payments within the meaning of that section; and

(ii)    amounts paid under Part 24; and

(b)  dealing with such amounts, in accordance with the rules of the fund, in any way calculated directly or indirectly to enhance the value of, or render profitable, property of the fund; and

(c)  subject to any contrary requirement in the standards from time to time applicable to the fund under section 32, paying in accordance with the covenant referred to in section 53 to beneficiaries, or to the legal personal representatives of beneficiaries, amounts deposited with the fund together with accumulated earnings on those amounts;

“approved rules”, in relation to a fund, means governing rules of the fund that include all the kinds of provisions specified in regulations made for the purposes of this definition;

“approved trustee” means a constitutional corporation in relation to which an approval under section 26 is in force;

“associate” has the meaning given by section 12;

“Australian court” means:

(a)   the High Court; or

(b)  a court created by the Parliament; or

(c)   a court of a State or Territory;


“authorised person” means an officer of the Australian Public Service authorised by the Commissioner, in writing, for the purposes of the provision in which the expression appears;

“beneficiary”, in relation to a fund, scheme or trust, means a person (whether described in the governing rules as a member, a depositor or otherwise) who has a beneficial interest in the fund, scheme or trust and includes, in relation to a superannuation fund, a member of the fund despite the express references in this Act to members of such funds;

“books” includes:

(a)   any record; or

(b)  any accounts or accounting records, however compiled, recorded or stored; or

(c)   a document;

“business day” means a day that is not a Saturday, a Sunday or a public holiday in the place concerned;

“child”, in relation to a person, includes an adopted child, a step-child or an ex-nuptial child of the person;

“civil penalty order” means a declaration or order made under section 196;

“civil penalty provision” has the meaning given by section 193;

“Commissioner” means the Insurance and Superannuation Commissioner appointed under the Insurance and Superannuation Commissioner Act 1987, or a person for the time being acting as Insurance and Superannuation Commissioner under that Act;

“constitutional corporation” means a body corporate that is:

(a)  a trading corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution); or

(b)  a financial corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution);

“corporate trustee”, in relation to a fund, scheme or trust, means a body corporate that is a trustee of the fund, scheme or trust;

“Corporations Law” means the Corporations Law set out in the Corporations Act 1989;

“court” means any court, when exercising jurisdiction under this Act;

“Court” means the Federal Court of Australia or the Supreme Court of a State or a Territory;

“custodian”, in relation to a superannuation entity, means a person (other than the trustee of the entity) who, under a contract with the trustee or an investment manager of the entity, performs custodial functions in relation to any of the assets of the entity;


“data processing device” means any article or material (for example, a disc) from which information is capable of being reproduced with or without the aid of any other article or device;

“deed” includes an instrument having the effect of a deed;

“dependant”, in relation to a person, includes the spouse and any child of the person;

“director”, in relation to a body corporate, has the same meaning as in the Corporations Law;

“disclose”, in relation to information, means give, reveal or communicate in any way;

“eligibility age”, in relation to an age pension, means:

(a)  in the case of a man—65 years or, if another age is prescribed by the regulations in place of 65 years, the age so prescribed; or

(b)  in the case of a woman—60 years or, if another age is prescribed by the regulations in place of 60 years, the age so prescribed;

“employee” has the same meaning as in the Superannuation Guarantee (Administration) Act 1992 (for the purposes of this definition, the Superannuation Guarantee (Administration) Act 1992 has effect as if subsection 12(11) of that Act had not been enacted);

“employer” has the same meaning as in the Superannuation Guarantee (Administration) Act 1992 (for the purposes of this definition, the Superannuation Guarantee (Administration) Act 1992 has effect as if subsection 12(11) of that Act had not been enacted);

“employer representative”, in relation to a group of trustees of a fund, a policy committee of a fund or the board of directors of a corporate trustee of a fund, means a member of the group, committee or board, as the case may be, nominated by:

(a)   the employer or employers of the members of the fund; or

(b)  an organisation representing the interests of that employer or those employers;

“employer-sponsor” has the meaning given by subsection 16(1);

“employer-sponsored fund” has the meaning given by subsection 16(3);

“excluded approved deposit fund” means an approved deposit fund:

(a)  in which there is only one beneficiary; and

(b)  that satisfies such other conditions (if any) as are specified in the regulations;

“excluded fund” means an excluded superannuation fund or an excluded approved deposit fund;

“excluded superannuation fund” means a superannuation fund of which there are fewer than 5 members;


“executive officer”, in relation to a body corporate, means a person, by whatever name called and whether or not a director of the body, who is concerned, or takes part, in the management of the body;

“exempt public sector superannuation scheme” means a public sector superannuation scheme that is specified in regulations made for the purposes of this definition;

“expert”, in relation to a matter, means a person whose profession or reputation gives authority to a statement made by him or her in relation to that matter;

“function” includes duty;

“governing rules”, in relation to a fund, scheme or trust, means any trust instrument, other document or legislation, or combination of them, governing the establishment and operation of the fund, scheme or trust;

“group of trustees”, in relation to a fund, scheme or trust, means a board, committee or other group of trustees of the fund, scheme or trust;

“half-year” means a period of 6 months ending on 30 June or 31 December;

“Income Tax Assessment Act” means the Income Tax Assessment Act 1936;

“independent director”, in relation to a corporate trustee of a fund, means a director of the corporate trustee who:

(a)  is not a member of the fund; and

(b)  is neither an employer-sponsor of the fund nor an associate of such an employer-sponsor; and

(c)  is neither an employee of an employer-sponsor of the fund nor an employee of an associate of such an employer-sponsor; and

(d)  is not, in any capacity, a representative of a trade union, or other organisation, representing the interests of one or more members of the fund; and

(e)  is not, in any capacity, a representative of an organisation representing the interests of one or more employer-sponsors of the fund;

“independent trustee”, in relation to a fund, means a trustee of the fund who:

(a)   is not a member of the fund; and

(b)  is neither an employer-sponsor of the fund nor an associate of such an employer-sponsor; and

(c)   is neither an employee of an employer-sponsor of the fund nor an employee of an associate of such an employer-sponsor; and

(d)  is not, in any capacity, a representative of a trade union, or other organisation, representing the interests of one or more members of the fund; and


(e)  is not, in any capacity, a representative of an organisation representing the interests of one or more employer-sponsors of the fund;

“individual trustee”, in relation to a fund, scheme or trust, means an individual who is a trustee of the fund, scheme or trust;

“insolvent under administration” means a person who:

(a)   under the Bankruptcy Act 1966 or the law of an external Territory, is a bankrupt in respect of a bankruptcy from which the person has not been discharged; or

(b)  under the law of a country other than Australia or the law of an external Territory, has the status of an undischarged bankrupt;

and includes:

(c)   a person any of whose property is subject to control under:

(i)    section 50 or 188 of the Bankruptcy Act 1966; or

(ii)   a corresponding provision of the law of an external Territory or the law of a foreign country; or

(d)  a person who has, at any time during the preceding 3 years, executed a deed of assignment or a deed of arrangement under:

(i)    Part X of the Bankruptcy Act 1966; or

(ii)   the corresponding provisions of the law of an external Territory or the law of a foreign country; or

(e)   a person whose creditors have, within the preceding 3 years, accepted a composition under:

(i)    Part X of the Bankruptcy Act 1966; or

(ii)  the corresponding provisions of the law of an external Territory or the law of a foreign country;

“inspector” has the meaning given by section 265;

“investment” means any mode of application of money for the purpose of gaining interest, income or profit;

“investment manager” means a person appointed by the trustee of a fund or trust to invest money of the fund or trust;

“involved”, in relation to a contravention, has the meaning given by section 17;

“lawyer” means a duly qualified legal practitioner and, in relation to a person, means such a practitioner acting for the person;

“legal personal representative” means the executor of the will or administrator of the estate of a deceased person, the trustee of the estate of a person under a legal disability or a person who holds an enduring power of attorney granted by a person;

“life insurance company” means:


(a)  a company registered under section 19 of the Life Insurance Act 1945; or

(b)  a public authority constituted by a law of a State or Territory, being an authority that carries on life insurance business within the meaning of subsection 4(1) of that Act;

“lodge” means lodge with the Commissioner;

“market value”, in relation to an asset, means the amount that a willing buyer of the asset could reasonably be expected to pay to acquire the asset from a willing seller if the following assumptions were made:

(a)   that the buyer and the seller dealt with each other at arm’s length in relation to the sale;

(b)  that the sale occurred after proper marketing of the asset;

(c)   that the buyer and the seller acted knowledgeably and prudentially in relation to the sale;

“member representative”, in relation to a group of trustees of a fund, a policy committee of a fund or the board of directors of a corporate trustee of a fund, means a member of the group, committee or board, as the case may be, nominated by:

(a)   the members of the fund; or

(b)  a trade union, or other organisation, representing the interests of those members;

“modifications” includes additions, omissions and substitutions;

“occurrence of an event” includes the coming into existence of a state of affairs;

“old-age pensions” has the same meaning as in paragraph 51(xxiii) of the Constitution;

“pension”, except in the expression “old-age pension”, includes a benefit provided by a fund, if the benefit is taken, under the regulations, to be a pension for the purposes of this Act;

“policy committee”, in relation to a regulated superannuation fund, means a board, committee or other body that:

(a)  advises the trustee of the fund about such matters as are specified in the regulations; and

(b)  is established by or under the governing rules of the fund;

“pooled superannuation trust” means a unit trust:

(a)   the trustee of which is a constitutional corporation; and

(b)  that, under the regulations, is a unit trust to which this definition applies;

“premises” includes:

(a)   a structure, building, aircraft, vehicle or vessel; and

(b)   any land or place (whether enclosed or built on or not); and


(c)  a part of a structure, building, aircraft, vehicle or vessel or of such a place;

“private sector fund” means a superannuation fund other than a public sector fund;

“procure” includes cause;

“produce” includes permit access to;

“protected document” means a document given or produced under or for the purposes of this Act, being a document containing information relating to the affairs of any fund or trust;

“protected information” means information disclosed or obtained under or for the purposes of this Act, being information relating to the affairs of any fund or trust;

“public offer entity” means:

(a)  a public offer superannuation fund; or

(b)  an approved deposit fund that is not an excluded approved deposit fund; or

(c)  a pooled superannuation trust;

“public offer superannuation fund” has the meaning given by section 18;

“public sector fund” means a superannuation fund that is part of a public sector superannuation scheme;

“public sector superannuation scheme” means a scheme for the payment of superannuation, retirement or death benefits, where the scheme is established:

(a)  by or under a law of the Commonwealth or of a State or Territory; or

(b)  under the authority of:

(i)    the Commonwealth or the government of a State or Territory; or

(ii)  a municipal corporation, another local governing body or a public authority constituted by or under a law of the Commonwealth or of a State or Territory;

“rectify”, in relation to a contravention of this Act or the regulations that has occurred in relation to a superannuation entity, includes put in operation managerial or administrative arrangements that could reasonably be expected to ensure that there are no further contraventions of a similar kind;

“redeem”, in relation to an interest in an approved deposit fund, includes pay an amount equal to the interest pursuant to a covenant of a kind referred to in section 53 that is contained, or taken to be contained, in the governing rules of the fund;

“registered organisation” means:

(a)  an association registered under a law of a State or Territory as a trade union; or


(b)  a society registered under a law of a State or Territory providing for the registration of friendly or benefit societies; or

(c)   an association of employees that is registered as an organisation under the Industrial Relations Act 1988;

“regulated document”, in relation to a public offer entity, means a document:

(a)   issued, or authorised to be issued, by the trustee of the entity; and

(b)  that the trustee knows, or ought reasonably to know (having regard to the trustee’s abilities, experience, qualifications and other attributes), may influence a person’s decision:

(i)   whether to apply to have a superannuation interest in the entity issued to a person; or

(ii)  whether to apply to become a standard employer-sponsor of the entity;

“regulated superannuation fund” has the meaning given by section 19;

“related”, in relation to bodies corporate, has the meaning given by section 20;

“relevant person”, in relation to a fund or trust, means:

(a)  if the trustee or an investment manager of the fund or trust is or includes an individual—that individual; or

(b)  if the trustee or an investment manager of the fund or trust is or includes a body corporate—a responsible officer of that body corporate; or

(c)  an auditor of the fund or trust; or

(d)  an actuary of the fund or trust;

“responsible officer”, in relation to a body corporate, means:

(a)   a director of the body; or

(b)  a secretary of the body; or

(c)  an executive officer of the body;

“reviewable decision” means:

(a)  a decision of the Commissioner under subsection 18(5) or (6) to make a declaration; or

(b)  a decision of the Commissioner under subsection 18(9) to revoke a declaration; or

(c)  a decision of the Commissioner under subsection 26(2) refusing an application for approval; or

(d)  a decision of the Commissioner under subsection 26(3) to specify conditions in an instrument of approval; or

(e)  a decision of the Commissioner to give a notice under section 40; or


(f)   a decision of the Commissioner refusing to give a notice under section 40; or

(g)   a decision of the Commissioner to give a direction under section 63; or

(h)  a decision of the Commissioner refusing to revoke a direction under section 63; or

(i)  a decision of the Commissioner refusing to make a determination under paragraph 71(1)(e); or

(j)  a decision of the Commissioner to revoke a determination under paragraph 71(1)(e); or

(k)  a decision of the Commissioner to make a determination under subsection 71(4); or

(l)  a decision of the Commissioner refusing to revoke a determination under subsection 71(4); or

(m)  a decision of the Commissioner under section 92 refusing to grant an approval; or

(n)  a decision of the Commissioner refusing to revoke an approval under section 92; or

(o)  a decision of the Commissioner under subsection 95(2) refusing to approve a borrowing; or

(p)  a decision of the Commissioner under subsection 117(6) refusing to waive a requirement; or

(q)   a decision of the Commissioner under subparagraph 123(2)(b)(ii) or (3)(c)(ii); or

(r)   a decision of the Commissioner under subparagraph 126(2)(b)(ii) or (4)(c)(ii); or

(s)  a decision of the Commissioner to make a disqualification order under section 131; or

(t)  a decision of the Commissioner refusing to revoke a disqualification order under section 131; or

(u) a decision of the Commissioner under section 141; or

(v)  a decision of the Commissioner under section 164 to make a stop order; or

(w)  a decision of the Commissioner under section 166 to revoke a stop order; or

(x)  a decision of the Commissioner to bring an action under section 187; or

(y)  a decision of the Commissioner refusing to make a declaration under section 243; or

(z)  a decision of the Commissioner under section 328 to make an exemption; or


(za)  a decision of the Commissioner under section 329 to make an exemption; or

(zb)  a decision of the Commissioner under section 332 to make a declaration; or

(zc)  a decision of the Commissioner under section 333 to make a declaration; or

(zd)  a decision of the Commissioner under section 335 to revoke an exemption or declaration; or

(ze)  a decision of the Commissioner refusing to give a notice under subsection 342(2) in relation to a fund; or

(zf)   a decision of the Commissioner to give a notice under subsection 342(6) in relation to a fund;

“spouse”, in relation to a person, includes another person who, although not legally married to the person, lives with the person on a genuine domestic basis as the husband or wife of the person;

“standard employer-sponsor” has the meaning given by subsection 16(2);

“standard employer-sponsored fund” has the meaning given by subsection 16(4);

“standard employer-sponsored member” has the meaning given by subsection 16(5);

“statement”, in Parts 18 and 19, includes a promise, estimate or forecast;

“stop order” means an order under section 164;

“Superannuation Complaints Tribunal” means the Superannuation Complaints Tribunal established by the Superannuation (Resolution of Complaints) Act 1993;

“superannuation entity” means:

(a)   a regulated superannuation fund; or

(b)  an approved deposit fund; or

(c)   a pooled superannuation trust;

“superannuation entity affected by a reviewable decision”, in relation to a reviewable decision, means the superannuation entity in relation to which the decision was made;

“superannuation fund” means:

(a)   a fund that:

(i)    is an indefinitely continuing fund; and

(ii)   is a provident, benefit, superannuation or retirement fund; or

(b)  a public sector superannuation scheme;

“superannuation interest” means a beneficial interest in a superannuation entity;


“superannuation standards officer” means a person who is or has been appointed or employed by the Commonwealth and who, because of that appointment or employment, or in the course of that employment:

(a)  may acquire, or has acquired, protected information; or

(b)  may have, or has had, access to protected documents;

and includes a person who is or has been an inspector;

“taxation officer” means a person who is an officer for the purposes of section 16 of the Income Tax Assessment Act;

“trustee”, in relation to a fund, scheme or trust, means:

(a)  if there is a trustee (within the ordinary meaning of that expression) of the fund, scheme or trust—the trustee; or

(b)  in any other case—the person who manages the fund, scheme or trust;

“unclaimed money” has the meaning given by subsection 225(1);

“unit trust” has the same meaning as in Part IX of the Income Tax Assessment Act;

“value” means market value, and includes amount;

“year of income”, in relation to a fund, scheme or trust, means a period that is, for the purposes of the Income Tax Assessment Act, a year of income of the fund scheme, or trust (subsection 6(2A) of that Act applies accordingly).

Approvals, determinations etc. by Commissioner

11. If:

(a)   a provision of this Act refers to an approval given, determination made or other act or thing done by the Commissioner; and

(b)  there is no other provision of this Act expressly authorising the Commissioner to give the approval, make the determination or do the act or thing;

the Commissioner is authorised to give the approval, make the determination or do the act or thing.

Associates

12.(1)         The question whether a person is an associate of another person for the purposes of this Act is to be determined in the same way as that question would be determined under the Corporations Law if the assumptions set out in subsection (2) were made.

(2)  The assumptions are as follows:

(a)   that sections 12 and 14 and paragraphs 15(1)(b) and 16(1)(b) and (c) of the Corporations Law had not been enacted;

(b)  that section 13 of the Corporations Law were not limited to Chapter 7, but extended to all provisions of the Corporations Law.

Single trustees and groups of trustees

13. For the purposes of this Act:


(a)   a fund, scheme or trust has a single corporate trustee if, and only if, there is only one trustee of the fund, scheme or trust and that trustee is a corporate trustee; and

(b)  a fund, scheme or trust has a single individual trustee if, and only if, there is only one trustee of the fund, scheme or trust and that trustee is an individual trustee; and

(c)   a fund, scheme or trust has a group of 2 or more individual trustees if, and only if, the fund, scheme or trust has 2 or more trustees and each trustee is an individual.

Indefinitely continuing fund—application of rules against perpetuities

14.  If the governing rules of a fund contain a provision the purpose of which is to avoid a breach of a rule of law relating to perpetuities, that provision does not prevent the fund from being treated as an indefinitely continuing fund for the purposes of the definition of “approved deposit fund” or “superannuation fund” in section 10.

Payments for purchase of annuities

15.(1) For the purposes of paragraph (c) of the definition of “approved purposes” in section 10, if:

(a)   an amount is deposited with an approved deposit fund; and

(b)  on the request of a beneficiary, the amount is paid by the fund to a life insurance company or registered organisation for the purchase of an annuity in the name of the beneficiary;

the amount is taken to be a repayment by the fund of the amount concerned to the beneficiary on request.

(2)  A reference in subsection (1) to a beneficiary includes a reference to the legal personal representative of a beneficiary.

Definitions associated with employer-sponsorship

Employer-sponsor

16.(1) An employer-sponsor of a regulated superannuation fund is an employer who:

(a)  contributes to the fund; or

(b)  would, apart from a temporary cessation of contributions, contribute to the fund;

for the benefit of:

(c)  a member of the fund who is an employee of:

(i)     the employer; or

(ii)    an associate of the employer; or

(d)  the dependants of such a member in the event of the death of the member.


Standard employer-sponsor

(2)  If an employer so contributes, or would contribute, wholly or partly pursuant to an arrangement between the employer and the trustee of the regulated superannuation fund concerned, the employer is a standard employer-sponsor of the fund (as well as being an employer-sponsor of the fund). If the employer only so contributes, or would contribute, pursuant to arrangements between the employer and a member or members of the fund, the employer is not a standard employer-sponsor.

Employer-sponsored fund

(3)  An employer-sponsored fund is a regulated superannuation fund that has at least one employer-sponsor.

Standard employer-sponsored fund

(4)  If a regulated superannuation fund has at least one standard employer-sponsor, the fund is a standard employer-sponsored fund (as well as being an employer-sponsored fund).

Standard employer-sponsored member

(5)  A standard employer-sponsored member is a member of a regulated superannuation fund in respect of whom an employer-sponsor contributes, or would contribute, as mentioned in subsection (1) wholly or partly pursuant to an arrangement between the employer-sponsor and the trustee of the fund.

Persons involved in contravention

17.  For the purposes of this Act, a person is involved in a contravention if, and only if, the person:

(a)  has aided, abetted, counselled or procured the contravention; or

(b)  has induced, whether by threats or promises or otherwise, the contravention; or

(c)  has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)  has conspired with others to effect the contravention.

Public offer superannuation fund

Definition

18.(1) A superannuation fund is a public offer superannuation fund if:

(a)  one of the following subparagraphs applies to the fund:

(i)  it is a regulated superannuation fund that is not a standard employer-sponsored fund;

(ii)  it is a standard employer-sponsored fund that has at least one member:

(A) who is not a standard employer-sponsored member; and


(B)     who is not a member of a prescribed class;

(iii) it is a standard employer-sponsored fund in relation to which an election under subsection (2) has been made;

(iv)  a declaration under subsection (6) (which allows for funds to be declared to be public offer superannuation funds) is in force in relation to the fund; and

(b)  no declaration under subsection (7) (which allows for funds to be declared not to be public offer superannuation funds) is in force in relation to the fund.

Election to be a public offer superannuation fund

(2)  The trustee of a standard employer-sponsored fund may elect that the fund is to be treated as a public offer superannuation fund.

How an election is made

(3)  An election must be made by giving the Commissioner a written notice that is:

(a)   in the approved form; and

(b)  under the common or official seal of the trustee.

Trustee has power to make election despite anything in the governing rules

(4)  The trustee has the power to make an election despite anything in the governing rules of the fund.

Election is irrevocable

(5)  An election is irrevocable.

Declaration that fund is a public offer superannuation fund

(6)  The Commissioner may, in writing, declare a superannuation fund to be a public offer superannuation fund.

Declaration that fund is not a public offer superannuation fund

(7)  The Commissioner may, in writing, declare a superannuation fund not to be a public offer superannuation fund.

Commencement of declaration

(8)  A declaration comes into force when it is made, or, if a later time is specified in the declaration as the time when it comes into force, it comes into force at that later time.

Cessation of declaration

(9)  A declaration remains in force:

(a)  if a time is specified in the declaration as the time when it stops being in force—until that time, or until the declaration is revoked, whichever occurs first; or


(b)  otherwise—until the declaration is revoked.

Revocation of declaration

(10)  The Commissioner may, in writing, revoke a declaration.

Commissioner must have regard to guidelines when making or revoking a declaration

(11)  When making or revoking a declaration, the Commissioner must have regard to any written guidelines determined by the Commissioner under this subsection.

Copy of declaration or revocation to be given to trustee

(12)  As soon as practicable after making or revoking a declaration, the Commissioner must give the trustee of the superannuation fund concerned a copy of the instrument making or revoking the declaration.

Regulated superannuation fund

Definition

19.(1) A regulated superannuation fund is a superannuation fund in respect of which subsections (2) to (4) have been complied with.

Fund must have a trustee

(2)  The superannuation fund must have a trustee.

Trustee must be a constitutional corporation or fund must be a pension fund

(3)  Either of the following must apply:

(a)   the trustee of the fund must be a constitutional corporation pursuant to a requirement contained in the governing rules;

(b)  the governing rules must provide that the sole or primary purpose of the fund is the provision of old-age pensions.

Election by trustee

(4)  The trustee or trustees must have given to the Commissioner a written notice in the approved form signed by the trustee or each trustee:

(a)  in the case of a corporate trustee—under its common or official seal; or

(b)  in the case of an individual—by him or her;

electing that this Act is to apply in relation to the fund.

Election is irrevocable

(5)  An election made as mentioned in subsection (4) is irrevocable.


Trustee has power to make election despite anything in the governing rules etc.

(6)  The trustee or trustees have the power to make an election as mentioned in subsection (4) despite anything in the governing rules of the fund.

Certain funds must become regulated superannuation funds

(7)  If all of the following conditions are satisfied in relation to a superannuation fund at any time during the period beginning on the day on which this Act received the Royal Assent and ending at the end of the fund’s 1993-94 year of income:

(a)  the fund has a trustee;

(b)  either:

(i)    the trustee of the fund is a constitutional corporation; or

(ii)  the governing rules of the fund provide that the sole or primary purpose of the fund is the provision of old-age pensions;

(c)  the fund is not a public sector superannuation scheme;

(d)  there is in force a notice under section 12 or 13 of the Occupational Superannuation Standards Act 1987 stating that the Commissioner is satisfied that the fund satisfied, or should be treated as if it had satisfied, the superannuation fund conditions in relation to a particular year of income;

(e)  there is not in force a notice under section 12 or 13 of the Occupational Superannuation Standards Act 1987 stating that the Commissioner is not satisfied that the fund satisfied the superannuation fund conditions in relation to a year of income later than the year of income mentioned in paragraph (d);

the trustee of the fund must use its best endeavours to ensure that the fund becomes a regulated superannuation fund at or before the beginning of the fund’s 1994-95 year of income.

Contravention of subsection (7) is not an offence

(8)  A contravention of subsection (7) is not an offence. However, a contravention of subsection (7) is a ground for the grant of an injunction under section 315.

References to repealed provisions of OSSA

(9)  A reference in this section to a provision of the Occupational Superannuation Standards Act 1987 includes a reference to the provision as it continues to apply, despite its repeal, because of the Occupational Superannuation Standards Amendment Act 1993.


Related bodies corporate

20.  The question whether bodies corporate are related to each other for the purposes of this Act is to be determined in the same way as that question would be determined under the Corporations Law.

 

PART 2—APPROVAL OF TRUSTEES

Object of Part

21.(1)         The object of this Part is to provide for constitutional corporations to be approved as trustees for the purposes of this Act.

(2)  The significance of the approval of trustees is as follows:

(a)   a fund cannot be an approved deposit fund unless it is maintained by an approved trustee (the other requirements of the definition of “approved deposit fund” in section 10 must also be satisfied);

(b)  the trustee of a public offer entity must not engage in conduct to which section 152 applies unless the trustee is an approved trustee (the other requirements of subsection 152(2) must also be satisfied).

Interpretation

22.  In this Part:

“relevant entity” means:

(a)   a public offer entity; or

(b)  an approved deposit fund.

Application for approval

23.(1) A constitutional corporation may apply to the Commissioner for an approval as a trustee for the purposes of this Act.

(2)  An application must:

(a)   be in the approved form; and

(b)  contain the information required by the form; and

(c)   be accompanied by an application fee of the prescribed amount.

Further information may be requested

24.  If the Commissioner needs further information to decide an application for approval, the Commissioner may ask the applicant to provide the information.

Period within which application for approval is to be decided

25.(1) Subject to this section, the Commissioner must decide an application for approval within 60 days after receiving it.

(2)  If the Commissioner thinks that it will take longer to decide the application, the Commissioner may extend, by up to 60 days, the period for deciding it.


(3)  An extension must be made by written notice given to the applicant within 60 days after the Commissioner receives the application.

(4)  If the Commissioner makes an extension, the Commissioner must decide the application within the extended period.

(5)  If the Commissioner has not decided the application by the end of the day by which the Commissioner is required to decide it, the Commissioner is taken to have decided, at the end of that day, to refuse the application.

Deciding an application for approval

26.(1) The Commissioner must, in writing, approve an applicant as a trustee for the purposes of this Act if, and only if:

(a)   the Commissioner is satisfied that the applicant can be relied on to perform, in a proper manner, the duties of trustee of any relevant entity of which the applicant is or becomes the trustee; and

(b)  at least one of the following subparagraphs applies:

(i)  the Commissioner is satisfied that the value of the net tangible assets of the applicant is not less than the amount prescribed by the regulations;

(ii)   the Commissioner is satisfied that the applicant is entitled to the benefit of an approved guarantee of an amount not less than the amount prescribed by the regulations, being a guarantee in respect of the applicant’s duties as trustee of each relevant entity of which the applicant is, or is proposing to become, the trustee;

(iii) the applicant has agreed to comply with the written requirements given to the applicant by the Commissioner before the granting of the approval, being requirements relating to the custody of the assets of a relevant entity or relevant entities of which the applicant is or becomes the trustee.

(2)  Otherwise, the Commissioner must, in writing, refuse the application.

(3)  The approval is subject to any conditions specified in the instrument of approval.

(4)  If the Commissioner refuses the application, the Commissioner must set out the reasons for the refusal in the instrument of refusal.

(5)  The Commissioner must cause the applicant to be given a copy of the instrument of approval or refusal.


When an approval is in force

27.  An approval under section 26:

(a)  comes into force when it is granted, or, if a later time is specified in the instrument of approval as the time when the approval comes into force, at that later time; and

(b)  remains in force until it is revoked under section 28.

Revocation of approval

28.(1) The Commissioner may revoke the approval of an approved trustee by written notice given to the trustee.

(2)  Without limiting subsection (1), the Commissioner may revoke an approval under that subsection if the Commissioner is satisfied, on reasonable grounds, that:

(a)   there has been a contravention of any condition to which the approval is subject; or

(b)  the trustee can no longer be relied on to perform, in a proper manner, the duties of trustee of each relevant entity of which the trustee is the trustee; or

(c)   if subparagraph 26(1)(b)(i) applied to the approval of the trustee—that subparagraph has ceased to apply to the trustee; or

(d)  if subparagraph 26(1)(b)(ii) applied to the approval of the trustee—that subparagraph has ceased to apply to the trustee; or

(e)   if subparagraph 26(1)(b)(iii) applied to the approval of the trustee—the trustee has failed to comply with a requirement of the Commissioner under that subparagraph.

(3)  The Commissioner must not make a decision under subsection (1) without the written consent of the Minister.

Notification of change in circumstances or breach of conditions

29.(1) An approved trustee must, as soon as practicable, and in any event within 30 days, after becoming aware of an event referred to in subsection (2), give the Commissioner a written notice setting out particulars of the event.

(2)  These are the events:

(a)   a contravention of a condition to which the approval of the trustee is subject;

(b)  if subparagraph 26(1)(b)(i) applied to the approval of the trustee—that subparagraph ceasing to apply to the trustee;

(c)   if subparagraph 26(1)(b)(ii) applied to the approval of the trustee—that subparagraph ceasing to apply to the trustee;


(d)  if subparagraph 26(1)(b)(iii) applied to the approval of the trustee—the trustee failing to comply with a requirement of the Commissioner under that subparagraph.

(3)  An approved trustee must not, without reasonable excuse, contravene subsection (1).

Penalty: 250 penalty units.

 

PART 3—OPERATING STANDARDS FOR SUPERANNUATION ENTITIES

Object of Part

30.  The object of this Part is to provide for a system of prescribed standards applicable to the operation of regulated superannuation funds, approved deposit funds and pooled superannuation trusts.

Operating standards for regulated superannuation funds

31.(1) The regulations may prescribe standards applicable to the operation of regulated superannuation funds (“funds”).

(2)  The standards that may be prescribed include, but are not limited to, standards relating to the following matters:

(a)  the persons who may contribute to funds;

(b)  the vesting in beneficiaries in funds of benefits arising directly or indirectly from amounts contributed to the funds;

(c)  the amount of contributions that a fund may accept;

(d)  the circumstances in which a fund may accept contributions;

(e)  the form in which benefits may be provided by funds;

(f)   the actuarial standards that will apply to funds;

(g)  the preservation of benefits arising directly or indirectly from amounts contributed to funds;

(h)  the payment by funds of benefits arising directly or indirectly from amounts contributed to the funds;

(i)  the portability of benefits arising directly or indirectly from amounts contributed to funds;

(j)   the levels of benefits that may be provided by funds and the levels of assets that may be held by funds;

(k)  the application by funds of money no longer required to meet payments of benefits to beneficiaries because the beneficiaries have ceased to be entitled to receive those benefits;

(l)   the investment of assets of funds;

(m)  the number of trustees, and the composition of boards or committees of trustees, of funds;


(n)  the keeping and retention of records in relation to funds;

(o)  the financial and actuarial reports to be prepared in relation to funds;

(p)  the disclosure of information to beneficiaries in funds;

(q)  the disclosure of information about funds to the Commissioner;

(r)  the disclosure of information about funds to persons other than beneficiaries or the Commissioner;

(s)  the financial position of funds;

(t)   the funding and solvency of funds;

(u)  the winding-up of funds.

Operating standards for approved deposit funds

32.(1) The regulations may prescribe standards applicable to the operation of approved deposit funds (“funds”).

(2)  The standards that may be prescribed include, but are not limited to, standards relating to the following matters:

(a)   the kinds of amounts that may be deposited with funds;

(b)  the preservation of amounts deposited with funds, and of earnings on such amounts;

(c)   the payment out of funds of amounts deposited with the funds, and of earnings on such amounts;

(d)  the portability of amounts deposited with funds, and of earnings on such amounts;

(e)   the form in which benefits may be paid out of funds;

(f)   the investment of assets of funds;

(g)   the keeping and retention of records in relation to funds;

(h)   the financial and actuarial reports to be prepared in relation to funds;

(i)    the disclosure of information to beneficiaries in funds;

(j)    the disclosure of information about funds to the Commissioner;

(k)  the disclosure of information about funds to persons other than beneficiaries or the Commissioner;

(l)   the financial position of funds;

(m)   the funding and solvency of funds;

(n)  the winding-up of funds.

Operating standards for pooled superannuation trusts

33.(1) The regulations may prescribe standards applicable to the operation of pooled superannuation trusts (“trusts”).

(2)  The standards that may be prescribed include, but are not limited to, standards relating to the following matters:

(a)  the ownership and disposal of units in trusts;


(b)  the investment of assets of trusts;

(c)  the persons who may be trustees of trusts;

(d)  the number of trustees, and the composition of boards or committees of trustees, of trusts;

(e)  the keeping and retention of records in relation to trusts;

(f)   the financial and actuarial reports to be prepared in relation to trusts;

(g)  the disclosure of information to unit-holders in trusts;

(h)  the disclosure of information about trusts to the Commissioner;

(i)  the disclosure of information about trusts to persons other than unit-holders or the Commissioner;

(j)   the financial position of trusts;

(k)  the funding and solvency of trusts.

Prescribed operating standards must be complied with

Standards must be complied with

34.(1) The trustee of a superannuation entity must ensure that the prescribed standards applicable to the operation of the entity are complied with at all times.

Offence

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Validity of transaction not affected by contravention of (1)

(3)  A contravention of subsection (1) does not affect the validity of a transaction.

 

PART 4—TRUSTEE OF SUPERANNUATION ENTITY TO LODGE ANNUAL RETURNS WITH THE COMMISSIONER

Object of Part

35.  The object of this Part is to require the trustee of a superannuation entity to lodge an annual return with the Commissioner.

Trustee to lodge annual returns

Lodgment

36.(1) The trustee of a superannuation entity must, within the prescribed period after each year of income, give to the Commissioner:

(a)  a return, in the approved form, containing such information as is required by that form in relation to the entity in respect of that year of income; and


(b)  a certificate, in the approved form, by the trustee in relation to the entity in respect of that year of income; and

(c)   the certificate given to the trustee by an approved auditor under Part 13 in relation to the entity in respect of that year of income.

Offence

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Data processing devices

(3)  An approval given by the Commissioner of a form of return for the purposes of paragraph (1)(a) may require or permit the return to be given on a specified kind of data processing device in accordance with specified software requirements.

Endorsement of certificates

(4)  If the return is given otherwise than on a data processing device, a certificate referred to in paragraph (1)(b) or (c) may be endorsed on the return.

 

PART 5—NOTICES ABOUT COMPLYING FUND STATUS

Division 1Objects and interpretation

Objects of Part

37.  The objects of this Part are:

(a)  to provide for a system of notices about complying fund status in relation to a year of income (see Division 2); and

(b)   to provide for those notices to be used to determine complying fund status for tax purposes (see Division 3).

Meaning of “entity”

38.  In this Part:

“entity” means a fund, scheme or trust.

Division 2Commissioner may give notices about complying fund status

Meaning of “contravention”

39.(1) For the purposes of this Division, a contravention of this Act (other than Part 9) or the regulations is to be ignored unless the contravention is:


(a)  an offence; or

(b)  a contravention of a civil penalty provision.

(2)  For the purposes of this Division, it is sufficient if a contravention is established on the balance of probabilities.

Notices by Commissioner to trustee

Notice about complying fund status

40.(1) The Commissioner may give a written notice to the trustee of an entity stating:

(a)  whether the entity is or is not a complying superannuation fund; or

(b)  whether the entity is or is not a complying approved deposit fund; or

(c)  whether the entity is or is not a pooled superannuation trust;

as the case may be, in relation to a year of income specified in the notice.

Reasons

(2)  If the Commissioner gives a notice to the trustee of an entity stating that:

(a)   the entity is not a complying superannuation fund; or

(b)  the entity is not a complying approved deposit fund; or

(c)   the entity is not a pooled superannuation trust;

as the case may be, in relation to a year of income, the notice must set out the reasons why the Commissioner so stated.

Commissioner of Taxation to be told about notice

(3)  When the Commissioner gives a notice under this section, the Commissioner must give particulars of the notice to the Commissioner of Taxation.

Revocation

(4)  If:

(a)   the Commissioner gives a notice under this section (the “original notice”) to the trustee of an entity stating that:

(i)    the entity is a complying superannuation fund; or

(ii)    the entity is a complying approved deposit fund; or

(iii) the entity is a pooled superannuation trust;

as the case may be, in relation to a year of income; and

(b)  the Commissioner subsequently gives a notice under this section (the “second notice”) to the trustee of the entity stating that:

(i)     the entity is not a complying superannuation fund; or

(ii)    the entity is not a complying approved deposit fund; or


(iii) the entity is not a pooled superannuation trust;

as the case may be, in relation to the year of income;

the second notice is taken to revoke the original notice.

When Commissioner obliged to give notice of compliance

41.(1) Except as provided by subsection (2), the Commissioner is not obliged to give a notice under section 40.

(2)  The Commissioner must give a notice under section 40 to the trustee of an entity stating that the entity is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust, as the case may be, in relation to a year of income (the “current year of income”) if:

(a)   the entity is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust, as the case requires, in relation to the current year of income; and

(b)  either:

(i)  the Commissioner has not given a notice to the trustee under section 40 stating that the entity is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust, as the case requires, in relation to a previous year of income; or

(ii)    both:

(A)  the Commissioner has given a notice to the trustee under section 40 stating that the entity is not a complying superannuation fund, is not a complying approved deposit fund or is not a pooled superannuation trust, as the case requires, in relation to a previous year of income; and

(B)  the Commissioner has not given a notice to the trustee under section 40 stating that the fund is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust, as the case requires, in relation to a year of income that is later than that previous year of income and earlier than the current year of income.

(3)  Despite section 2, a previous year mentioned in subsection (2) may be a year of income earlier than the 1994-95 year of income (see section 49). However, despite section 49, for the purposes of the application of subsection (2) to a complying superannuation fund, if the fund was not a regulated superannuation fund at all times during the current year of income when the fund was in existence, paragraph (2)(b) does not apply unless the previous year of income is the 1994-95 year of income or a later year of income.


(4)  For the purposes of this section, if a notice under section 40 is revoked, or the decision to give the notice is set aside, the notice is taken never to have been given.

Complying superannuation fund

42.(1) An entity is a complying superannuation fund in relation to a year of income for the purposes of this Division if:

(a)   at all times during the year of income when the entity was in existence, the entity was a regulated superannuation fund; and

(b)  any of the following conditions is satisfied:

(i)  the trustee did not contravene this Act or the regulations in relation to the entity in respect of the year of income;

(ii)   both:

(A)  the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)   each contravention was rectified within a period of 30 days after the trustee became aware of the contravention or within such further period as the Commissioner allows;

(iii) both:

(A)  the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)  the Commissioner is satisfied that the seriousness or frequency, or both, of the contraventions does not warrant the giving of a notice stating that the entity is not a complying superannuation fund in relation to the year of income;

(iv)  the Commissioner, after considering all relevant circumstances, thinks that a notice should be given stating that the entity is a complying superannuation fund in relation to the year of income.

(2)  For the purposes of subsection (1), if a fund does not comply with Part 9 (which deals with equal representation) at any time during the year of income, the trustee of the fund is taken to have contravened this Act in relation to the fund in respect of the year of income.

Complying approved deposit fund

43.  An entity is a complying approved deposit fund in relation to a year of income for the purposes of this Division if:

(a)  at all times during the year of income when the entity was in existence, the entity was an approved deposit fund; and


(b)  any of the following conditions is satisfied:

(i)  the trustee did not contravene this Act or the regulations in relation to the entity in respect of the year of income;

(ii)   both:

(A)   the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)   each contravention was rectified within a period of 30 days after the trustee became aware of the contravention or within such further period as the Commissioner allows;

(iii) both:

(A)  the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)   the Commissioner is satisfied that the seriousness or frequency, or both, of the contraventions does not warrant the giving of a notice stating that the entity is not a complying approved deposit fund in relation to the year of income;

(iv)  the Commissioner, after considering all relevant circumstances, thinks that a notice should be given stating that the entity is a complying approved deposit fund in relation to the year of income.

Pooled superannuation trust

44.  An entity is a pooled superannuation trust in relation to a year of income for the purposes of this Division if:

(a)   at all times during the year of income when the entity was in existence, the entity was a pooled superannuation trust; and

(b)  any of the following conditions is satisfied:

(i)  the trustee did not contravene this Act or the regulations in relation to the entity in respect of the year of income;

(ii)    both:

(A)  the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)   each contravention was rectified within a period of 30 days after the trustee became aware of the contravention or such further period as the Commissioner allows;

(iii) both:


(A)  the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)  the Commissioner is satisfied that the seriousness or frequency, or both, of the contraventions does not warrant the giving of a notice stating that the entity is not a pooled superannuation trust in relation to the year of income;

(iv)  the Commissioner, after considering all relevant circumstances, thinks that a notice should be given stating that the entity is a pooled superannuation trust in relation to the year of income.

Division 3Complying fund status for tax purposes

Complying superannuation fund

45.(1) A fund is a complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act in relation to a year of income (the “current year of income”) if, and only if:

(a)   the Commissioner has given a notice to the trustee under section 40 stating that the fund is a complying superannuation fund in relation to the current year of income; or

(b)  the Commissioner has given a notice to the trustee under section 40 stating that the fund is a complying superannuation fund in relation to a previous year of income and has not given a notice to the trustee under that section stating that the fund was not a complying superannuation fund in relation to:

(i)      the current year of income; or

(ii)     a year of income that is:

(A)   later than that previous year of income; and

(B)   earlier than the current year of income.

(2)  Despite section 2, the previous year mentioned in paragraph (1)(b) may be a year of income earlier than the 1994-95 year of income (see section 49). However, despite section 49, if the fund was not a regulated superannuation fund at all times during the current year of income when the fund was in existence, paragraph (1)(b) does not apply unless the previous year of income is the 1994-95 year of income or a later year of income.

(3)  For the purposes of this section, if a notice under section 40 is revoked, or the decision to give the notice is set aside, the notice is taken never to have been given.

(4)  Section 170 of the Income Tax Assessment Act does not prevent the amendment of an assessment at any time for the purposes of giving effect to subsection (3).


(5)  For the purposes of this section, if a notice under section 40 is given in relation to a fund in relation to a year of income, the notice is taken to have been given at the beginning of the year of income.

(6)  Despite subsection (1), if, at all times during a year of income when a fund was in existence, the fund was, or was part of, an exempt public sector superannuation scheme, the fund is a complying superannuation fund in relation to the year of income for the purposes of Part IX of the Income Tax Assessment Act.

Complying superannuation scheme—superannuation guarantee charge

46.  An exempt public sector superannuation scheme is taken to be a complying superannuation scheme for the purposes of the Superannuation Guarantee (Administration) Act 1992.

Complying approved deposit fund

47.(1) A fund is a complying approved deposit fund for the purposes of Part IX of the Income Tax Assessment Act in relation to a year of income (the “current year of income”) if, and only if:

(a)   the Commissioner has given a notice to the trustee under section 40 stating that the fund is a complying approved deposit fund in relation to the current year of income; or

(b)  the Commissioner has given a notice to the trustee under section 40 stating that the fund is a complying approved deposit fund in relation to a previous year of income and has not given a notice to the trustee under that section stating that the fund was not a complying approved deposit fund in relation to:

(i)    the current year of income; or

(ii)    a year of income that is:

(A)  later than that previous year of income; and

(B)   earlier than the current year of income.

(2)  Despite section 2, the previous year mentioned in paragraph (1)(b) may be a year of income earlier than the 1994-95 year of income (see section 49).

(3)  For the purposes of this section, if a notice under section 40 is revoked, or the decision to give the notice is set aside, the notice is taken never to have been given.

(4)  Section 170 of the Income Tax Assessment Act does not prevent the amendment of an assessment at any time for the purposes of giving effect to subsection (3).


(5)  For the purposes of this section, if a notice under section 40 is given in relation to a fund in relation to a year of income, the notice is taken to have been given at the beginning of the year of income.

Pooled superannuation trust

48.(1) A unit trust is a pooled superannuation trust for the purposes of Part IX of the Income Tax Assessment Act in relation to a year of income (the “current year of income”) if, and only if:

(a)   the Commissioner has given a notice to the trustee under section 40 stating that the trust is a pooled superannuation trust in relation to the current year of income; or

(b)  the Commissioner has given a notice to the trustee under section 40 stating that the trust is a pooled superannuation trust in relation to a previous year of income and has not given a notice to the trustee under that section stating that the trust was not a pooled superannuation trust in relation to:

(i)      the current year of income; or

(ii)     a year of income that is:

(A)  later than that previous year of income; and

(B)   earlier than the current year of income.

(2)  Despite section 2, the previous year mentioned in paragraph (1)(b) may be a year of income earlier than the 1994-95 year of income (see section 49).

(3)  For the purposes of this section, if a notice under section 40 is revoked, or the decision to give the notice is set aside, the notice is taken never to have been given.

(4)  Section 170 of the Income Tax Assessment Act does not prevent the amendment of an assessment at any time for the purposes of giving effect to subsection (3).

(5)  For the purposes of this section, if a notice under section 40 is given in relation to a trust in relation to a year of income, the notice is taken to have been given at the beginning of the year of income.

Transitional—notices under the repealed provisions of the Occupational Superannuation Standards Act 1987

Superannuation funds—positive

49.(1) For the purposes of paragraph 41(2)(b) and this Division, if:

(a)  a notice under repealed section 12 or 13 of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is satisfied that:

(i)  a fund satisfied the superannuation fund conditions in relation to a year of income; or


(ii)  a fund should be treated as if it had satisfied the superannuation fund conditions in relation to a year of income; and

(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the fund is a complying superannuation fund in relation to the year of income.

ADFs—positive

(2)  For the purposes of paragraph 41(2)(b) and this Division, if:

(a)   a notice under repealed section 14 or 15 of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is satisfied that:

(i)  a fund satisfied the approved deposit fund conditions in relation to a year of income; or

(ii)   a fund should be treated as if it had satisfied the approved deposit fund conditions in relation to a year of income; and

(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the fund is a complying approved deposit fund in relation to the year of income.

PSTs—positive

(3)  For the purposes of paragraph 41(2)(b) and this Division, if:

(a)   a notice under repealed section 15B or 15C of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is satisfied that:

(i)  a trust satisfied the pooled superannuation trust conditions in relation to a year of income; or

(ii)  a trust should be treated as if it had satisfied the pooled superannuation trust conditions in relation to a year of income; and

(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the trust is a pooled superannuation trust in relation to the year of income.

Superannuation fundsnegative

(4)  For the purposes of paragraph 41(2)(b) and this Division, if:

(a)  a notice under the repealed section 12 or 13 of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is not satisfied that a fund satisfied the superannuation fund conditions in relation to a year of income; and


(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the fund is not a complying superannuation fund in relation to the year of income.

ADFsnegative

(5)  For the purposes of paragraph 41(2)(b) and this Division, if:

(a)  a notice under the repealed section 14 or 15 of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is not satisfied that a fund satisfied the approved deposit fund conditions in relation to a year of income; and

(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the fund is not a complying approved deposit fund in relation to the year of income.

PSTsnegative

(6)  For the purposes of paragraph 41(2)(b) and this Division, if:

(a)  a notice under the repealed section 15B or 15C of the Occupational Superannuation Standards Act 1987 stated that the Commissioner is not satisfied that a trust satisfied the pooled superannuation trust conditions in relation to a year of income; and

(b)  the year of income is the 1993-94 year of income or an earlier year of income;

the notice has effect as if it were a notice under section 40 stating that the trust is not a pooled superannuation trust in relation to the year of income.

OSSAcontinued operation

(7)  A reference in this section to a provision of the Occupational Superannuation Standards Act 1987 includes a reference to that provision as it continues to apply, despite its repeal, because of the Occupational Superannuation Standards Amendment Act 1993.

Transitional—late lodgment of elections by trustees of superannuation funds

28 days late

50.(1) For the purposes of subsection 41(3), paragraph 42(1)(a) and subsection 45(2), if:

(a)   on a particular day (the “lodgment day”), the trustee of a superannuation fund lodges an election under section 19; and

(b)  the lodgment day is after the end of the fund’s 1993-94 year of income and before 29 July 1994; and


(c)  under the regulations, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period (the “pre-lodgment period”):

(i)  beginning at the beginning of the fund’s 1994-95 year of income; and

(ii)   ending at the end of the lodgment day;

the fund is taken to be a regulated superannuation fund at all times during the pre-lodgment period.

Excluded superannuation funds

(2)  For the purposes of subsection 41(3), paragraph 42(1)(a) and subsection 45(2), if:

(a)   on a particular day (the “lodgment day”), the trustee of an excluded superannuation fund lodges an election under section 19; and

(b)  the lodgment day is after the end of the fund’s 1993-94 year of income and before whichever is the earlier of:

(i)     1 January 1995; or

(ii)    the beginning of the fund’s 1995-96 year of income; and

(c)   under the regulations, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period (the “pre-lodgment period”):

(i)  beginning at the beginning of the fund’s 1994-95 year of income; and

(ii)    ending at the end of the lodgment day;

the fund is taken to be a regulated superannuation fund at all times during the pre-lodgment period.

Public sector superannuation schemes

(3)  For the purposes of subsection 41(3), paragraph 42(1)(a) and subsection 45(2), if:

(a)   on a particular day (the “lodgment day”), the trustee of a superannuation fund, being a public sector superannuation scheme, lodges an election under section 19; and

(b)  the lodgment day is after the end of the fund’s 1993-94 year of income and before:

(i)     1 July 1995; or

(ii)    such later date as the Commissioner allows; and

(c)   under the regulations, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period (the “pre-lodgment period”):

(i)  beginning at the beginning of the fund’s 1994-95 year of income; and

(ii)   ending at the end of the lodgment day;


the fund is taken to be a regulated superannuation fund at all times during the pre-lodgment period.

Special circumstances

(4)  For the purposes of subsection 41(3), paragraph 42(1)(a) and subsection 45(2), if:

(a)  on a particular day (the “lodgment day”), the trustee of a superannuation fund lodges an election under section 19; and

(b)  the lodgment day is;

(i)    after 28 July 1994; and

(ii)    before whichever is the earlier of:

(A)  1 January 1995; or

(B)  the beginning of the fund’s 1995-96 year of income; and

(c)  the trustee satisfies the Commissioner that, because of special circumstances, this subsection should apply in relation to the fund; and

(d)  the trustee has complied with such requirements relating to notifying members of the fund about:

(i)    the delay in lodging the election; and

(ii)    the reasons for the delay in lodging the election;

as are specified in regulations made for the purposes of this paragraph; and

(e)  under the regulations, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period (the “pre-lodgment period”):

(i)    beginning at the beginning of the fund’s 1994-95 year of income; and

(ii)    ending at the end of the lodgment day;

the fund is taken to be a regulated superannuation fund at all times during the pre-lodgment period.

Regulations may apply OSS system

(5)  Regulations made for the purposes of paragraph (1)(c), (2)(c), (3)(c) or (4)(e) may:

(a)  confer functions or powers on the Commissioner; and

(b)  make provision for or in relation to a matter by applying, adopting or incorporating, with such modifications as are prescribed, the provisions, or the repealed provisions, of:

(i)    the Occupational Superannuation Standards Act 1987; or

(ii)    regulations made for the purposes of section 7 of that Act;

(including those provisions as they continue to apply, despite their repeal, because of the Occupational Superannuation Standards Amendment Act 1993).


Section 49A of the Acts Interpretation Act 1901

(6)  Subsection (5) of this section does not limit the application of section 49A of the Acts Interpretation Act 1901 to regulations made for the purposes of this section.

 

PART 6—PROVISIONS RELATING TO GOVERNING RULES OF SUPERANNUATION ENTITIES

Object of Part

51.  The object of this Part is to set out rules about the content of the governing rules of superannuation entities.

Covenants to be included in governing rules

Governing rules taken to contain covenants

52.(1) If the governing rules of a superannuation entity do not contain covenants to the effect of the covenants set out in subsection (2), those governing rules are taken to contain covenants to that effect.

The covenants

(2)  The covenants referred to in subsection (1) are the following covenants by the trustee:

(a)   to act honestly in all matters concerning the entity;

(b)  to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide;

(c)   to ensure that the trustee’s duties and powers are performed and exercised in the best interests of the beneficiaries;

(d)  to keep the money and other assets of the entity separate from any money and assets, respectively:

(i)    that are held by the trustee personally; or

(ii)  that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the entity;

(e)   not to enter into any contract, or do anything else, that would prevent the trustee from, or hinder the trustee in, properly performing or exercising the trustee’s functions and powers;

(f)   to formulate and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:

(i)  the risk involved in making, holding and realising, and the likely return from, the entity’s investments having regard to its objectives and its expected cash flow requirements;


(ii)   the composition of the entity’s investments as a whole including the extent to which the investments are diverse or involve the entity in being exposed to risks from inadequate diversification;

(iii) the liquidity of the entity’s investments having regard to its expected cash flow requirements;

(iv)  the ability of the entity to discharge its existing and prospective liabilities;

(g)   if there are any reserves of the entity—to formulate and to give effect to a strategy for their prudential management, consistent with the entity’s investment strategy and its capacity to discharge its liabilities (whether actual or contingent) as and when they fall due;

(h)  to allow a beneficiary access to any prescribed information or any prescribed documents.

Covenant referred to in paragraph (2)(e)

(3)  A covenant referred to in paragraph (2)(e) does not prevent the trustee from engaging or authorising persons to do acts or things on behalf of the trustee.

Covenant referred to in paragraph (2)(f)

(4)  An investment strategy is taken to be in accordance with paragraph (2)(f) even if it provides for a specified beneficiary or a specified class of beneficiaries to give directions to the trustee, where:

(a)  the directions relate to the strategy to be followed by the trustee in relation to the investment of a particular asset or assets of the entity; and

(b)  the directions are given in circumstances covered by regulations made for the purposes of this paragraph.

Regulations may prescribe other covenants

(5)  The regulations may prescribe a covenant to be included in the governing rules of a superannuation entity and, if the governing rules of such a superannuation entity do not contain a covenant to the effect of the prescribed covenant, those rules are taken to contain a covenant to that effect.

Prescribed covenants may overlap with other requirements

(6)  Without limiting the generality of subsection (5), the regulations may prescribe, for the purposes of that subsection, a covenant that elaborates, supplements, or otherwise deals with, any aspect of:

(a)  a matter to which a covenant in subsection (2) relates; or

(b)  a matter to which a provision of this Act (other than this section) relates.


But prescribed covenants must be capable of operating concurrently with other requirements

(7)  However, a covenant prescribed for the purposes of subsection (5) must be capable of operating concurrently with:

(a)   all the covenants referred to in subsection (2); and

(b)  this Act other than this section.

Covenant by corporate trustee has effect as covenant by trustee’s directors

(8)  A covenant by a corporate trustee of a superannuation entity that is to the effect of a covenant referred to in subsection (2), or to the effect of a covenant prescribed by regulations referred to in subsection (5), also operates as a covenant by each of the directors of the trustee to exercise a reasonable degree of care and diligence for the purposes of ensuring that the trustee carries out the first-mentioned covenant, and so operates as if the directors were parties to the governing rules.

Reasonable degree of care and diligence

(9)  The reference in subsection (8) to a reasonable degree of care and diligence is a reference to the degree of care and diligence that a reasonable person in the position of director of the trustee would exercise in the trustee’s circumstances.

Covenants to repay amounts to beneficiaries in approved deposit funds

Governing rules to contain 2 covenants

53.(1) If the governing rules of an approved deposit fund (other than an excluded approved deposit fund) do not contain covenants to the effect of those set out in subsection (2), they are taken to contain covenants to that effect.

Content of the covenants

(2)  The covenants are:

(a)   that, if a beneficiary, by written notice given to the trustee, requests the trustee to pay to the beneficiary an amount equal to the beneficiary’s interest in the fund, the trustee will pay that amount within a period (not being more than 12 months) determined by the trustee; and

(b)  that each director of the trustee will ensure that the trustee gives effect to the covenant in paragraph (a).

Directors taken to be parties to governing rules

(3)  The covenant in paragraph (2)(b) has effect as if each director were a party to the governing rules.


Period for payments to beneficiaries

(4)  The trustee is to determine the period within which amounts are to be paid to beneficiaries under the covenant referred to in paragraph (2)(a).

Variation of payment period

(5)  When the trustee has determined the period under subsection (4), the trustee may make a further determination varying that period if, and only if:

(a)   the Commissioner has consented in writing to the variation; or

(b)  the requirements of section 54 have been complied with.

Prerequisites to variation of repayment period

54.(1) The requirements referred to in paragraph 53(5)(b) are as follows:

(a)  the question whether the variation should be made has been voted on at a meeting of the beneficiaries;

(b)  the trustee convened the meeting by sending by post, to the last-known address of each of the beneficiaries, at least 21 days before the meeting, a notice that set out:

(i)     the date, time and place of the meeting; and

(ii)    the reason for convening the meeting;

(c)  the beneficiaries who, at the meeting, vote (whether in person or by proxy) on the question hold interests equal in value to at least the prescribed percentage of the total value of all the interests in the fund;

(d)  the prescribed percentage of the beneficiaries who voted on the question cast their votes in favour of making the variation.

(2)  For the purposes of paragraph (1)(c), the value of an interest is the price at which the trustee would have to make a payment in respect of the interest if the trustee were required to do so, under the covenant referred to in section 53, on the day immediately before the day when the meeting is held.

Consequences of contravention of covenant

55.(1) A person must not contravene a covenant contained, or taken to be contained, in the governing rules of a superannuation entity.

(2)  A contravention of subsection (1) is not an offence and a contravention of that subsection does not result in the invalidity of a transaction.

(3)  A person who suffers loss or damage as a result of conduct of another person that was engaged in in contravention of subsection (1) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(4)  An action under subsection (3) may be begun at any time within 6 years after the day on which the cause of action arose.


(5)  It is a defence to an action for loss or damage suffered by a person as a result of the making of an investment by or on behalf of the trustee of a superannuation entity if the defendant establishes that the investment was made in accordance with an investment strategy formulated under a covenant referred to in paragraph 52(2)(f).

(6)  It is a defence to an action for loss or damage suffered by a person as a result of the management of any reserves by the trustee of a superannuation entity if the defendant establishes that the management of the reserves was in accordance with a covenant referred to in paragraph 52(2)(g).

(7)  Subsections (5) and (6) apply to an action for loss or damage, whether brought under subsection (3) or otherwise.

Indemnification of trustee from assets of entity

56.(1) A provision in the governing rules of a superannuation entity is void if:

(a)  it purports to preclude the trustee from being indemnified out of the assets of the entity in respect of any liability incurred while acting as trustee of the entity; or

(b)  subject to subsection (2), it limits the amount of such an indemnity.

(2)  A provision in the governing rules of a superannuation entity is void in so far as it would have the effect of exempting the trustee from, or indemnifying the trustee against:

(a)  liability for breach of trust if the trustee:

(i)    fails to act honestly in a matter concerning the entity; or

(ii)  intentionally or recklessly fails to exercise, in relation to a matter affecting the entity, the degree of care and diligence that the trustee was required to exercise; or

(b)  liability for a monetary penalty under a civil penalty order.

(3)  Nothing in the governing rules of a superannuation entity prohibits the trustee of the entity from seeking advice from any person in respect of any matter relating to performance of the duties or the exercise of the powers of the trustee. A provision in the governing rules that purports to preclude the trustee from being indemnified out of assets of the entity in respect of the cost of obtaining such advice, or to limit the amount of such an indemnity, is void.

Indemnification of directors of trustee from assets of entity

57.(1) Subject to subsection (2), the governing rules of a superannuation entity may provide for a director of the trustee to be indemnified out of the assets of the entity in respect of a liability incurred while acting as a director of the trustee.


(2)  A provision of the governing rules of a superannuation entity is void in so far as it would have the effect of indemnifying a director of the trustee against:

(a)   a liability that arises because the director:

(i)    fails to act honestly in a matter concerning the entity; or

(ii)  intentionally or recklessly fails to exercise, in relation to a matter affecting the entity, the degree of care and diligence that the director is required to exercise; or

(b)  liability for a monetary penalty under a civil penalty order.

(3)  A director of the trustee of a superannuation entity may be indemnified out of the assets of the entity in accordance with provisions of the entity’s governing rules that comply with this section.

(4)  This section has effect despite section 241 of the Corporations Law of a State or internal Territory.

Trustee not to be subject to direction

58.(1) Subject to subsection (2), the governing rules of a superannuation entity other than an excluded fund must not permit the trustee to be subject, in the exercise of any of the trustee’s powers under those rules, to direction by any other person.

(2)  Subsection (1) does not apply to:

(a)  a direction given by a court; or

(b)  a direction given by the Commissioner; or

(c)  a direction given by a beneficiary or a group of beneficiaries that relates to benefits payable to that beneficiary or those beneficiaries, as the case may be; or

(d)  a direction given by a beneficiary or group of beneficiaries, where the direction is covered by subsection 52(4); or

(e)  if the entity is an employer-sponsored fund—a direction given by an employer-sponsor, or an associate of an employer-sponsor, in circumstances prescribed by the regulations; or

(f)  a direction given by the Superannuation Complaints Tribunal.

(3)  A provision included in the governing rules of a superannuation entity in contravention of this section is void.

Exercise of discretion by person other than trustee

59.(1) The governing rules of a superannuation entity other than an excluded fund must not permit a discretion under those rules that is exercisable by a person other than the trustee to be exercised unless:

(a)  those rules require the consent of the trustee to the exercise of that discretion; or


(b)  if the entity is an employer-sponsored fund:

(i)  the exercise of the discretion relates to the contributions that an employer-sponsor will, after the discretion is exercised, be required or permitted to pay to the fund; or

(ii)  the exercise of the discretion relates solely to a decision to terminate the fund; or

(iii) the circumstances in which the discretion was exercised are covered by regulations made for the purposes of this subparagraph.

(2)  A provision included in the governing rules of a superannuation entity in contravention of subsection (1) is void.

Amendment of governing rules

60.(1) The governing rules of a superannuation entity other than an excluded fund must not permit those rules to be amended unless:

(a)   the trustee has consented to the amendment; or

(b)  if the entity is an employer-sponsored fund:

(i)  the amendment relates to the contributions that an employer-sponsor will, after the amendment, be required or permitted to pay to the fund; or

(ii)    the amendment relates solely to the termination of the fund; or

(iii) the circumstances in which the amendment was made are covered by regulations made for the purposes of this subparagraph; or

(c)   the amendment is made solely for the purpose of conferring on the trustee the power to consent to amendments of those rules.

(2)  The governing rules of a regulated superannuation fund must not permit those rules to be amended in such a way that:

(a)   an individual would be eligible to be appointed as trustee unless the rules provide, and will continue to provide after the amendment is made, that the fund has, as its sole or primary purpose, the provision of old-age pensions; or

(b)  the sole or primary purpose of the fund would be a purpose other than the provision of old-age pensions unless the rules provide, and will continue to provide after the amendment is made, that the trustee must be a constitutional corporation.

(3)  If the governing rules of the superannuation entity are inconsistent with subsection (1) or (2), the subsection concerned prevails, and the governing rules are, to the extent of the inconsistency, invalid.


PART 7—PROVISIONS APPLYING ONLY TO REGULATED
SUPERANNUATION FUNDS

Object of Part

61.  The object of this Part is to set out special rules which apply only to regulated superannuation funds.

Sole purpose test

62.(1)         The trustee of a regulated superannuation fund must ensure that the fund is maintained solely:

(a)  for one or more of the following purposes (the “core purposes”):

(i)  the provision of benefits for each member of the fund on or after the member’s retirement from any business, trade, profession, vocation, calling, occupation or employment in which the member was engaged (whether the member’s retirement occurred before, or occurred after, the member joined the fund);

(ii)  the provision of benefits for each member of the fund on or after the member’s attainment of an age not less than the age specified in the regulations;

(iii) the provision of benefits for each member of the fund on or after whichever is the earlier of:

(A)  the member’s retirement from any business, trade, profession, vocation, calling, occupation or employment in which the member was engaged; or

(B)  the member’s attainment of an age not less than the age prescribed for the purposes of subparagraph (ii);

(iv)  the provision of benefits in respect of each member of the fund on or after the member’s death, if:

(A)  the death occurred before the member’s retirement from any business, trade, profession, vocation, calling, occupation or employment in which the member was engaged; and

(B)  the benefits are provided to the member’s legal personal representative, to any or all of the member’s dependants, or to both;

(v)  the provision of benefits in respect of each member of the fund on or after the member’s death, if:

(A)  the death occurred before the member attained the age prescribed for the purposes of subparagraph (ii); and

(B)  the benefits are provided to the member’s legal personal representative, to any or all of the member’s dependants, or to both; or


(b)  for one or more of the core purposes and for one or more of the following purposes (the “ancillary purposes”):

(i)  the provision of benefits for each member of the fund on or after the termination of the member’s employment with an employer who had, or any of whose associates had, at any time, contributed to the fund in relation to the member;

(ii)  the provision of benefits for each member of the fund on or after the member’s cessation of work, if the work was for gain or reward in any business, trade, profession, vocation, calling, occupation or employment in which the member was engaged and the cessation is on account of ill-health (whether physical or mental);

(iii) the provision of benefits in respect of each member of the fund on or after the member’s death, if:

(A)  the death occurred after the member’s retirement from any business, trade, profession, vocation, calling, occupation or employment in which the member was engaged (whether the member’s retirement occurred before, or occurred after, the member joined the fund); and

(B)   the benefits are provided to the member’s legal personal representative, to any or all of the member’s dependants, or to both;

(iv)  the provision of benefits in respect of each member of the fund on or after the member’s death, if:

(A)  the death occurred after the member attained the age prescribed for the purposes of subparagraph (a)(ii); and

(B)   the benefits are provided to the member’s legal personal representative, to any or all of the member’s dependants, or to both;

(v)  the provision of such other benefits as the Commissioner approves in writing.

(2)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

(3)  An approval given by the Commissioner for the purposes of subsection (1) may be expressed to relate to:

(a)   a specified fund; or

(b)  a specified class of funds.


Commissioner may direct trustees of certain regulated superannuation funds not to accept employer contributions

Directions

63.(1) The Commissioner may give the trustee of a regulated superannuation fund a written notice directing the trustee not to accept any contributions made to the fund by an employer-sponsor.

Pre-1994-95 directions

(2)  The Commissioner may only give a direction under this section to the trustee of a fund before the fund’s 1994-95 year of income (whether in accordance with section 4 of the Acts Interpretation Act 1901 or otherwise) if the direction takes effect at the beginning of that year of income and, at a time during the period:

(a)  beginning on the day on which this Act received the Royal Assent; and

(b)  ending immediately before the beginning of that year of income;

when:

(c)   the fund was in existence; and

(d)  there were in force regulations for the purposes of subsection 7(1) of the Occupational Superannuation Standards Act 1987 prescribing standards applicable to the fund;

the fund did not comply with any or all of those standards.

Post-1993-94 directions

(3)  The Commissioner must not give a direction under this section to the trustee of a fund after the beginning of the fund’s 1994-95 year of income unless:

(a)   the trustee of the fund has contravened this Act or the regulations on one or more occasions after the beginning of that year of income; and

(b)  the Commissioner is satisfied that the seriousness or frequency, or both, of the contraventions warrants the giving of the direction.

Reasons

(4)  A direction under this section must be accompanied by, or included in the same document as, a statement giving the reasons for the direction.

Revocation

(5)  The Commissioner may revoke a direction under this section if the trustee of the fund concerned satisfies the Commissioner that there is, and is likely to continue to be, substantial compliance by the trustee with the provisions of this Act and the regulations applicable to the fund.


Contravention of equal representation rules

(6)  For the purposes of subsections (3) and (5), if a fund does not comply with Part 9 (which deals with equal representation), the trustee of the fund is taken to have contravened this Act.

Offence of contravening direction

(7)  A trustee of a fund must not, without reasonable excuse, contravene a direction under this section.

Penalty: 100 penalty units.

Refund of contributions

(8)  A contravention of subsection (7) does not result in the invalidity of a transaction. However, if a contribution is accepted in contravention of that subsection, the trustee concerned must refund the contribution within 28 days or such further period as the Commissioner allows.

Notification to employer-sponsors

(9)  If the trustee of a fund is given a direction under this section, the trustee must take all reasonable steps to notify the direction to each employer-sponsor of the fund.

Offence of contravening subsection (8) or (9)

(10)  A person who, without reasonable excuse, contravenes subsection (8) or (9) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Refunded contributions to be ignored for the purposes of income tax and superannuation guarantee charge

(11)  For the purposes of the Income Tax Assessment Act and the Superannuation Guarantee (Administration) Act 1992, if a contribution is refunded under this section, the person who made the contribution is taken never to have made the contribution.

Superannuation guarantee chargeshortfall component to be treated as employer contribution

(12)  This section has effect as if the payment of a shortfall component to a fund under section 65 of the Superannuation Guarantee (Administration) Act 1992 were a contribution made to the fund by an employer-sponsor.

OSSA

(13)  A reference in this section to subsection 7(1) of the Occupational Superannuation Standards Act 1987 includes a reference to that subsection as it continues to apply, despite its repeal, because of the Occupational Superannuation Standards Amendment Act 1993.


Superannuation contributions—deductions from salary or wages to be remitted promptly

Application

64.(1) This section applies if:

(a)  an employer of an employee is authorised (whether by the employee, by force of law or otherwise) to:

(i)  deduct an amount from salary or wages payable by the employer to the employee; and

(ii)  pay to the trustee of a regulated superannuation fund the amount of the deduction for the purposes of making provision for superannuation benefits for, or for dependants of, the employee; and

(b)  the employer makes such a deduction.

Prompt remission

(2)  The employer must pay to the trustee of the superannuation fund the amount of the deduction before the end of the 28-day period beginning immediately after the end of the month in which the deduction was made.

Offence

(3)  A person who intentionally or recklessly contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Definition

(4)  In this section:

“salary or wages” has the same meaning as in the Superannuation Guarantee (Administration) Act 1992.

Part-time domestic workers counted

(5)  For the purposes of this section, the Superannuation Guarantee (Administration) Act 1992 has effect as if subsection 11(2) of that Act had not been enacted.

Lending to members of regulated superannuation fund prohibited

Prohibition

65.(1) The trustee or an investment manager of a regulated superannuation fund must not:

(a)  lend money of the fund to:

(i)      a member of the fund; or

(ii)     a relative of a member of the fund; or

(b)  give any other financial assistance using the resources of the fund to:


(i)     a member of the fund; or

(ii)    a relative of a member of the fund.

Exception—private sector funds

(2)  Subsection (1) does not prohibit the lending of money of a private sector fund established before 16 December 1985 to a member if the trustee of the fund, on or before that date:

(a)   had express power to lend money to members; or

(b)  lent money to members and that lending was not expressly prohibited by the governing rules of the fund.

Exception—public sector funds

(3)  Subsection (1) does not prohibit the lending of money of a public sector fund established before 25 May 1988 to a member if the trustee of the fund, on or before that date:

(a)  had express power to lend money to members; or

(b)  lent money to members and that lending was not expressly prohibited by the governing rules of the fund.

Variation of governing rules

(4)  If:

(a)  subsection (2) or (3) applies to a regulated superannuation fund; and

(b)  at the beginning of the fund’s 1994-95 year of income, a provision included in the governing rules of the fund authorised the lending of the fund’s money to members;

a variation of that provision is void unless the variation:

(c)  limits the power to lend the fund’s money to members; or

(d)  removes the power to lend the fund’s money to members.

Civil penalty provision

(5)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

Definition

(6)  In this section:

“relative” has the same meaning as in the Income Tax Assessment Act.

Acquisitions of certain assets from members of regulated superannuation funds prohibited

Prohibition

66.(1) Subject to subsection (2), the trustee or an investment manager of a regulated superannuation fund must not intentionally acquire an asset from:


(a)   a member of the fund; or

(b)  a relative of a member of the fund.

Exceptionacquisitions of business real property and listed securities

(2)  Subsection (1) does not prohibit a trustee or investment manager acquiring an asset from a member of the fund or a relative of such a member if:

(a)   the asset is business real property of the member or relative, or a listed security; and

(b)  the asset is acquired at market value; and

(c)   if the asset is business real property—after the acquisition of the business real property, that property, together with any other business real property previously acquired from a member of the fund or a relative of such a member since this Act received the Royal Assent, would represent no more than the acceptable percentage of the total value of the assets of the fund.

Prohibition of avoidance schemes

(3)  A person must not enter into, commence to carry out, or carry out a scheme if the person entered into, commenced to carry out, or carried out the scheme or any part of the scheme with the intention that:

(a)  the scheme would result, or be likely to result, in the acquisition of an asset by the trustee or an investment manager of a regulated superannuation fund, where the asset is acquired from a person who has a connection (either direct or indirect through one or more interposed companies, partnerships or trusts) with:

(i)     a member of the fund; or

(ii)    a relative of a member of the fund; and

(b)  that aquisition would avoid the application of subsection (1) to the fund.

Offence

(4)  A person who contravenes subsection (1) or (3) is guilty of an offence punishable on conviction by imprisonment for a term not exceeding 1 year.

Definitions

(5)  In this section:

“acceptable percentage” means:

(a)   for an excluded superannuation fund—40%; and

(b)  otherwise—0%;

“acquire an asset” does not include accept money;

“business” includes any profession, trade, employment, vocation or calling carried on for the purposes of profit, including:


(a)   the carrying on of primary production; and

(b)  the provision of professional services;

but does not include occupation as an employee;

“business real property” of a person means any freehold or leasehold interest in real property which is used wholly and exclusively in the person’s business;

“listed security” means:

(a)   a share; or

(b)  a unit; or

(c)   a bond or debenture; or

(d)  a right or option; or

(e)   any other security;

listed for quotation in the official list of a stock exchange in Australia;

“relative” has the same meaning as in the Income Tax Assessment Act;

“scheme” means:

(a)   any agreement, arrangement, understanding, promise or undertaking:

(i)    whether express or implied; or

(ii)  whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b)  any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

Borrowing

Prohibition

67.(1) Subject to this section, the trustee of a regulated superannuation fund must not:

(a)   borrow money; or

(b)  maintain an existing borrowing of money.

Exceptiontemporary borrowing to pay beneficiary

(2)  Subsection (1) does not prohibit the trustee of a regulated superannuation fund from borrowing money if:

(a)  the purpose of the borrowing is to enable the trustee to make a payment to a beneficiary which the trustee is required to make by law or by the governing rules and which, apart from the borrowing, the trustee would not be able to make; and

(b)  the period of the borrowing does not exceed 90 days; and

(c)  if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.


Exceptiontemporary borrowing to cover settlement of securities transactions

(3)  Subsection (1) does not prohibit the trustee of a regulated superannuation fund from borrowing money if:

(a)   the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of any of the following:

(i)    bonds, debentures, stock, bills of exchange or other securities;

(ii)   shares in a company;

(iii)  units in a unit trust;

(iv)  futures contracts;

(v)   forward contracts;

(vi)  interest rates swap contracts;

(vii) currency swap contracts;

(viii)            forward exchange rate contracts;

(ix)  forward interest rate contracts;

(x)   a right or option in respect of such a security, share, unit, contract or policy;

(xi)  any similar financial instrument;

(xii) foreign currency; and

(b)  both:

(i)  at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and

(ii)  the borrowing is not taken, under a written determination made by the Commissioner, to be exempt from this paragraph; and

(c)   the period of the borrowing does not exceed 7 days; and

(d)  if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.

(4)  A determination made by the Commissioner under subsection (3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Exception—private sector funds

(5)  Subsection (1) does not prohibit the trustee of a private sector fund from maintaining an existing borrowing of money if:

(a)  the trustee had, at a time before 12 June 1986, borrowed the money in circumstances that did not comply with the standard set out in paragraph 16(1)(b) of the Occupational Superannuation Standards Regulations; and

(b)  the maintenance occurs before whichever is the earliest of the following:


(i)  the day on which the trustee made such arrangements as were necessary to comply with that standard;

(ii)  the day on which the trustee makes such arrangements as are necessary to comply with subsection (1);

(iii)    1 July 1995.

Exception—public sector funds

(6)  Subsection (1) does not prohibit the trustee of a public sector fund from maintaining an existing borrowing of money if:

(a)  the trustee had, at a time before 2 July 1990, borrowed the money in circumstances that did not comply with the standard set out in paragraph 16(1)(b) of the Occupational Superannuation Standards Regulations; and

(b)  the maintenance occurs before whichever is the earliest of the following:

(i)  the day on which the trustee made such arrangements as were necessary to comply with that standard;

(ii)  the day on which the trustee makes such arrangements as are necessary to comply with subsection (1);

(iii)    1 July 2000.

Civil penalty provision

(7)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

Victimisation of trustees etc.

Prohibition

68.(1) A person must not intentionally or recklessly commit an act of victimisation against:

(a)   the trustee of an employer-sponsored fund; or

(b)  a responsible officer of a corporate trustee of an employer-sponsored fund.

Penalty: Imprisonment for 2 years.

Act of victimisation against trustee

(2)  For the purposes of this section, a person is taken to commit an act of victimisation against the trustee of an employer-sponsored fund if, and only if, the person subjects, or threatens to subject, the trustee to a detriment on the grounds that:

(a)  the trustee has fulfilled, is fulfilling, or is proposing to fulfil, an obligation imposed on the trustee; or


(b)  the trustee has exercised, is exercising, or is proposing to exercise, the trustee’s powers in a particular way.

Act of victimisation against officer of corporate trustee

(3)  For the purposes of this section, a person is taken to commit an act of victimisation against a responsible officer of a corporate trustee of an employer-sponsored fund if, and only if, the person subjects, or threatens to subject, the responsible officer to a detriment on the grounds that:

(a)  the trustee or officer has fulfilled, is fulfilling, or is proposing to fulfil, an obligation imposed on the trustee or officer; or

(b)  the trustee or officer has exercised, is exercising, or is proposing to exercise, any of the trustee’s powers or the officer’s powers, as the case may be, in a particular way.

Employers

(4)  For the purposes of this section, an employer is taken to subject an employee to a detriment if the employer:

(a)  dismisses the employee; or

(b)  injures the employee in his or her employment; or

(c)  alters the position of the employee to the employee’s prejudice.

However, for the purposes of this section, an employer is taken not to subject an employee to a detriment if the employer:

(a)  permanently ceases to be an employer-sponsor of a superannuation fund of which the employee is a member; or

(b)  temporarily ceases to contribute to a superannuation fund in respect of a class of members in which the employee is included; or

(c)  reduces the level of contributions to a superannuation fund in respect of a class of members in which the employee is included.

Reasons

(5)  In civil proceedings arising out of this section:

(a)  it is not necessary for the plaintiff to prove the defendant’s reason for the alleged action; and

(b)  it is a defence if the defendant proves that the action was not motivated (whether in whole or in part) by the alleged reason.

Obligations

(6)  A reference in this section to an obligation imposed on a trustee or a responsible officer is a reference to an obligation imposed on the trustee or officer by this Act or the regulations, by the governing rules of the entity concerned or otherwise.


Powers

(7)  A reference in this section to the powers of a trustee or a responsible officer is a reference to the powers conferred on the trustee or the officer by this Act or the regulations, by the governing rules of the entity concerned or otherwise.

Civil liability

(8)  If:

(a)   a person (the “defendant”) commits an act of victimisation against:

(i)    the trustee of an employer-sponsored fund; or

(ii)   a responsible officer of a corporate trustee of an employer-sponsored fund; and

(b)  the trustee or officer suffers loss or damage because of the act of victimisation;

the trustee or officer may recover the amount of the loss or damage by action against the defendant.

Special meaning of “employee” and “employer”

(9)  The meaning of the expressions “employee” and “employer”, when used in this section, is to be determined as if subsections 12(3) and (8) of the Superannuation Guarantee (Administration) Act 1992 had not been enacted. (Those subsections deem certain contractors to be employees.)

 

PART 8—IN-HOUSE ASSET RULES APPLYING TO REGULATED SUPERANNUATION FUNDS

Division 1Object and interpretation

Object of Part

69.  The object of this Part is to set out rules about the level of the in-house assets of regulated superannuation funds.

Associate of employer-sponsor

70.  For the purposes of this Part:

(a)  a person is an associate of a standard employer-sponsor of a superannuation fund other than a public sector fund if, and only if, the person is an associate of the employer-sponsor within the meaning of subsection 26AAB(14) of the Income Tax Assessment Act; and

(b)  a person is an associate of a standard employer-sponsor of a public sector fund if, and only if:

(i)    the person is a body corporate; and


(ii)    either:

(A)  the person has a controlling interest in, or directs the operations of, the employer-sponsor; or

(B)   the employer-sponsor has a controlling interest in, or directs the operations of, the person.

Meaning of “in-house asset”

Basic meaning

71.(1) For the purposes of this Part, an in-house asset of a superannuation fund is an asset of the fund that is a loan to, or an investment in, a standard employer-sponsor, or an associate of a standard employer-sponsor, of the fund, but does not include:

(a)  a life policy issued by a life insurance company; or

(b)  a deposit with an approved bank; or

(c)  an investment in a pooled superannuation trust, where the trustee of the fund and the trustee of the pooled superannuation trust acted at arm’s length in relation to the making of that investment; or

(d)  an asset of a public sector fund, where the asset consists of an investment in securities issued under the authority of:

(i)    the Commonwealth or a government of a State or a Territory; or

(ii)   a public authority constituted by or under a law of the Commonwealth, a State or a Territory, where the public authority is neither a standard employer-sponsor, nor an associate of a standard employer-sponsor, of the fund; or

(e)  an asset which the Commissioner, by written notice given to the trustee of the fund, determines is not an in-house asset of the fund; or

(f)   an asset which the Commissioner, by written determination, determines is not an in-house asset of:

(i)     any fund; or

(ii)    a class of funds in which the fund is included.

Agreements

(2)  If:

(a)  apart from this subsection, an asset of a fund consists of a loan, or an investment, other than an in-house asset; and

(b)  the 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 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, a standard employer-sponsor of the fund;


then:

(d)  the asset is taken, for the purposes of this Part, to be a loan to, or an investment in, the standard employer-sponsor, or the associate of the employer-sponsor, as the case requires; and

(e)  paragraphs (1)(a) to (f) (inclusive) do not apply to the asset.

2 or more purposes

(3)  Subsection (2) does not stop the same asset from being treated as if it were a loan to, or an investment in, 2 or more persons if 2 or more purposes apply under paragraph (2)(c).

Commissioner’s determination

(4)  If:

(a)   apart from this subsection, an asset of a fund consists of a loan, or an investment, other than an in-house asset; and

(b)  the Commissioner, by written notice given to the trustee of the fund, determines that the asset is to be treated, with effect from the day on which the notice is given, as if the asset were a loan to, or an investment in, a specified standard employer-sponsor of the fund;

then:

(c)   the asset is taken, for the purposes of this Part, to be a loan to, or an investment in, the employer-sponsor; and

(d)  paragraphs (1)(a) to (f) (inclusive) do not apply to the asset.

Paragraph (1)(e) determinations may be retrospective

(5)  A determination under paragraph (1)(e) may be expressed to have taken effect at a time earlier than the time when the determination was made.

Paragraph (1)(f) determinations to be disallowable instruments

(6)  A determination under paragraph (1)(f) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

How this Part applies if there are 2 or more unrelated employer-sponsors

Meaning of “unrelated employer-sponsor”

72.(1)         For the purposes of this section, a standard employer-sponsor (the “first employer-sponsor”) of a superannuation fund is an unrelated employer-sponsor of the fund if, and only if, there is no other standard employer-sponsor of the fund who is an associate of the first employer-sponsor.

Corresponding classes of in-house assets

(2)  For the purposes of this section, the class of the in-house assets of a fund that corresponds to a particular unrelated employer-sponsor is the class of in-house assets that consists of loans to, or investments in, the employer-sponsor or an associate of the employer-sponsor.


Part applies separately in relation to each unrelated employer-sponsor

(3)  If there are 2 or more unrelated employer-sponsors of a superannuation fund:

(a)   this Part does not apply in relation to the fund in relation to the in-house assets of the fund as a whole but, instead, applies in relation to the fund separately in relation to each of the 2 or more corresponding classes of in-house assets of the fund; and

(b)  for the purposes of this Part as so applying in relation to each of the 2 or more corresponding classes of in-house assets of the fund, that corresponding class of in-house assets is to be treated as the whole of the in-house assets of the fund.

Cost of in-house asset

73.(1) For the purposes of this Part, if:

(a)   an asset of a superannuation fund was acquired:

(i)    without consideration; or

(ii)  for consideration other than the arm’s length 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 taken to be the arm’s length value of the asset when it was acquired.

(2)  In this section:

“arm’s length value”, in relation to an asset, means the amount that the acquirer of the asset could reasonably be expected to have been required to pay to acquire the asset under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction.

Historical cost ratio of fund’s in-house assets

74.  For the purposes of this Part, the historical cost ratio of a fund’s in-house assets is the percentage worked out using the formula:

 


Market value ratio of fund’s in-house assets

75.  For the purposes of this Part, the market value ratio of a fund’s in-house assets is the percentage worked out using the formula:

Division 2Historical cost ratio of fund’s in-house assets

Private sector funds established on or after 12 March 1985—historical cost ratio for the 1994-95 year of income

76.(1) This section applies to a regulated superannuation fund, if the fund is a private sector fund established on or after 12 March 1985.

(2)  At all times during the fund’s 1994-95 year of income when the fund was in existence, the historical cost ratio of the fund’s in-house assets must not exceed 10%.

Private sector funds established before 12 March 1985—historical cost ratio for the 1994-95 year of income

77.(1) This section applies to a regulated superannuation fund, if the fund is a private sector fund established before 12 March 1985.

(2)  At all times during the fund’s 1994-95 year of income when the fund was in existence, the historical cost ratio of the fund’s in-house assets must not exceed whichever is the greater of the following percentages:

(a)   whichever is the lesser of the following percentages:

(i)  the percentage equal to the historical cost ratio of the fund’s in-house assets as at the end of 11 March 1985;

(ii)    70%;

(b)  10%.

(3)  Section 72 is to be ignored in working out the percentage mentioned in subparagraph (2)(a)(i).

Public sector funds established on or after 1 July 1990—historical cost ratio for the 1994-95 year of income

78.(1) This section applies to a regulated superannuation fund, if the fund is a public sector fund established on or after 1 July 1990.

(2)  At all times during the fund’s 1994-95 year of income when the fund was in existence, the historical cost ratio of the fund’s in-house assets must not exceed 10%.


Public sector funds established before 1 July 1990—historical cost ratio for the 1994-95 year of income

79.(1) This section applies to a regulated superannuation fund, if the fund is a public sector fund established before 1 July 1990.

(2)  At all times during the fund’s 1994-95 year of income when the fund was in existence, the historical cost ratio of the fund’s in-house assets must not exceed whichever is the greater of the following percentages:

(a)  the percentage equal to the historical cost ratio of the fund’s in-house assets as at the end of 1 July 1990;

(b)  10%.

(3)  Section 72 is to be ignored in working out the percentage mentioned in paragraph (2)(a).

All funds—historical cost ratio for the 1995-96 year of income, the 1996-97 year of income and the 1997-98 year of income

80.(1) This section applies to a regulated superannuation fund.

(2)  At all times during the period:

(a)  beginning at the beginning of the fund’s 1995-96 year of income; and

(b)  ending at the end of the fund’s 1997-98 year of income;

when the fund was in existence, the historical cost ratio of the fund’s in-house assets must not exceed 10%.

Division 3Market value ratio of fund’s in-house assets

All funds—market value ratio for the 1998-99 year of income and the 1999-2000 year of income

81.(1) This section applies to a regulated superannuation fund.

(2)  The market value ratio of the fund’s in-house assets as at the end of:

(a)   the fund’s 1998-99 year of income; or

(b)  the fund’s 1999-2000 year of income;

must not exceed 10%.

All funds—market value ratio for the 2000-2001 year of income and later years of income

82.(1) This section applies to a regulated superannuation fund.

(2)  If the market value ratio of the fund’s in-house assets as at the end of:

(a)  the fund’s 2000-2001 year of income; or

(b)  a later year of income;

exceeds 5%, the trustee of the fund must prepare a written plan.


(3) The plan must specify the amount (the “excess amount”) worked out using the formula:

 

(4)  The plan must set out the steps which the trustee proposes to take in order to ensure that:

(a)   one or more of the fund’s in-house assets held at the end of that year of income are disposed of during the next following year of income; and

(b)  the value of the assets so disposed of is equal to or more than the excess amount.

(5)  The plan must be prepared before the end of the next following year of income.

(6)  The trustee must carry out the steps in the plan.

Certain new in-house asset investments prohibited

83.(1)         This section applies to a regulated superannuation fund.

(2)  If the market value ratio of the fund’s in-house assets exceeds 5%, the trustee of the fund must not acquire an in-house asset.

(3)  If the market value ratio of the fund’s in-house assets does not exceed 5%, the trustee of the fund must not acquire an in-house asset if the acquisition would result in the market value ratio of the fund’s in-house assets exceeding 5%.

Division 4Enforcement

In-house asset rules must be complied with

84.(1) The trustee of a regulated superannuation fund must take all reasonable steps to ensure that the provisions of Divisions 2 and 3 are complied with.

(2)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

(3)  A contravention of subsection (1) does not affect the validity of a transaction.


Division 5Anti-avoidance

Prohibition of avoidance schemes

Prohibition

85.(1) A person must not enter into, commence to carry out, or carry out, a scheme if the person entered into, commenced to carry out, or carried out the scheme or any part of the scheme with the intention that:

(a)  the scheme would result, or be likely to result, in an artificial reduction in the market value ratio of the fund’s in-house assets; and

(b)  that artificial reduction would avoid the application of any provision of this Part to the fund.

Civil penalty provision

(2)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or being involved in a contravention of, that subsection.

Validity of transaction not affected by contravention of subsection (1)

(3)  A contravention of subsection (1) does not affect the validity of a transaction.

Scheme

(4)  In this section:

“scheme” means:

(a)  any agreement, arrangement, understanding, promise or undertaking:

(i)    whether express or implied; or

(ii)  whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b)  any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

 

PART 9—EQUAL REPRESENTATION OF EMPLOYERS AND MEMBERS—EMPLOYER-SPONSORED FUNDS

Object of Part

86.  The object of this Part is to set out rules about the representation of employers and members in relation to the management and control of standard employer-sponsored funds.


Consequences of non-compliance with this Part

87.  It is not an offence to contravene this Part and a failure to comply with this Part does not result in the invalidity of a transaction. However, a contravention of this Part may result in a fund not being a complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act (see Part 5 of this Act).

This Part does not apply if acting trustee appointed under Part 17

88.  This Part does not apply to a fund if the fund has an acting trustee appointed under Part 17.

Basic equal representation rules

Basic rule

89.(1)         For the purposes of this Part, a fund complies with the basic equal representation rules if:

(a)   both:

(i)    the fund has a group of 2 or more individual trustees;

(ii)  the group of trustees consists of equal numbers of employer representatives and member representatives; or

(b)  both:

(i)    the fund has a single corporate trustee;

(ii)   the board of the corporate trustee consists of equal numbers of employer representatives and member representatives.

Additional independent trustee or additional independent director

(2)  For the purposes of the application of the basic equal representation rules to a fund, a group of trustees, or the board of a corporate trustee, is taken to consist of equal numbers of employer representatives and member representatives if:

(a)   the group or board includes an additional independent trustee or an additional independent director, as the case may be; and

(b)  the additional independent trustee or additional independent director, as the case may be, is appointed at the request of the employer representatives, or the member representatives, who are the members of the group or board; and

(c)   provision is made in the governing rules for the appointment of the independent additional trustee or additional independent director, as the case may be; and

(d)  the governing rules do not allow the additional independent trustee or additional independent director, as the case may be, to exercise a casting vote in any proceedings of the group or board concerned.


Vacancy

(3)  For the purposes of the application of the basic equal representation rules to a fund, if:

(a)  a vacancy occurs in the membership of a group of trustees or of the board of a corporate trustee; and

(b)  immediately before the vacancy occurred, the fund complied with the basic equal representation rules; and

(c)  the vacancy is filled within 90 days after it occurred; and

(d)  immediately after the vacancy is filled, the fund complies with the basic equal representation rules;

the fund is taken to have complied with the basic equal representation rules at all times during the period of the vacancy.

Pre-1 July 1995 rules—funds with fewer than 200 members

Application

90.(1) This section applies to a standard employer-sponsored fund (other than a public offer superannuation fund) with fewer than 200 members, where:

(a)   the fund is a private sector fund established on or after 16 December 1985; or

(b)  the fund is a public sector fund established on or after 25 May 1988; or

(c)  if there are 2 or more standard employer-sponsors of the fund—any one of those employer-sponsors is not an associate of any other of those employer-sponsors.

Pre-1 July 1995

(2)  This section does not apply on or after 1 July 1995.

Rules

(3)  The fund must comply with:

(a)  the basic equal representation rules; or

(b)  the alternative agreed representation rule set out in subsection (4).

Alternative agreed representation rule

(4)  For the purposes of this section, a fund complies with the alternative agreed representation rule if any of the trustees of the fund are appointed following nomination by agreement between:

(a)  either:

(i)    the members of the fund; or

(ii)   a trade union, or other organisation, representing the interests of those members; and


(b)  either:

(i)    the employer or employers of those members; or

(ii)  an organisation representing the interests of that employer or those employers.

Pre-1 July 1995 rules—funds with 200 or more members

Application

91.(1) This section applies to a standard employer-sponsored fund with 200 or more members, where:

(a)   the fund is a private sector fund established on or after 16 December 1985; or

(b)  the fund is a public sector fund established on or after 25 May 1988; or

(c)   if there are 2 or more standard employer-sponsors of the fund—any one of those employer-sponsors is not an associate of any other of those employer-sponsors.

Pre-1 July 1995

(2)  This section does not apply on or after 1 July 1995.

Public offer funds

(3)  If the fund is a public offer superannuation fund:

(a)   the trustee of the fund must be an independent trustee; and

(b)  if the regulations provide that the fund is subject to rules about the existence, number and functions of policy committees (“prescribed policy committees”)—the fund must comply with those rules; and

(c)   each prescribed policy committee must consist of equal numbers of employer representatives and member representatives.

Non-public offer funds

(4)  If the fund is not a public offer superannuation fund, the fund must comply with the basic equal representation rules.

Transitional

(5)  If, at a particular time, the number of members of a fund increases from a number less than 200 to 200 or more:

(a)   the trustee of the fund must make such arrangements (if any) as are necessary to enable the fund to comply with this section; and

(b)  the fund does not have to comply with this section during the period:

(i)     beginning at that time; and

(ii)    ending at whichever is the earlier of the following times:


(A)  the time at which such arrangements are made;

(B)   the end of 90 days.

Post-30 June 1995 rules—funds with more than 4, but fewer than 50, members

Application

92.(1) This section applies to a standard employer-sponsored fund with more than 4, but fewer than 50, members.

Post-30 June 1995

(2)  This section applies on and after 1 July 1995.

Public offer funds

(3)  If the fund is a public offer superannuation fund:

(a)  the trustee of the fund must be an independent trustee; and

(b)  if the regulations provide that the fund is subject to rules about the existence, number and functions of policy committees (“prescribed policy committees”)—the fund must comply with those rules; and

(c)  each prescribed policy committee must consist of equal numbers of employer representatives and member representatives.

Non-public offer funds

(4)  If the fund is not a public offer superannuation fund, the fund must comply with:

(a)   the basic equal representation rules; or

(b)  the alternative agreed representation rule set out in subsection (5).

Alternative agreed representation rule

(5)  For the purposes of this section, a fund complies with the alternative agreed representation rule if:

(a)   there is a single corporate trustee of the fund; and

(b)  the trustee is appointed following nomination by agreement between:

(i)     a majority of the members of the fund; and

(ii)    the employer or employers of those members; and

(c)   there is in force an approval of the trustee under subsection (6); and

(d)  the trustee is not an associate of a standard employer-sponsor of the fund.

Approval of trustee

(6)  A body corporate may apply for an approval under this subsection.

Application for approval

(7)  The application must be in writing and must be given to the Commissioner.


Information to accompany application

(8)  The application must be accompanied by such information as the Commissioner requires.

Further information

(9)  The Commissioner may refuse to consider the application unless the applicant gives the Commissioner such further information about the application as the Commissioner requires.

Decision

(10)  After considering the application, the Commissioner must:

(a)   grant the approval; or

(b)  refuse to grant the approval.

Reasons for refusing approval

(11)  If the Commissioner makes a decision refusing an application for the grant of an approval, the Commissioner must cause to be given to the applicant a written notice setting out the decision and giving the reasons for that decision.

Revocation of approval

(12)  The Commissioner may, by written notice given to the holder of an approval, revoke the approval.

Post-30 June 1995 rules—funds with more than 49 members

Application

93.(1) This section applies to a standard employer-sponsored fund with more than 49 members.

Post-30 June 1995

(2)  This section applies on and after 1 July 1995.

Public offer funds

(3)  If the fund is a public offer superannuation fund:

(a)   the trustee of the fund must be an independent trustee; and

(b)  if the regulations provide that the fund is subject to rules about the existence, number and functions of policy committees (“prescribed policy committees”)—the fund must comply with those rules; and

(c)   each prescribed policy committee must consist of equal numbers of employer representatives and member representatives.

Non-public offer funds

(4)  If the fund is not a public offer superannuation fund, the fund must comply with the basic equal representation rules.


Transitional

(5)  If, at a particular time, the number of members of a fund increases from a number greater than 4, but less than 50, to 50 or more:

(a)   the trustee of the fund must make such arrangements (if any) as are necessary to enable the fund to comply with this section; and

(b)  the fund does not have to comply with this section during the period:

(i)      beginning at that time; and

(ii)     ending at whichever is the earlier of the following times:

(A)  the time at which such arrangements are made;

(B)   the end of 90 days; and

(c)   despite subsection 92(1), the fund must comply with subsection 92(3) or (4) during that 90-day period.

 

PART 10—PROVISIONS APPLYING ONLY TO APPROVED DEPOSIT FUNDS

Object of Part

94.  The object of this Part is to set out rules about borrowing by the trustees of approved deposit funds.

Borrowing

95.(1) Except with the approval of the Commissioner under subsection (2) or except as provided by subsection (3), the trustee of an approved deposit fund must not borrow money.

(2)  The Commissioner may approve a borrowing by the trustee of an approved deposit fund if the trustee satisfies the Commissioner that special circumstances exist that justify the borrowing.

(3)  Subsection (1) does not prohibit the trustee of an approved deposit fund from borrowing money if:

(a)  the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of any of the following:

(i)     bonds, debentures, stock, bills of exchange or other securities;

(ii)    shares in a company;

(iii)   units in a unit trust;

(iv)   futures contracts;

(v)    forward contracts;

(vi)   interest rates swap contracts;

(vii)  currency swap contracts;

(viii) forward exchange rate contracts;

(ix)   forward interest rate contracts;


(x)  a right or option in respect of such a security, share, unit, contract or policy;

(xi)    any similar financial instrument;

(xii)    foreign currency; and

(b)  both:

(i)  at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and

(ii)   the borrowing is not taken, under a written determination made by the Commissioner, to be exempt from this paragraph; and

(c)   the period of the borrowing does not exceed 7 days; and

(d)  if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.

(4)  A determination made by the Commissioner under subsection (3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

(5)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

 

PART 11—PROVISIONS APPLYING ONLY TO POOLED SUPERANNUATION TRUSTS

Object of Part

96.  The object of this Part is to set out special rules applying only to pooled superannuation trusts.

Borrowing

97.(1) Subject to subsection (2), the trustee of a pooled superannuation trust must not borrow money.

(2)  Subsection (1) does not prohibit the trustee of a pooled superannuation trust from borrowing money if:

(a)   the purpose of the borrowing is to enable the trustee to make a payment to a beneficiary in the trust which the trustee is required to make by law or by the governing rules and which, apart from the borrowing, the trustee would not be able to make; and

(b)  the period of the borrowing does not exceed 90 days; and

(c)   if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the trust.

(3)  Subsection (1) does not prohibit the trustee of a pooled superannuation trust from borrowing money if:


(a)  the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of any of the following:

(i)  bonds, debentures, stock, bills of exchange or other securities;

(ii)  shares in a company;

(iii)  units in a unit trust;

(iv)  futures contracts;

(v)  forward contracts;

(vi)  interest rates swap contracts;

(vii)  currency swap contracts;

(viii)  forward exchange rate contracts;

(ix)  forward interest rate contracts;

(x)    a right or option in respect of such a security, share, unit, contract or policy;

(xi)    any similar financial instrument;

(xii)    foreign currency; and

(b)  both:

(i)  at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and

(ii)  the borrowing is not taken, under a written determination made by the Commissioner, to be exempt from this paragraph; and

(c)  the period of the borrowing does not exceed 7 days; and

(d)  if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the trust.

(4)  A determination made by the Commissioner under subsection (3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Lending to unit-holders prohibited

98.  The trustee or an investment manager of a pooled superannuation trust must not:

(a)  lend money of the trust to a beneficiary of the trust; or

(b)  give any other financial assistance using the resources of the trust to a beneficiary of the trust.

Civil penalty provisions

99.  Subsection 97(1) and section 98 are civil penalty provisions as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, either of them.


PART 12—DUTIES OF TRUSTEES AND INVESTMENT MANAGERS OF SUPERANNUATION ENTITIES

Object of Part

100. The object of this Part is to impose special duties on the trustees and investment managers of superannuation entities.

Duty to establish arrangements for dealing with inquiries or complaints

101.(1) The trustee of a regulated superannuation fund other than an excluded superannuation fund, or of an approved deposit fund other than an excluded approved deposit fund, must take all reasonable steps to ensure that there are at all times in force arrangements under which:

(a)   beneficiaries have the right to make inquiries into, or complaints about, the operation or management of the fund in relation to the beneficiary making the inquiry or complaint; and

(b)  inquiries or complaints so made will be properly considered and dealt with within 90 days after they were made.

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Duty to seek information from investment manager

102.(1) If the trustee of a superannuation entity enters into an agreement with an investment manager under which money of the entity will be placed under the control of the investment manager, the trustee must:

(a)  ensure that the agreement contains adequate provision to enable the trustee to require the investment manager from time to time:

(i)  to provide appropriate information as to the making of, and return on, the investments; and

(ii)  to provide such information as is necessary to enable the trustee to assess the capability of the investment manager to manage the investments of the entity; and

(b)  whenever it is necessary or desirable to do so, require the investment manager to provide the information.

(2)  If:

(a)  the trustee of a superannuation entity entered into an agreement before the commencement of this section with an investment manager under which money of the entity would be placed under the control of the investment manager; and

(b)  the agreement does not contain a provision of a kind mentioned in paragraph (1)(a);


the trustee must as soon as practicable:

(c)  seek to have the agreement amended so as to contain such a provision; or

(d)  if the investment manager refuses to agree to such an amendment—terminate the agreement.

(3)  The trustee of a superannuation entity:

(a)   may terminate an agreement under paragraph (2)(d) despite anything in the agreement; and

(b)  is not under any liability to the investment manager because of the termination.

(4)  A person who intentionally or recklessly contravenes subsection (1) or (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Duty to keep minutes and records

103.(1) If a superannuation entity has a group of 2 or more individual trustees, the trustees must keep, and retain for at least 10 years, minutes of all meetings of the trustees at which matters affecting the entity were considered.

(2)  If there is only one trustee of a superannuation entity:

(a)   if the trustee is a corporate trustee—the directors of the trustee must keep, and retain for at least 10 years, minutes of all meetings of the directors at which matters affecting the entity were considered; or

(b)  if the trustee is an individual—the trustee must keep, and retain for at least 10 years, a record of all decisions made by the trustee in respect of matters affecting the entity.

(3)  A person who intentionally or recklessly contravenes subsection (1) or (2) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Duty to keep records of changes of trustees

104.(1) The trustee of a superannuation entity must keep, and retain for at least 10 years, up-to-date records of all changes of trustees, and changes of directors of any corporate trustee, of the entity and of all consents given under section 118.

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Duty to keep reports

105.(1) The trustee of a regulated superannuation fund or of an approved deposit fund must:


(a)  keep, and retain so long as they are relevant and in any event for at least 10 years, copies of reports that were given in the same form (apart from differences relating to the names and addresses of the persons to whom the notices were given):

(i)  in the case of a regulated superannuation fund—to all members of the fund, or to all members included in a particular class of members; or

(ii)  in the case of an approved deposit fund—to all beneficiaries in the fund, or to all beneficiaries included in a particular class of beneficiaries;

if the reports were given under this Act, under the Superannuation Entities (Taxation) Act 1987 or under the governing rules; and

(b)  make those copies available for inspection by a member of the staff of the Commissioner if requested to do so by a member of that staff.

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Duty to notify Commissioner of significant adverse events

106.(1) If the trustee of a superannuation entity becomes aware of the occurrence of an event having a significant adverse effect on the financial position of the entity, the trustee must give written notice to the Commissioner setting out particulars of the event. The trustee must do this no later than the third business day after becoming aware of the event.

(2)  An event has a significant adverse effect on the financial position of an entity if, as a result of the event, the trustee will not, or may not, be able, at a time before the next annual report by the trustee to beneficiaries entitled to the report, to make payments to beneficiaries as and when the obligation to make those payments arises.

(3)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

Duty of trustee of employer-sponsored fund to establish procedure for appointing member representatives

107.(1) This section applies if the trustee of a standard employer-sponsored fund (other than an excluded superannuation fund) is required by law:

(a)  if the trustee is a single corporate trustee—to have member representatives on the board of directors of the trustee; or

(b)  if there is a group of 2 or more individual trustees—to have member representatives included in the group; or


(c)  in any other case—to have member representatives on a policy committee of the fund.

(2)  The trustee must:

(a)   establish (whether by inclusion in the governing rules or otherwise) rules:

(i)  setting out a procedure for appointing the member representatives; and

(ii)  ensuring that member representatives so appointed can only be removed by the same procedure as that by which they were appointed, except in the event of:

(A)  death; or

(B)   mental or physical incapacity; or

(C)   retirement; or

(D)  termination of employment; or

(E)   the member representative becoming a disqualified person within the meaning of Part 15; or

(F)  the suspension or removal of the trustee under Part 17; or

(G)  other prescribed circumstances; and

(b)  publish those rules in such a way as will make members of the fund aware of the procedure for appointment and removal of member representatives.

(3)  A person who intentionally or recklessly contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Duty of trustee of employer-sponsored fund to establish procedure for appointing independent trustee or independent member of board of directors of corporate trustee

108.(1) This section applies if a standard employer-sponsored fund (other than an excluded superannuation fund) relies on subsection 89(2) in order to comply with the basic equal representation rules. (That subsection deals with an additional independent trustee or an additional independent director of a corporate trustee.)

(2)  The trustee must:

(a)  establish (whether by inclusion in the governing rules or otherwise) rules ensuring that the additional independent trustee or additional independent director, as the case may be, can only be removed by the same procedure as that by which the additional independent trustee or additional independent director was appointed, except in the event of:


(i)     death; or

(ii)    mental or physical incapacity; or

(iii)   the additional independent trustee or additional independent director, as the case may be, becoming a disqualified person within the meaning of Part 15; or

(iv)   the suspension or removal of the trustee under Part 17; or

(v)    other prescribed circumstances; and

(b)  publish those rules in such a way as will make members of the fund aware of the procedure for removal of the additional independent trustee or additional independent director, as the case may be.

(3)  A person who intentionally or recklessly contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Investments of superannuation entity to be made on an arm’s length basis

109.(1) The trustee or investment manager of a superannuation entity must not invest money of the entity unless the trustee or investment manager, as the case may be, and the other party to the relevant transaction are dealing with each other at arm’s length in respect of the transaction.

(2)  Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

(3)  A contravention of subsection (1) does not affect the validity of a transaction.

 

PART 13—ACCOUNTS OF SUPERANNUATION ENTITIES

Object of Part

110.            The object of this Part is to set out rules about the accounts of superannuation entities.

Accounting records

111.(1) The trustee of a superannuation entity must:

(a)   keep such accounting records as correctly record and explain the transactions and financial position of the entity; and

(b)  so keep its accounting records so as to enable the following to be prepared:

(i)  the accounts and statements of the entity mentioned in section 112;

(ii)   the returns of the entity mentioned in section 36; and


(c)  so keep its accounting records so as to enable those accounts, statements and returns to be conveniently and properly audited in accordance with this Act.

(2)  If accounting records of a superannuation entity are kept in accordance with subsection (1), the trustee of the superannuation entity must:

(a)  retain the records for at least 5 years after the end of the year of income to which the transactions relate; and

(b)  cause the records to be kept in Australia; and

(c)  keep the records:

(i)    in writing in the English language; or

(ii)  in a form in which they are readily accessible and readily convertible into writing in the English language.

(3)  A person who intentionally or recklessly contravenes subsection (1) or (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Accounts

112.(1) The trustee of a superannuation entity must, in respect of each year of income of the entity, prepare the following accounts and statements in respect of the entity:

(a)   except where the regulations provide that this paragraph does not apply—a statement of financial position;

(b)  except where the regulations provide that this paragraph does not apply—an operating statement;

(c)   such accounts and statements as are specified in the regulations.

(2)  The regulations may make provision for or in relation to the preparation of accounts and statements covered by subsection (1). If the regulations make such provision, the accounts and statements covered by subsection (1) must be prepared in accordance with the regulations.

(3)  The accounts and statements prepared in accordance with subsection (1) must be signed as follows:

(a)   if there is a single corporate trustee—by at least 2 directors of the corporate trustee;

(b)  if there is a single individual trustee—by that trustee;

(c)   if there is a group of 2 or more individual trustees—by at least 2 of those trustees.

(4)  The trustee must retain the accounts and statements prepared in accordance with subsection (1) for a period of 5 years after the end of the year of income to which they relate.


(5)  A person who intentionally or recklessly contravenes this section is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Audit of accounts

113.(1) The accounts and statements of a superannuation entity prepared in respect of a year of income in accordance with this Part must be audited by an approved auditor.

(2)  The trustee of the entity must make such arrangements as are necessary to enable the audit of those accounts and statements in accordance with this Part.

(3)  A person who intentionally or recklessly contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

(4)  The auditor must, for the purposes of this Part, give to the trustee a certificate relating to the accounts and statements. The certificate must be given within the prescribed period after the year of income to which the accounts and statements relate. The certificate must be in the approved form.

(5)  A person who intentionally or recklessly contravenes subsection (4) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

 

PART 14—OTHER PROVISIONS APPLYING TO SUPERANNUATION ENTITIES

Object of Part

114.            The object of this Part is to set out various rules applying to superannuation entities.

Trustee of superannuation entity may maintain reserves

115.(1) The trustee of a superannuation entity may maintain reserves of the entity.

(2)  Subsection (1) does not apply if the governing rules of the entity prohibit the maintenance of reserves.

Agreement between trustee and investment manager

116.            Despite anything in the governing rules of a superannuation entity, any provision of an agreement between the trustee of the entity and an investment manager that purports to exempt the investment manager from liability for negligence, or to limit that liability, is void.


Circumstances in which amounts may be paid out of an employer-sponsored fund to an employer-sponsor

Application21 October 1992 to Royal Assent

117.(1) This section does not apply to a standard employer-sponsored fund during the period:

(a)  beginning on 21 October 1992; and

(b)  ending immediately before the day on which this Act received the Royal Assent;

unless the fund is a complying superannuation fund in relation to each year of income of the fund any part of which occurred during that period.

Excluded superannuation funds

(2)  This section does not apply to an excluded superannuation fund during the period:

(a)  beginning on 21 October 1992; and

(b)  ending immediately before the day on which this Act received the Royal Assent.

This section does not apply to an excluded superannuation fund after the end of that period if, at all times after the end of that period when the fund was in existence, the fund was an excluded superannuation fund.

Basic prohibition

(3)  Except as provided by this section, the trustee of a standard employer-sponsored fund must not pay an amount, or permit an amount to be paid, out of the fund to a standard employer-sponsor.

Exceptionmanagement services

(4)  A reasonable amount may be paid out of any standard employer-sponsored fund to a standard employer-sponsor for services rendered in connection with the management or operation of the fund.

Exceptionspecial procedures followed

(5)  An amount may be paid out of a standard employer-sponsored fund to a standard employer-sponsor if the following requirements are fulfilled:

(a)  apart from this section, the governing rules would require or permit the amount to be paid to the employer-sponsor;

(b)  whichever of the following subparagraphs is applicable has been complied with:

(i)    if the fund has a single corporate trustee:

(A)  the directors of the trustee have, by resolution, declared their intention to pay the amount out of the fund to the employer-sponsor; and


(B)  when that resolution was passed, the board of the corporate trustee consisted of equal numbers of employer representatives and member representatives;

(ii)          if the fund has a group of 2 or more individual trustees:

(A)   the trustees have, by resolution, declared their intention to pay the amount out of the fund to the employer-sponsor; and

(B)   when that resolution was passed, the group of trustees consisted of equal numbers of employer representatives and member representatives;

(iii) in any other case—the trustee has declared his or her intention to pay the amount out of the fund to the employer-sponsor;

(c)  before the resolution referred to in subparagraph (b)(i) or (ii), as the case may be, was passed:

(i)  an actuary had given a written certificate to the trustee stating that, if the amount were paid, the fund would remain in a satisfactory financial position; and

(ii)  the trustee was satisfied that the payment of the amount and the making of the changes (if any) to the governing rules were reasonable having regard to the interests of the employer-sponsor and of the beneficiaries in the fund;

(d)  the trustee gave notice in accordance with the governing rules to all members of the fund:

(i)  stating the intention to pay the amount to the employer-sponsor; and

(ii)  stating that an actuary has given a certificate to the trustee as required by subparagraph (c)(i); and

(iii) setting out particulars of any changes to the governing rules that were proposed to be made if the amount were paid to the employer-sponsor;

(e)  at the end of 3 months after the notice mentioned in paragraph (d) was given to members, the provisions of whichever of the following subparagraphs is applicable were complied with:

(i)  if the fund has a single corporate trustee—the directors of the corporate trustee passed a resolution agreeing to pay the amount out of the fund to the employer-sponsor;

(ii)  if the fund has a group of 2 or more individual trustees—the trustees passed a resolution agreeing to pay the amount out of the fund to the employer-sponsor;

(iii) in any other case—the trustee decided to make the payment;

(f)  any other requirements made by the regulations.


Commissioner may waive requirements

(6)  The Commissioner may waive any or all of the requirements specified in subsection (5) in relation to a matter occurring on or after the date of commencement of this section.

Civil penalty provision

(7)  Subsection (3) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.

This section does not apply to loans to, or investments in, a standard employer-sponsor

(8)  A reference in this section to the payment of an amount out of a standard employer-sponsored fund to a standard employer-sponsor does not include a reference to the payment of an amount by way of the making of a loan to, or an investment in, the standard employer-sponsor.

Additional independent trustee and additional independent director

(9)  For the purposes of the application of this section to a fund, a group of trustees, or the board of a corporate trustee, is taken to consist of equal numbers of employer representatives and member representatives if:

(a)   the group or board includes an additional independent trustee or an additional independent director, as the case may be; and

(b)  the additional independent trustee or additional independent director, as the case may be, is appointed at the request of the employer representatives, or the member representatives, who are the members of the group or board; and

(c)   provision is made in the governing rules for the appointment of the independent additional trustee or additional independent director, as the case may be; and

(d)  the governing rules do not allow the additional independent trustee or additional independent director, as the case may be, to exercise a casting vote in any proceedings of the group or board concerned.

Definitions

(10)  In this section:

“complying superannuation fund” means a complying superannuation fund within the meaning of Part IX of the Income Tax Assessment Act, as in force immediately before the day on which this Act received the Royal Assent;

“standard employer-sponsor”, in relation to a standard employer-sponsored fund, includes:

(a)  if a standard employer-sponsor is a body corporate—another body corporate that is related to the employer-sponsor; or


(b)  if a standard employer-sponsor is an individual—an associate of the employer-sponsor.

Consents to appointments

118.  A person is not eligible for appointment as a trustee of a superannuation entity, or as a director of a corporate trustee of a superannuation entity, unless the person has consented in writing to the appointment.

 

PART 15—STANDARDS FOR TRUSTEES, CUSTODIANS AND INVESTMENT MANAGERS OF SUPERANNUATION ENTITIES

Object of Part

119.  The object of this Part is to set out rules about the eligibility of trustees, custodians and investment managers of superannuation entities.

Disqualified persons

Individuals

120.(1) For the purposes of this Part, an individual is a disqualified person if:

(a)  at any time (including a time before the commencement of this section):

(i)  the individual was convicted of an offence against or arising out of a law of the Commonwealth, a State, a Territory or a foreign country, being an offence in respect of dishonest conduct; or

(ii)    a civil penalty order was made in relation to the person; or

(b)  the person is an insolvent under administration.

Bodies corporate

(2)  For the purposes of this Part, a body corporate is a disqualified person if:

(a)  both:

(i)    a responsible officer of the body is a disqualified person; and

(ii)   the responsible officer was a disqualified person at all times during the immediately preceding period of 28 days; or

(b)  a receiver, or a receiver and manager, has been appointed in respect of property beneficially owned by the body; or

(c)  an official manager or deputy official manager has been appointed in respect of the body; or

(d)  a provisional liquidator has been appointed in respect of the body; or

(e)  the body has begun to be wound up.


Convictions

(3)  A reference in this section to a person who has been convicted of an offence includes a reference to a person in respect of whom an order has been made under section 19B of the Crimes Act 1914, or under a corresponding provision of a law of a State, a Territory or a foreign country, in relation to the offence.

Law on spent convictions does not apply

(4)  Division 3 of Part VIIC of the Crimes Act 1914 does not apply in relation to the disclosure of information about a conviction of the kind mentioned in paragraph (1)(a), if the disclosure is for the purposes of this Part.

Disqualified persons not to be trustees of superannuation entities

121.(1) A person must not intentionally be, or act as, a trustee of a superannuation entity if the person is, and knows that the person is, a disqualified person.

Penalty: Imprisonment for 2 years.

(2)  A body corporate that is a trustee of a superannuation entity must not, without reasonable excuse, permit a disqualified person to be, or act as, a responsible officer of the body corporate if the body corporate knows, or has reasonable grounds to suspect, that:

(a)   the person is a disqualified person; and

(b)  the person was a disqualified person at all times during the immediately preceding period of 28 days

Penalty: 600 penalty units.

(3)  If a trustee of a superannuation entity is or becomes a disqualified person, the trustee must immediately tell the Commissioner in writing.

Penalty for a contravention of this subsection: 50 penalty units.

Investment manager must not appoint or engage custodian without the trustee’s consent

122.(1) An investment manager of a superannuation entity must not appoint or engage a custodian of the entity without the written consent of the trustee of the entity.

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Persons who may be appointed to be custodians of superannuation entities

123.(1) A person must not intentionally be the custodian of a superannuation entity (other than an excluded fund) unless:


 

(a)  the person is a body corporate; and

(b)  either of the following subparagraphs applies:

(i)  the value of the net tangible assets of the body corporate is not less than the amount prescribed by the regulations;

(ii)  the trustee of the entity is entitled to the benefit, in respect of the due performance of the body corporate’s duties as custodian of the entity, of an approved guarantee of an amount that is not less than the amount prescribed by the regulations.

Penalty: 600 penalty units.

(2)  Subsection (1) does not prohibit a person from being a custodian of a superannuation entity if:

(a)   the person immediately tells the trustee of the entity and the Commissioner in writing that paragraph (1)(b) does not, or has ceased to, apply; and

(b)  the person is the custodian of the entity during:

(i)  the 28-day period beginning at whichever is the later of the following times:

(A)  the time when paragraph (1)(b) ceased to apply to the custodian;

(B)  the beginning of the entity’s 1994-95 year of income; or

(ii)     such longer period as the Commissioner allows; and

(c)   the trustee of the entity has made, or proposes to make, arrangements for the orderly dismissal of the person as the custodian; and

(d)  the person is taking, or is willing to take, all reasonable steps to assist the trustee in carrying out those arrangements.

(3)  If paragraph (1)(b) does not, or ceases to, apply to the custodian of a superannuation entity:

(a)  the custodian must immediately tell the trustee of the entity and the Commissioner in writing; and

(b)  the trustee must make arrangements for the orderly dismissal of the custodian; and

(c)  the trustee must make those arrangements before the end of:

(i)  the 28-day period beginning at whichever is the later of the following times:

(A)  the time when paragraph (1)(b) ceased to apply to the custodian;

(B)  the beginning of the entity’s 1994-95 year of income; or

(ii)    such longer period as the Commissioner allows.


(4)  A person who contravenes subsection (3) because of paragraph (a) of that subsection is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

(5)  A person who contravenes subsection (3) because of paragraph (b) or (c) of that subsection is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Investment managers must be appointed in writing

124.(1) The trustee of a superannuation entity must not make a non-written appointment of an investment manager of the entity.

(2)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Individuals not to be investment managers of superannuation entities

125. A person must not intentionally be, or act as, an investment manager of a superannuation entity (other than an excluded fund) if the person is not a body corporate.

Penalty: Imprisonment for 2 years.

Disqualified persons not to be investment managers of superannuation entities

126.(1) A person must not intentionally be, or act as, an investment manager of a superannuation entity (other than an excluded fund) if the person is, and knows that the person is, a disqualified person.

Penalty: Imprisonment for 2 years.

(2)  Subsection (1) does not prohibit a person from being or acting as an investment manager of a superannuation entity if:

(a)  the person immediately tells the trustee of the entity and the Commissioner in writing that the person is, or has become, a disqualified person; and

(b)  the person is, or is acting as, the investment manager of the entity during:

(i)  the 28-day period beginning at whichever is the later of the following times:

(A)  the time when the person became a disqualified person;

(B)   the beginning of the entity’s 1994-95 year of income; or

(ii)     such longer period as the Commissioner allows; and

(c)  the trustee of the entity has made, or proposes to make, arrangements for the orderly dismissal of the person as the investment manager; and


(d)  the person is taking, or is willing to take, all reasonable steps to assist the trustee in carrying out those arrangements.

(3)  A body corporate that is an investment manager of a superannuation entity must not permit a disqualified person to be, or act as, a responsible officer of the body corporate if the body corporate knows, or has reasonable grounds to suspect, that the person is a disqualified person.

Penalty: 600 penalty units.

(4)  If an investment manager of a superannuation entity is or becomes a disqualified person:

(a)   the investment manager must immediately tell the trustee of the entity and the Commissioner in writing; and

(b)  the trustee must make arrangements for the orderly dismissal of the investment manager; and

(c)   the trustee must make those arrangements before the end of:

(i)  the 28-day period beginning at whichever is the later of the following times:

(A)  the time when the investment manager became a disqualified person;

(B)  the beginning of the entity’s 1994-95 year of income; or

(ii)    such longer period as the Commissioner allows.

(5)  A person who contravenes subsection (4) because of paragraph (a) of that subsection is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

(6)  A person who contravenes subsection (4) because of paragraph (b) or (c) of that subsection is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Non-compliance not to invalidate appointment or transaction

127.  A failure to comply with a provision of this Part does not affect the validity of an appointment or transaction.

 

PART 16—ACTUARIES AND AUDITORS OF SUPERANNUATION ENTITIES

Object of Part

128.  The object of this Part is to set out special rules about actuaries and auditors of superannuation entities.

Obligations of actuaries and auditors—compliance

When section applies

129.(1) This section applies to a person (the “first person”) in relation to a superannuation entity if:


(a)  the first person forms the opinion that it is likely that a contravention of this Act or the regulations may have occurred, may be occurring, or may occur, in relation to the entity; and

(b)  the first person formed the opinion in the course of, or in connection with, the performance by the first person of actuarial or audit functions under this Act or the regulations in relation to the entity.

Section does not apply if the first person believes that his or her opinion is not relevant to the performance of actuarial or audit functions

(2)  This section does not apply to the first person if the first person has an honest belief that the opinion is not relevant to the performance of those functions.

Trustee to be told about contravention

(3)  The first person must tell the trustee of the entity about the matter in writing. However, this rule does not apply if the first person has an honest belief that the trustee has already been told about the matter.

Commissioner may be told

(4)  The first person may tell the Commissioner about the matter. The first person is not liable in a civil action or civil proceeding in relation to the telling.

Trustee’s report

(5)  If the first person:

(a)  tells the trustee about the matter; and

(b)  does not tell the Commissioner about the matter;

the first person must, as soon as practicable, give the trustee a written notice requesting the trustee to give the first person, before the end of the period specified in the notice, a written report about the action (if any) the trustee has taken, or proposes to take, to deal with the matter. The period specified in the notice must be reasonable. The trustee must comply with the request.

Report to Commissioner

(6)  If:

(a)  the first person makes such a request; and

(b)  either:

(i)    the trustee does not comply with the request; or

(ii)   the trustee complies with the request, but the first person is dissatisfied with:

(A)  the action taken, or proposed to be taken, by the trustee to deal with the matter concerned; or

(B)   the inaction of the trustee in relation to the matter concerned;


the first person must give the Commissioner a written report about the matter as soon as practicable after:

(c)   if subparagraph (b)(i) applies—the expiry of the deadline for the receipt of the report; or

(d)  if subparagraph (b)(ii) applies—the first person becomes dissatisfied as mentioned in that subparagraph.

Offence

(7)  A person who intentionally or recklessly contravenes subsection (3), (5) or (6) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Obligations of actuaries and auditors—solvency

When section applies

130.(1) This section applies to a person (the “first person”) in relation to a superannuation entity if:

(a)  the first person forms the opinion that the financial position of the entity may be, or may be about to become, unsatisfactory; and

(b)  the first person formed the opinion in the course of, or in connection with, the performance by the first person of actuarial or audit functions under this Act or the regulations in relation to the entity.

Trustee to be told about financial position

(2)  The first person must tell the trustee of the entity about the matter in writing. However, this rule does not apply if the first person has an honest belief that the trustee has already been told about the matter.

Commissioner may be told

(3)  The first person may tell the Commissioner about the matter. The first person is not liable in a civil action or civil proceeding in relation to the telling.

Trustee’s report

(4)  If the first person:

(a)   tells the trustee about the matter; and

(b)  does not tell the Commissioner about the matter;

the first person must, as soon as practicable, give the trustee a written notice requesting the trustee to give the first person, before the end of the period specified in the notice, a written report about the action (if any) the trustee has taken, or proposes to take, to deal with the matter. The period specified in the notice must be reasonable. The trustee must comply with the request.

Report to Commissioner

(5)  If:

(a)  the first person makes such a request; and


(b)  either:

(i)    the trustee does not comply with the request; or

(ii)  the trustee complies with the request, but the first person is dissatisfied with:

(A)  the action taken, or proposed to be taken, by the trustee to deal with the matter concerned; or

(B)   the inaction of the trustee in relation to the matter concerned;

the first person must give the Commissioner a written report about the matter as soon as practicable after:

(c)  if subparagraph (b)(i) applies—the expiry of the deadline for the receipt of the report; or

(d)  if subparagraph (b)(ii) applies—the first person becomes dissatisfied as mentioned in that subparagraph.

Offence

(6)  A person who intentionally or recklessly contravenes subsection (2), (4) or (5) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

When financial position is unsatisfactory

(7)  For the purposes of this section, the financial position of an entity is taken to be unsatisfactory if, and only if, under the regulations, the financial position of the entity is treated as unsatisfactory.

Auditors—disqualification orders

Disqualification order

131.(1) The Commissioner may make a written order (“disqualification order”) disqualifying a person from being an approved auditor for the purposes of this Act if:

(a)   the person has failed, whether within or outside Australia, to carry out or perform adequately and properly:

(i)    the duties of an auditor under this Act or the regulations; or

(ii)   any duties required by a law of the Commonwealth, a State or a Territory to be carried out or performed by an auditor; or

(b)  the person is otherwise not a fit and proper person to be an approved auditor for the purposes of this Act.

Date of effect

(2)  A disqualification order takes effect on the day specified in the order. The specified day must be within the 28-day period beginning on the day on which the order was made.

Notification

(3)  The Commissioner must give a copy of the order to the person.


Gazettal

(4)  The Commissioner must cause to be published in the Gazette particulars of:

(a)  the disqualification order; and

(b)  any action taken under section 344 of this Act, or under the Administrative Appeals Tribunal Act 1975, in relation to the decision to make the order.

Revocation

(5)  The Commissioner may revoke a disqualification order. The Commissioner’s power to revoke may be exercised:

(a)  on the Commissioner’s own initiative; or

(b)  on written application made by the disqualified person.

Revocationdecision on application

(6)  If an application is made for the revocation of a disqualification order, the Commissioner must decide to:

(a)   revoke the order; or

(b)  refuse to revoke the order.

Revocationgrounds

(7)  The Commissioner must not revoke a disqualification order unless the Commissioner is satisfied that the person concerned:

(a)   is likely to carry out and perform adequately and properly the duties of an auditor under this Act or the regulations; and

(b)  is otherwise a fit and proper person to be an approved auditor for the purposes of this Act.

Revocationdate of effect

(8)  A revocation of a disqualification order takes effect on the day the revocation is made.

Reasons for revocation

(9)  If the Commissioner decides to refuse an application for revocation of a disqualification order, the Commissioner must cause to be given to the applicant a written notice setting out the decision and giving the reasons for the decision.

Gazettal

(10)  The Commissioner must cause to be published in the Gazette particulars of the revocation of a disqualification order.


PART 17—SUSPENSION OR REMOVAL OF TRUSTEE OF SUPERANNUATION ENTITY

Object of Part

132.            The object of this Part is to provide for the suspension or removal of the trustee of a superannuation entity, and for the appointment of an acting trustee.

Suspension or removal of trustee of superannuation entity

Suspension or removal

133.(1) The Commissioner may suspend or remove the trustee, or all of the trustees, of a superannuation entity if:

(a)   the trustee, or any of the trustees, is a disqualified person within the meaning of Part 15; or

(b)  it appears to the Commissioner that conduct that has been, is being, or is proposed to be, engaged in by the trustee or any of the trustees may result in the financial position of the entity or of any other superannuation entity becoming unsatisfactory; or

(c)   the Commissioner, under section 28, revokes the approval of the trustee, or any of the trustees.

Period of suspension

(2)  A suspension of a trustee is to be for such period as the Commissioner determines.

Extension of period of suspension

(3)  A suspension of a trustee may be extended for such further period or such further periods as the Commissioner determines.

Reasons

(4)  If the Commissioner makes a decision:

(a)   suspending or removing a trustee; or

(b)  extending the suspension of a trustee;

the Commissioner must cause to be given to the trustee a written notice:

(c)   setting out that decision; and

(d)  giving the reasons for that decision.

Written consent of the Minister

(5)  The Commissioner must not make either of the following decisions without the written consent of the Minister:

(a)   a decision to suspend or remove a trustee;

(b)  a decision to extend the suspension of a trustee.


Commissioner to appoint acting trustee in cases of suspension or removal

Suspension

134.(1) If the Commissioner suspends a trustee of a superannuation entity, the Commissioner must appoint a constitutional corporation or an individual to act as the trustee during the period of the suspension. The appointee is called the “acting trustee”.

Removal

(2)  If the Commissioner removes a trustee of a superannuation entity, the Commissioner must appoint a constitutional corporation or an individual to act as the trustee until the vacancy in the position of trustee is filled. The appointee is called the “acting trustee”.

Pension funds

(3)  The Commissioner must not appoint an individual as the acting trustee of a superannuation entity unless the governing rules of the entity provide that the sole or primary purpose of the entity is the provision of old-age pensions.

Groups

(4)  If:

(a)  there is a group of 2 or more individual trustees of a superannuation entity; and

(b)  the Commissioner suspends or removes all of the trustees; and

(c)  the Commissioner is satisfied that any one or more of the persons who were suspended or removed is a fit and proper person to be appointed as the acting trustee;

this Act does not prevent the Commissioner from so appointing that person.

Terms and conditions of appointment of acting trustee

135.(1) The Commissioner may determine the terms and conditions of the appointment of the acting trustee, including fees. The determination has effect despite anything in:

(a)  any other provision of this Act; and

(b)  the regulations; and

(c)  any other law; and

(d)  the entity’s governing rules.

(2)  Without limiting subsection (1), the Commissioner may make a determination under that subsection to the effect that the acting trustee’s fees are to be paid out of the corpus of the entity concerned.

Termination of appointment of acting trustee

136.            The Commissioner may terminate the appointment of the acting trustee at any time.


Resignation of acting trustee

137. The acting trustee may resign by writing delivered to the Commissioner. The resignation does not take effect until the end of the 7th day after the day on which it was delivered to the Commissioner. (The delay gives the Commissioner time to appoint a fresh acting trustee.)

Property vesting orders

138.(1) If a person is appointed as acting trustee, the Commissioner must make a written order vesting the property of the entity concerned in the acting trustee.

(2)  If the appointment of the acting trustee comes to an end, the Commissioner must make a written order vesting the property of the entity concerned in:

(a)  if there is to be a fresh acting trustee—the fresh acting trustee; or

(b)  if the acting trustee acted during a period of suspension of the actual trustee and the suspension has come to an end—the actual trustee; or

(c)  if the acting trustee acted because of a vacancy in the position of actual trustee and the acting trustee’s appointment has come to an end because the vacancy in the position of actual trustee has been filled by a new actual trustee—the actual trustee.

(3)  If an order is made by the Commissioner under this section vesting property of a superannuation entity in a person:

(a)  if the property was vested in law in the trustee—subject to subsections (4) and (5), the property immediately vests in law in the person named in the order by force of this Act; and

(b)  if the property was vested in equity in the trustee—the property immediately vests in equity in the person named in the order by force of this Act.

(4)  If:

(a)   the property is of a kind whose transfer or transmission may be registered under a law of the Commonwealth, of a State or of a Territory; and

(b)  that law enables the registration of such an order;

the property does not vest in that person at law until the requirements of the law referred to in paragraph (a) have been complied with.

(5)  If:

(a)   the property is of a kind whose transfer or transmission may be registered under a law of the Commonwealth, of a State or of a Territory; and

(b)  that law enables the person named in the order to be registered as the owner of that property;


the property does not vest in that person at law until the requirements of the law referred to in paragraph (a) have been complied with.

Powers of acting trustee

139. Subject to section 138, while a person is acting as trustee under this Part:

(a)  the person has and may exercise all the rights, title and powers, and must perform all the functions and duties, of the trustee; and

(b)  the entity’s governing rules, this Act, the regulations and any other law apply in relation to the person as if the person were the trustee.

Acting trustee to notify appointment to beneficiaries

140.(1) If a person is appointed under this Part to act as trustee of a superannuation entity, the person must, as soon as practicable, give each beneficiary a notice about the appointment.

(2)  The notice is to be in a form approved by the Commissioner.

(3)  A person who, without reasonable excuse, contravenes this section is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

(4)  A contravention of subsection (1) does not affect the validity of the appointment.

Commissioner may give directions to acting trustee

141.(1) If a person is appointed under this Part to act as trustee of a superannuation entity, the Commissioner may give a written notice to the person directing the person to do, or not to do, one or more specified acts or things in relation to the superannuation entity.

(2)  A person must not intentionally or recklessly contravene a direction under subsection (1).

Penalty: 100 penalty units.

(3)  This section does not affect the validity of a transaction entered into by a person in contravention of the notice.

Commissioner may formulate a scheme for the winding-up or dissolution, or both, of a superannuation entity

Schemes

142.(1) If a person is appointed under this Part to act as trustee of a superannuation entity, the Commissioner may, by writing, formulate a scheme for the winding-up or dissolution, or both, of the entity.

Vacancies

(2)  Without limiting subsection (1), a scheme may make provision for and in relation to prohibiting the appointment of a person to fill a vacancy in the position of trustee.


Contravention of scheme

(3)  A person must not intentionally or recklessly contravene the provisions of a scheme formulated under this section.

Penalty: 100 penalty units.

Notification

(4)  The Commissioner must give a copy of an instrument under subsection (1) to the acting trustee.

Beneficiaries to be told

(5)  Without limiting section 141, the Commissioner may give a direction under that section to the acting trustee requiring the acting trustee to tell beneficiaries in the entity about an instrument under subsection (1).

Copies to be supplied

(6)  A person whose interests are affected by an instrument under subsection (1) may request the Commissioner to give the person a copy of the instrument. The Commissioner must comply with the request.

Advertising

(7)  The Commissioner must advertise the making of each instrument under subsection (1) in such newspaper or newspapers as the Commissioner considers reasonable having regard to the likely places of residence of the majority of beneficiaries in the entity. The advertisement is to be in the prescribed form.

Disallowance

(8)  An instrument under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

 

PART 18—PROHIBITED CONDUCT IN RELATION TO SUPERANNUATION INTERESTS

Object of Part

143.(1) The object of this Part is to prohibit false and misleading conduct in relation to superannuation interests.

(2)  To that end, this Part contains provisions about:

(a)   criminal liability arising from certain conduct relating to superannuation interests (sections 144 and 145); and

(b)  civil liability arising from certain conduct relating to superannuation interests (sections 144, 146, 147 and 148).

Regulated acts

144. For the purposes of sections 145 and 146, these are regulated acts:

(a)  applying for the issue of superannuation interests in a superannuation entity;


(b)  applying to become a standard employer-sponsor of a superannuation entity;

(c)  issuing superannuation interests in a superannuation entity;

(d)  permitting a person to become a standard employer-sponsor of a superannuation entity;

(e)  publishing or broadcasting a statement or advertisement in relation to superannuation interests in a superannuation entity;

(f)   issuing a regulated document in relation to a public offer entity;

(g)  redeeming a superannuation interest in a superannuation entity;

(h)  doing anything preparatory to, or in any other way related to, an act mentioned in any of the above paragraphs.

Fraudulently inducing a person to engage in a regulated act—criminal liability

145. A person must not:

(a)  by making, publishing or broadcasting a statement or advertisement that the person knows to be false or misleading; or

(b)  by dishonestly concealing or withholding material facts; or

(c)  by recording or storing in, or by means of, any mechanical, electronic or other device, information that the person knows to be:

(i)    false in a material particular; or

(ii)    materially misleading;

intentionally induce another person to engage in a regulated act.

Penalty: Imprisonment for 5 years.

Misleading conduct in connection with a regulated act—civil liability

146.(1) A person must not, in connection with the performance by the person of a regulated act, engage in conduct that is:

(a)   misleading; or

(b)  likely to mislead.

(2)  A contravention of subsection (1) is not an offence, but it may give rise to civil liability under section 148.

(3)  The generality of subsection (1) is not limited by any other provision of this Act.

Misleading conduct by trustees of entities—civil liability

147.(1) This section applies if the trustee of a superannuation entity is dealing with:

(a)   a beneficiary of that entity as such a beneficiary; or

(b)  an employer-sponsor, or an associate of an employer-sponsor, of that entity as such an employer-sponsor or associate.


(2)  When so dealing with the beneficiary, employer-sponsor or associate, the trustee must not engage in conduct that is:

(a)  misleading; or

(b)  likely to mislead.

(3)  A contravention of subsection (2) is not an offence, but it may give rise to civil liability under section 148.

Civil liability where section 146 or 147 contravened

148.(1) Subject to subsection (2), if a person (the “plaintiff”) suffers loss or damage because of a contravention of section 146 or 147 by another person (the “primary defendant”), the plaintiff may recover the amount of the loss or damage by action against:

(a)   the primary defendant; or

(b)  a person involved in the contravention.

(2)  The person must not begin an action under this section in respect of the contravention if the person could, instead, bring an action under section 162 in respect of the conduct constituting the contravention.

(3)  The action may be begun even if the defendant has been convicted of an offence in respect of the conduct constituting the contravention.

(4)  The action must be begun within 6 years after the day on which the cause of action arose.

(5)  This section does not affect any liability that the defendant or another person has under any other provision of this Act or under any other law.

Contravention of Part does not affect validity of issue of superannuation interest etc.

149. A contravention of this Part does not affect the validity of the issue of a superannuation interest or of any other act.

 

PART 19—PUBLIC OFFER ENTITIES—PROVISIONS RELATING TO SUPERANNUATION INTERESTS AND DISCLOSURE OF INFORMATION

Division 1Preliminary

Object of Part

150.(1) The object of this Part is to ensure that beneficiaries and standard employer-sponsors of public offer entities, and prospective beneficiaries and standard employer-sponsors of public offer entities, are treated fairly and honestly and are adequately informed.

(2)  To that end, this Part contains:


(a)   requirements imposed on trustees of public offer entities in connection with dealing with superannuation interests, including, in particular, requirements about issuing or offering superannuation interests (Division 2); and

(b)  requirements imposed on trustees of public offer entities in relation to the disclosure of information about such entities (Divisions 3 and 4); and

(c)   requirements imposed on trustees of public offer entities in relation to money received in respect of applications for the issue of superannuation interests (Division 5); and

(d)  provision for a cooling-off period during which superannuation interests issued to a person may be redeemed at the request of the person (Division 6).

Contravention of Part does not affect validity of issue of superannuation interest etc.

151. A contravention of this Part does not affect the validity of the issue of a superannuation interest or of any other act.

Division 2Issuing, offering etc. superannuation interests in public
offer entities

Limitation on issuing, offering etc. superannuation interests in public offer entities

152.(1) This section applies to the following conduct:

(a)   issuing superannuation interests in a public offer entity;

(b)  offering to issue superannuation interests in a public offer entity;

(c)   inviting the making of applications for the issue of superannuation interests in a public offer entity.

(2)  The trustee of a public offer entity must not, intentionally or recklessly, engage in conduct to which this section applies unless:

(a)  the trustee is an approved trustee and is the only trustee of the entity; and

(b)  the entity is constituted by a deed as a trust.

Penalty: Imprisonment for 5 years.

(3)  A person, other than the trustee of a public offer entity, must not, intentionally or recklessly, engage in conduct to which this section applies.

Penalty: Imprisonment for 5 years.

(4)  This section does not prevent the trustee of a public offer entity from engaging or authorising persons to act on behalf of the trustee.


Trustee must not issue interests, or permit persons to become standard employer-sponsors, except pursuant to applications

153.(1) The trustee of a public offer entity must not, intentionally or recklessly, issue a superannuation interest in the entity to a person except pursuant to an application made to the trustee by the person, or by a standard employer-sponsor of the entity on the person’s behalf.

Penalty: 100 penalty units.

(2)  The trustee of a public offer entity must not, intentionally or recklessly, permit a person to become a standard employer-sponsor of the entity except pursuant to an application made by the person to the trustee.

Penalty: 100 penalty units.

Commission and brokerage

154.(1) The trustee of a public offer entity must comply with the requirements of the regulations in relation to the payment of commission or brokerage in respect of:

(a)  an application for the issue of a superannuation interest in the entity; or

(b)  an application to become a standard employer-sponsor of the entity.

(2)  The trustee must not, intentionally or recklessly, contravene subsection (1).

Penalty: 100 penalty units.

(3)  Requirements specified in regulations for the purposes of subsection (1) must relate to all or any of the following:

(a)  the classes of persons to whom payments of commission or brokerage may be made;

(b)  the situations in which payments of commission or brokerage may be made;

(c)  the disclosure of information about payments of commission or brokerage;

(d)  the keeping of records about payments of commission or brokerage.

Fair dealing on issue or redemption of a superannuation interest

155.(1) This section applies if:

(a)  the trustee of a public offer entity is considering:

(i)    issuing a superannuation interest in the entity to a person; or

(ii)    redeeming a superannuation interest in the entity held by a person; and

(b)  either:


(i)  the trustee believes on reasonable grounds that the price at which, under the governing rules of the entity, the interest would be issued or redeemed would not, in the circumstances, be fair and reasonable as between the person and the beneficiaries of the entity; or

(ii)  the trustee cannot, for whatever reason, work out the price at which, under the governing rules of the entity, the interest should be issued or redeemed.

(2)  The trustee must not issue or redeem the interest while subsection (1) applies except at a price that is fair and reasonable as between the person and the beneficiaries of the entity.

(3)  If, while this section applies, the trustee issues or redeems the interest at such a price, the trustee is taken to have acted in accordance with the governing rules of the entity.

(4)  A contravention of subsection (2) is not an offence, but it may give rise to civil liability under section 156.

Civil liability where subsection 155(2) contravened

156.(1) If:

(a)  the trustee of a public offer entity contravenes subsection 155(2); and

(b)  a person suffers loss or damage because of the contravention;

the person may recover the amount of the loss or damage by action against the trustee.

(2)  The action must be begun within 6 years after the day on which the cause of action arose.

Division 3Provisions relating to information given to prospective beneficiaries etc. of public offer entities

Subdivision ACertain information to be given to prospective beneficiaries etc.

Information to be given before superannuation interests issued otherwise than to standard employer-sponsored member

157.(1) Subject to subsections (2) and (3), the trustee of a public offer entity must not, intentionally or recklessly, issue a superannuation interest in the entity to a person unless the trustee is satisfied, on reasonable grounds, that the person has received documents issued, or authorised to be issued, by the trustee that:

(a)  contain all the information that the regulations and determinations referred to in section 159 require to be given to the person; and

(b)  comply with the formal requirements specified in those regulations and determinations.

Penalty: 100 penalty units.


(2)  Despite subsection (1), the trustee does not have to be satisfied that the person has received information that relates to an event or change of circumstances that happened after the trustee received the application for the interest.

(3)  Subsection (1) does not apply if:

(a)  the public offer entity is a standard employer-sponsored fund; and

(b)  the person will, if the interest is issued to the person, be a standard employer-sponsored member of the fund.

Information to be given before persons become standard employer-sponsors

158.(1) Subject to subsection (2), the trustee of a public offer entity must not, intentionally or recklessly, permit a person to become a standard employer-sponsor of the entity unless the trustee is satisfied, on reasonable grounds, that the person has received documents issued, or authorised to be issued, by the trustee that:

(a)  contain all the information that the regulations and determinations referred to in section 159 require to be given to the person; and

(b)  comply with the formal requirements specified in those regulations and determinations.

Penalty: 100 penalty units.

(2)  Despite subsection (1), the trustee does not have to be satisfied that the person has received information that relates to an event or change of circumstances that happened after the trustee received the person’s application to become a standard employer-sponsor of the entity.

Regulations and determinations requiring the giving of information

159.(1) For the purposes of sections 157 and 158, the regulations may:

(a)   require that particular information is to be given to persons; and

(b)  specify formal requirements that documents used to give information to persons must comply with.

(2)  Subject to subsection (3), the Commissioner may, for the purposes of sections 157 and 158, by written determination:

(a)   require that particular information is to be given to persons; and

(b)  specify formal requirements that documents used to give information to persons must comply with.

(3)  A determination must not be inconsistent with regulations referred to in subsection (1).


(4)  A determination is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

(5)  In this section:

“formal requirements” includes, for example, requirements about layout or type size.

Documents taken to contain information referred to

160.(1) If:

(a)  a person has received a document (the “received document”) issued, or authorised to be issued, by the trustee of a public offer entity; and

(b)  the received document refers to particular information (the “referred information”) being contained in another document issued, or authorised to be issued, by the trustee; and

(c)  the requirements of subsections (2), (3) and (4) are satisfied; then, for the purposes of sections 157 and 158, the received document is taken to contain the referred information.

(2)  The received document must clearly identify:

(a)  the other document; and

(b)  the nature of the referred information.

(3)  The received document must include a statement to the effect that the trustee will provide a copy of the other document, free of charge, to a person who asks for it.

(4)  The trustee must not have failed or refused to provide a copy of the other document free of charge when asked by the person for a copy of it.

Subdivision BLimitations on issuing regulated documents

Regulated documents not to be false or misleading—criminal liability

161. The trustee of a public offer entity must not, intentionally or recklessly, issue, or authorise the issue of, a regulated document in relation to the entity if the trustee knows:

(a)  that the document contains a material statement that is false or misleading; or

(b)  that there has been a material omission from the document.

Penalty: Imprisonment for 5 years.

Regulated documents not to be false or misleading—civil liability

162.(1) The trustee of a public offer entity must not issue, or authorise the issue of, a regulated document in relation to the entity:

(a)   in which there is a material statement that is false or misleading; or

(b)  from which there is a material omission.


(2)  If:

(a)  the trustee of a public offer entity contravenes subsection (1); and

(b)  a person suffers loss or damage because of the contravention;

the person may recover the amount of the loss or damage by action against the trustee.

(3)  The action may be begun even if the trustee has been convicted of an offence in respect of the conduct constituting the contravention.

(4)  The action must be begun within 6 years after the day on which the cause of action arose.

(5)  It is a defence to the action if the trustee proves that, before the person suffered the loss or damage, the person:

(a)   if the contravention relates to a false or misleading statement—knew that the statement was false or misleading; or

(b)  if the contravention relates to an omission—was aware of the omitted matter.

(6)  This section does not affect any liability under any other provision of this Act or under any other law.

Statements by experts

163.(1) The trustee of a public offer entity must not, intentionally or recklessly, issue, or authorise the issue of, a regulated document in relation to the entity that includes a statement made by, or purporting to be based on a statement made by, an expert, unless:

(a)  the expert has given written consent to the issue of the document with the statement included in the form and context in which it is included; and

(b)  that consent has not been withdrawn before the issue of the document.

Penalty: Imprisonment for 6 months.

(2)  The trustee must not, without reasonable excuse, fail to keep the consent, or a copy of it, for the period, and in the manner, required by the regulations.

Penalty: 10 penalty units.

Division 4Stop orders

Order to stop contracts etc. for issue of superannuation interests in public offer entities

164.(1) If it appears to the Commissioner that any of the circumstances mentioned in subsection (2) exist in respect of a regulated document in relation to a public offer entity, the Commissioner may, by written order (a


“stop order”) given to the trustee of the entity, direct that no contract or agreement for the issue of superannuation interests in the entity may be entered into while the stop order is in force.

(2)  The circumstances are as follows:

(a)   there is a material statement in the document that is false or misleading; or

(b)  there is a material omission from the document.

When a stop order is in force

165.  A stop order:

(a)   comes into force when it is made, or, if a later time is specified in the order as the time when the order comes into force, at that later time; and

(b)  remains in force until it is revoked under section 166.

Revocation of stop order

166.  The Commissioner may, in writing, revoke a stop order if the Commissioner is satisfied, for whatever reason, that the stop order should no longer have effect.

Effect of stop order

167.  While a stop order is in force in relation to a public offer entity, the trustee of the entity must not, intentionally or recklessly, enter into a contract or agreement for the issue of a superannuation interest in the entity.

Penalty: Imprisonment for 2 years.

Division 5Application money to be held on trust

Situation to which Division applies—application money received but superannuation interest not issued immediately

168.  This Division applies to money received by the trustee of a public offer entity from a person (the “applicant”) in respect of an application for the issue of a superannuation interest in the entity if the trustee does not, for whatever reason (for example, because the application has not been received), issue the superannuation interest immediately after receiving the money.

Trustee to comply with requirements of the regulations in relation to the money

169.(1) The Trustee must, subject to subsection (2), hold the money on trust for the applicant in accordance with the regulations.

(2)  The trustee must comply with the requirements of the regulations in relation to how the money so held on trust is to be dealt with (including, for example, requirements about the payment to a person of the money and any interest that has accrued).


(3)  The trustee must not, intentionally or recklessly, contravene subsection (1) or (2).

Penalty: Imprisonment for 1 year.

Division 6Cooling-offredemption of interests

Situation to which Division applies—superannuation interest issued in certain circumstances

170. This Division applies if:

(a)   a superannuation interest in a public offer entity, other than a pooled superannuation trust, is issued to a person (the “applicant”) pursuant to an application made after the commencement of this section; and

(b)  the interest is the first superannuation interest in the entity to be issued to the applicant pursuant to the application; and

(c)   the applicant does not hold the interest as a standard employer-sponsored member of an employer-sponsored fund; and

(d)  the applicant has not cancelled the contract for the issue of the interest under section 64 of the Insurance Contracts Act 1984, and does not have the right to so cancel the contract.

Governing rules taken to confer right to have interest redeemed

171.(1) The governing rules of the public offer entity are taken to include the provisions described in subsections (2) to (5).

(2)  A provision that entitles the applicant, by written notice given to the trustee of the entity within 14 days after the issue of the interest, to request the trustee to redeem the interest.

(3)  A provision that requires the trustee to comply with such a request by redeeming the interest, as soon as practicable after receiving the request, at a price (the “redemption price”) calculated under the provisions of the governing rules relevant to the redemption of superannuation interests.

(4)  A provision that requires the trustee to pay to the applicant when redeeming the interest (in addition to the redemption price) the amount worked out as follows:

(a)  work out the amount a person would have to pay, at the time of redemption, for the issue to the person of an interest in the entity of the same kind as that issued to the applicant: this amount is called the “issue price”;


(b)  if the redemption price was calculated taking into account tax (including, for example, stamp duty) that the trustee has paid, or is or may become liable to pay, because of the issue of the interest to the applicant—work out the amount by which the redemption price is less than it would have been if that tax had not been so taken into account: this amount is called the “tax reduction”;

(c)   if there is no tax reduction, the amount the trustee is liable to pay (in addition to the redemption price) is the amount (if any) by which the issue price exceeds the redemption price;

(d)  if there is a tax reduction, the amount the trustee is liable to pay (in addition to the redemption price) is the amount (if any) by which the issue price, reduced by the amount of the tax reduction, exceeds the redemption price.

(5)  A provision that prohibits the trustee from being indemnified out of the assets of the entity for an amount payable to the applicant under the provision described in subsection (4).

(6)  The provision referred to in subsection (5) has effect in spite of section 56.

Consequences of contravening provisions taken to be included in governing rules

172.(1) A person must not contravene a provision taken to be included in the governing rules of a public offer entity under section 171.

(2)  A contravention of subsection (1) is not an offence.

(3)  A person who suffers loss or damage as a result of conduct of another person that was engaged in in contravention of subsection (1) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(4)  An action under subsection (3) must be begun within 6 years after the day on which the cause of action arose.

 

PART 20—PUBLIC OFFER ENTITIES—INSIDER TRADING

Division 1Preliminary

Object of Part

173.  The object of this Part is to stop people from unfairly taking advantage of information that is not generally available in connection with applications for the issue of superannuation interests in public offer entities.

Superannuation interest means interest in public offer entity

174.  This Part only applies in relation to superannuation interests in public offer entities. The expression “superannuation interest”, when used in this Part, is limited to a superannuation interest in a public offer entity.


Division 2Interpretation

Definitions

175.            In this Part:

“information” includes:

(a)  matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; or

(b)  matters relating to the intentions, or the likely intentions, of a person;

“officer”, in relation to a body corporate, means:

(a)   an executive officer of the body corporate; or

(b)  an employee of the body corporate.

When information is generally available

176.(1) For the purposes of this Part, information is generally available if:

(a)  it is readily observable; or

(b)  both of the following apply:

(i)  it has been made known in a way that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information;

(ii)  after it was so made known, a reasonable period for it to be disseminated among such persons has elapsed; or

(c)  it consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i)    information that is readily observable;

(ii)  information made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information.

(2)  Nothing in subsection (1) limits anything else in it.

When information has a material effect on price or value of superannuation interests

177.  For the purposes of this Part, a reasonable person would be taken to expect information to have a material effect on the price or value of superannuation interests (the “first interests”) if the information would, or would be likely to, influence persons who commonly invest in superannuation interests in deciding whether or not to apply for the issue of the first interests.

Information in possession of officer of body corporate

178.(1) For the purposes of this Part, a body corporate is taken to possess any information which:


(a)   is in the possession of an officer of the body corporate; and

(b)  came into the officer’s possession in the course of performing duties as such an officer.

(2)  For the purposes of this Part, it is presumed that a body corporate knows, or ought reasonably to know, anything that one of its officers knows, or ought reasonably to know, through being one of its officers.

Division 3Insider trading rules

When a person contravenes the insider trading rules in relation to superannuation interests

179.(1) For the purposes of this Part, a person (the “insider”) contravenes the insider trading rules if:

(a)  the insider possesses information that is not generally available; and

(b)  if the information were generally available, a reasonable person would expect it to have a material effect on the price or value of superannuation interests; and

(c)  the insider knows, or ought reasonably to know, that:

(i)    the information is not generally available; and

(ii)   if it were generally available, it might have a material effect on the price or value of those interests; and

(d)  the insider, whether as principal or agent:

(i)  applies for, or enters into an agreement to apply for, the issue of any such interests; or

(ii)   procures another person to apply for, or to enter into an agreement to apply for, the issue of any such interests.

(2)  The remaining provisions of this Division provide for special cases in which a person is taken not to have contravened the insider trading rules.

(3)  The consequences of contravening the insider trader rules are set out in Division 4 (which deals with criminal liability), Divisions 5 and 6 (which deal with civil liability) and Division 7 (which deals with orders by the Court).

Exception to insider trading rules—Chinese wall arrangements by bodies corporate

180. A body corporate does not contravene the insider trading rules by entering into a transaction or agreement at a particular time merely because of information in the possession of an officer of the body corporate if:

(a)  the decision to enter into the transaction or agreement was taken on behalf of the body corporate by a person or persons other than that officer; and


(b)  the body corporate had in operation at that time arrangements that could reasonably be expected to ensure that:

(i)  the information was not communicated to the person or persons who made the decision; and

(ii)  no advice with respect to the transaction or agreement was given to that person or any of those persons by a person in possession of the information; and

(c)   the information was not so communicated and no such advice was given.

Exception to insider trading rules—knowledge of person’s own intentions or activities

181. An individual does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because the individual is aware that he or she proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity.

Exceptions to insider trading rules—special rules relating to bodies corporate

182.(1) A body corporate does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because the body corporate is aware that it proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity.

(2)  A body corporate does not contravene the insider trading rules by entering into a transaction or agreement in relation to superannuation interests in a particular superannuation entity merely because:

(a)   an officer of the body corporate is aware that the body corporate proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity; and

(b)  the officer became aware of the matters referred to in paragraph (a) in the course of the performance of duties as such an officer.

Exception to insider trading rules—officers or agents of bodies corporate

183. A person does not contravene the insider trading rules by entering into a transaction or agreement on behalf of a body corporate in relation to superannuation interests in a particular superannuation entity merely because:


(a)   the person is aware that the body corporate proposes to enter into, or has previously entered into, one or more transactions or agreements in relation to superannuation interests in the same entity; and

(b)   the person became aware of the matters mentioned in paragraph (a) in the course of the performance of duties as an officer of the body corporate or in the course of acting as an agent of the body corporate.

Division 4Offence of contravening the insider trading rules

Offence of contravening the insider trading rules

184.(1) A person must not, intentionally or recklessly, contravene the insider trading rules.

Penalty: Imprisonment for 5 years.

(2)  In a prosecution under this section:

(a)   it is not necessary for the prosecution to prove the non-existence of facts or circumstances described in sections 180 to 183; and

(b)  it is a defence if the defendant proves that the facts or circumstances existed.

(3)  In a prosecution brought against a person for an offence against this section because the person entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the defendant’s possession:

(a)  it is a defence if the defendant proves that the information came into the defendant’s possession solely as a result of the information having been made known in a way that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information; and

(b)  it is a defence if the defendant proves that the other party to the transaction or agreement knew, or ought reasonably to have known, of the information before entering into the transaction or agreement.

Division 5Civil liability for contravention of the insider trading rulesrecovery of loss or damage

Civil liability where plaintiff suffers loss or damage because of a contravention of the insider trading rules

185.(1) If a person (the “plaintiff”) suffers loss or damage by the conduct of another person (the “primary defendant”) that was engaged in in contravention of the insider trading rules, the plaintiff may recover the amount of the loss or damage by action against:

(a)  the primary defendant; or


(b)  any person involved in the contravention.

(2)  An action may be begun even if the defendant has been convicted of an offence in respect of the contravention.

(3)  An action must be begun within 6 years after the day on which the cause of action arose.

(4)  This section does not affect any liability that a person has under any other provision of this Act or under any other law.

Division 6Civil liability for contravention of the insider trading rulesrecovery of price differential

Civil liability—trustee may recover price differential

186.(1) If a person (the “insider”) contravenes the insider trading rules in relation to particular superannuation interests, the trustee of the public offer entity concerned may recover the amount described in subsection (2) by action against:

(a)   in any case—the insider; or

(b)  if the insider’s contravention relates to the procurement of another person to apply for, or to enter into an agreement to apply for, superannuation interests—that other person; or

(c)   any other person involved in the contravention.

(2)  The trustee may recover the amount (if any) by which:

(a)  the price at which the superannuation interests were applied for, or agreed to be applied for, by the insider or by the other person mentioned in paragraph (1)(b);

was less than:

(b)  the price at which the superannuation interests would have been likely to have been applied for if the information had been generally available.

(3)  An action may be begun even if the defendant has been convicted of an offence for a contravention of the insider trading rules.

(4)  An action must be begun within 6 years after the day on which the cause of action arose.

(5)  This section does not affect any liability that a person has under any other provision of this Act or under any other law.

Commissioner may bring an action in the name of a trustee

187. If the Commissioner thinks that it is in the public interest to do so, the Commissioner may bring an action under this Division in the name, and for the benefit of, a trustee for the recovery of an amount that the trustee is entitled to recover under this Division.


Special defence where information made known in a certain manner

188.(1) This section applies to an action brought against a person (the “defendant”) under this Division because the defendant entered into, or procured another person to enter into, a transaction or agreement at a time when certain information was in the defendant’s possession.

(2)  It is a defence if the defendant proves that the information came into the defendant’s possession solely as a result of the information having been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in superannuation interests of a kind whose price or value might be affected by the information.

Amounts recovered to be held on trust for certain interest-holders

189. An amount recovered in an action under this Division in respect of an application for, or agreement to apply for, particular superannuation interests:

(a)  is to be held by the trustee of the superannuation entity concerned on behalf of the persons who, at the time of the application or agreement, had superannuation interests in the entity; and

(b)  is to be held on their behalf in the respective proportions that, at that time, their individual interests bore to the total of those interests.

Offset of amounts recovered in other proceedings

190.(1) The amount recoverable from a person under this Division in respect of a particular act or transaction is to be reduced by any amount recovered from, or ordered to be paid by, the person in proceedings instituted under another provision of this Act or under the Corporations Law in respect of the same act or transaction.

(2)  The burden of proving that those proceedings related to the same act or transaction is on the defendant.

Division 7Special powers of Court to make orders in cases of contravention of the insider trading rules

Special powers of Court

191.(1) If, in a proceeding under, or arising out of, this Act, the Court finds that a contravention of the insider trading rules has occurred, the Court may make such order or orders as it thinks just in addition to any other orders that it may make under any other provision of this Act.

(2) The orders which may be made include, but are not limited to:

(a)   an order restraining the exercise of any rights attached to superannuation interests;

(b)  an order restraining the issue of superannuation interests;


(c)   an order restraining an application for superannuation interests;

(d)  an order directing the redemption of superannuation interests;

(e)   an order cancelling an agreement for the issue of superannuation interests;

(f)   for the purpose of securing compliance with any other order made under this section—an order directing a person to do, or refrain from doing, a specified act.

 

PART 21—CIVIL AND CRIMINAL CONSEQUENCES OF CONTRAVENING CIVIL PENALTY PROVISIONS

Division 1Preliminary

Object of Part

192.  The object of this Part is to specify the consequences of contravening a civil penalty provision.

Civil penalty provisions

193.  Each of the following provisions of this Act is a civil penalty provision:

(a)   subsection 62(1);

(b)  subsection 65(1);

(c)   subsection 67(1);

(d)  subsection 84(1);

(e)   subsection 85(1);

(f)   subsection 95(1);

(g)   subsection 97(1);

(h)  section 98;

(i)   subsection 106(1);

(j)   subsection 109(1);

(k)  subsection 117(3).

Person involved in contravening a provision taken to have contravened the provision

194.  For the purposes of this Part, a person who is involved in a contravention of a particular provision of this Act is taken to have contravened that provision.

When a court is taken to find a person guilty of an offence

195.  For the purposes of this Part, an Australian court is taken to find a person guilty of an offence if, and only if:

(a)  the court convicts the person of the offence; or


(b)  the person is charged before the court with the offence and is found by the court to have committed the offence, but the court does not proceed to convict the person of the offence.

Division 2Civil penalty orders

Court may make civil penalty orders

196.(1) This section applies if the Court is satisfied that a person has contravened a civil penalty provision, whether or not the contravention also constitutes an offence because of section 202.

Note: Section 220 provides that a certificate by a court that the court has declared a person to have contravened a civil penalty provision is conclusive evidence of the contravention.

(2)  The Court is to declare that the person has, by a specified act or omission, contravened that provision in relation to a specified superannuation entity, but need not so declare if such a declaration is already in force under Division 4.

(3)  The Court may also make against the person an order that the person pay to the Commonwealth a monetary penalty of an amount specified in the order that does not exceed 2,000 penalty units.

(4)  The Court is not to make an order under subsection (3) unless it is satisfied that the contravention is a serious one.

(5)  The Court is not to make an order under subsection (3) if it is satisfied that an Australian court has ordered the person to pay damages in the nature of punitive damages because of the act or omission constituting the contravention.

Who may apply for civil penalty order

197.(1) An application for a civil penalty order may only be made by the Commissioner or a person to whom the Commissioner has delegated the power to make applications for civil penalty orders.

(2)  A delegation for the purposes of subsection (1) may relate to applications in relation to specified contraventions, or all contraventions, of civil penalty provisions.

(3)  This section does not affect the operation of the Director of Public Prosecutions Act 1983.

Time limit for application

198. An application for a civil penalty order may be made within 6 years after the contravention.

Application for civil penalty order is a civil proceeding

199.(1) In hearing and determining an application for a civil penalty order, the Court is to apply the rules of evidence and procedure that it applies in hearing and determining civil matters.


(2)  Subsection (1) has effect subject to the rules of the Court.

Enforcement of order to pay monetary penalty

200. If the Court makes under subsection 196(3) an order that a person pay a monetary penalty:

(a)   the penalty is payable to the Commissioner on the Commonwealth’s behalf; and

(b)  the Commissioner or the Commonwealth may enforce the order as if it were a judgment of the Court.

Commissioner may require a person to give assistance in connection with application for civil penalty order

201.(1) This section applies if it appears to the Commissioner that a person may have contravened a civil penalty provision.

(2)  If the Commissioner, on reasonable grounds, suspects or believes that a person can give information relevant to an application for a civil penalty order in relation to the contravention (whether or not such an application has been made), the Commissioner may, by writing given to the person, require the person to give all reasonable assistance in connection with such an application.

(3)  Subsection (2) does not apply in relation to:

(a)   the person referred to in subsection (1); or

(b)  a person who is or has been that person’s lawyer.

(4)  If a person fails to give assistance as required under subsection (2):

(a)  the person is guilty of an offence punishable on conviction by a fine not exceeding 5 penalty units; and

(b)  the Court may, on the application of the Commissioner, order the person to comply with the requirement as specified in the order.

(5)  Paragraph (4)(b) does not affect any penalty for an offence referred to in paragraph (4)(a).

Division 3Criminal proceedings

When contravention of civil penalty provisions is an offence

202.(1) If a person contravenes a civil penalty provision:

(a)   knowingly, intentionally or recklessly; and

(b)  either:

(i)  dishonestly and intending to gain, whether directly or indirectly, an advantage for that or any other person; or

(ii)     intending to deceive or defraud someone;

the person is guilty of an offence punishable on conviction by imprisonment for not more than 5 years.


(2) A person who contravenes a civil penalty provision is not guilty of an offence except as provided by subsection (1).

(3) The Federal Court of Australia does not have jurisdiction with respect to criminal proceedings for an offence constituted by a contravention of a civil penalty provision.

Application for civil penalty order precludes later criminal proceedings

203. Criminal proceedings for an offence constituted by a contravention of a civil penalty provision cannot be begun if a person has already applied for a civil penalty order in relation to the same contravention, even if the application has been finally determined or otherwise disposed of.

Division 4Effect of criminal proceedings on application for civil penalty order

When Division applies

204. This Division applies if criminal proceedings are begun against a person for an offence constituted by a contravention of a civil penalty provision.

Effect during criminal proceedings

205.(1) An application may be made for a civil penalty order against the person in relation to the same contravention.

(2)  However, such an application is stayed, because of this subsection, until:

(a)  the criminal proceedings; and

(b)  all appeals and applications for review (including appeals and applications for review under this Division) arising out of the criminal proceedings;

have been finally determined or otherwise disposed of.

Final outcome precluding applications for civil penalty order

206. When the criminal proceedings, appeals and applications for review are finally determined or otherwise disposed of:

(a)  an application for a civil penalty order in relation to the same contravention cannot be made (except under this Division); and

(b)  such an application that was stayed because of subsection 205(2) is, because of this section, dismissed;

if the result of the criminal proceedings, appeals and applications for review is:

(c)  a court finding the person guilty of the offence; or

Note: Section 195 defines when a court is taken to find a person guilty of an offence.


(d)  the person being acquitted of the offence, unless there is in force a declaration that the person committed the contravention; or

Note: This kind of declaration is made under section 209, 210 or 211.

(e)   a declaration by a court that the evidence in a committal proceeding for the offence could not satisfy the Court, on an application for a civil penalty order, that the person committed the contravention; or

Note: This kind of declaration is made under section 208.

(f)  a declaration by a court that the person committed the contravention; or

Note: This kind of declaration is made under section 209 or 211.

(g)   an order by a court prohibiting an application for a civil penalty order in relation to the contravention from being made or from proceeding; or

Note: This kind of declaration is made under section 212.

(h)  the Court, on an appeal or review, affirming, varying or substituting a declaration that the person committed the contravention.

Note: Section 213 applies in this case.

Final outcome not precluding application for civil penalty order

207. If the result of the criminal proceedings, appeals and applications for review being finally determined or otherwise disposed of is:

(a)  a declaration by a court (other than the Court) that the person committed the contravention; or

Note: This kind of declaration is made under section 209, 210 or 211.

(b)  none of the results referred to in section 206;

then:

(c)  if an application for a civil penalty order in relation to the contravention was stayed because of subsection 205(2)—the application may proceed; or

(d)  otherwise—such an application may be made and may proceed;

as if the criminal proceedings had never begun.

After unsuccessful committal proceeding, court may preclude application for civil penalty order

208.(1) If:

(a)  a proceeding in a court for the commitment of the person for trial for the offence is finally determined or otherwise disposed of without the person being committed for trial for the offence; and

(b)  that court is satisfied that the evidence in the proceeding could not satisfy the Court, on an application for a civil penalty order in relation to the contravention, that the person committed the contravention;


the court may declare that it is so satisfied.

(2)  A declaration under subsection (1) is subject to appeal or review in the same way as any other order or decision made in the proceeding.

Application for civil penalty order based on alternative verdict at jury trial

209.(1) This section applies if the person is tried on indictment for the offence and the jury is satisfied beyond reasonable doubt that the person committed the contravention, but is not satisfied beyond reasonable doubt that the person did so as mentioned in subsection 202(1).

(2)  The jury may find the person not guilty of the offence, but guilty of the contravention.

(3)  If the jury does so, the court is to declare that the person has, by a specified act or omission, contravened the civil penalty provision in relation to a specified superannuation entity.

(4)  If the court is the Court, it may then proceed to make an order under subsection 196(3) on the application of the prosecutor or someone else who has power under section 197 to apply for a civil penalty order in relation to the contravention.

(5)  Subsection (4) has effect despite section 198.

(6)  A declaration under subsection (3) is subject to appeal or review as if it were a conviction by the court for an offence constituted by the contravention.

Application for civil penalty order based on alternative finding by court of summary jurisdiction

210.(1) This section applies if, on the hearing of a proceeding for the summary conviction of the person for the offence, the court is satisfied beyond reasonable doubt that the person committed the contravention but is not satisfied beyond reasonable doubt that the person did so as mentioned in subsection 202(1).

(2)  The court may find the person not guilty of the offence, but guilty of the contravention.

(3)  If the court does so, it is to declare that the person has, by a specified act or omission, contravened the civil penalty provision in relation to a specified superannuation entity.

(4)  A declaration under subsection (3) is subject to appeal or review as if it were a conviction by the court for an offence constituted by the contravention.


Application for civil penalty order based on alternative finding by appeal court

211.(1) This section applies if:

(a)   a court finds the person guilty of the offence; and

(b)  on appeal or review, a court makes an order determining the criminal proceedings for the offence in a way that does not involve convicting the person of that or any other offence; and

(c)   the court is satisfied beyond reasonable doubt that the person committed the contravention.

(2)  The court may declare that the person has, by a specified act or omission, contravened the civil penalty provision in relation to a specified superannuation entity.

(3)  If the court is the Court, it may then proceed to make an order under subsection 196(3) on the application of the prosecutor or someone else who has power under section 197 to apply for a civil penalty order in relation to the contravention.

(4)  Subsection (3) has effect despite section 198.

(5)  A declaration under subsection (2) is subject to appeal or review in the same way as any other order or decision that was made on the appeal or review or might have been made.

After setting aside declaration, court may preclude application for civil penalty order

212. If a court sets aside a declaration made under section 209, 210 or 211, the court may, by order, prohibit an application for a civil penalty order in relation to the contravention from being made or from proceeding.

On unsuccessful appeal against declaration, Court may make civil penalty orders

213.(1) This section applies if, on an appeal from, or review of, a declaration made under section 209, 210 or 211 by a court other than the Court, the Court determines the appeal or review by:

(a)   affirming or varying the declaration; or

(b)  substituting another declaration for the first-mentioned declaration.

(2)  The Court may then proceed to make orders under subsection 196(3) on the application of the prosecutor or someone else who has power under section 197 to apply for a civil penalty order in relation to the contravention.

(3)  Subsection (2) has effect despite section 198.

Appeals under this Division

214. For the purposes of an appeal or review under subsection 208(2), 209(6), 210(4) or 211(5), a law about appeals or reviews has effect with such modifications as the circumstances require.


Division 5Compensation for loss suffered by superannuation entity

On application for civil penalty order, Court may order compensation

215.(1) If, on an application for a civil penalty order against a person in relation to a contravention, the Court is satisfied that:

(a)   the person committed the contravention; and

(b)  the superannuation entity in relation to which the contravention was committed has suffered loss or damage as a result of the act or omission constituting the contravention;

the Court may (whether or not it makes an order under subsection 196(3)) order the person to pay to the trustee of the entity or, if the person is the trustee, to pay to the entity compensation of such amount as the order specifies.

(2)  The trustee of a superannuation entity may intervene in an application for a civil penalty order against a person in relation to a contravention, unless the application was made under Division 4.

(3)  The trustee of a superannuation entity that so intervenes is entitled to be heard:

(a)  only if the Court is satisfied that the person committed the contravention in relation to that entity; and

(b)  only on the question whether the Court should order the person to pay compensation to the trustee because of the contravention.

Criminal court may order compensation

216.(1) If:

(a)  a court finds a person guilty of an offence constituted by a contravention of a civil penalty provision in relation to a superannuation entity; and

(b)  the court is satisfied that the superannuation entity has suffered loss or damage as a result of the act or omission constituting the contravention;

the court may (whether or not it imposes a penalty) order the person to pay to the trustee or, if the person is the trustee, to pay to the entity compensation of such amount as the order specifies.

Note: Section 195 defines when a court is taken to find a person guilty of an offence.

(2)  If:

(a)   a court declares under Division 4 that a person has, by an act or omission, contravened a civil penalty provision in relation to a superannuation entity; and

(b)  the court is satisfied that the superannuation entity has suffered loss or damage as a result of that act or omission;


the court may (whether or not it makes an order under subsection 196(3)) order the person to pay to the trustee or, if the person is the trustee, to pay to the entity compensation of such amount as the order specifies.

Enforcement of order under section 215 or 216

217. An order to pay compensation that a court makes under section 215 or 216 may be enforced as if it were a judgment of the court.

Recovery of profits, and compensation for loss, resulting from contravention

218.(1) If a civil penalty provision in relation to a superannuation entity is contravened by a person other than the trustee, the trustee may, by proceedings in a court of competent jurisdiction, recover from the person, as a debt due to the trustee:

(a)   if that or another person has made a profit because of the act or omission constituting the contravention—an amount equal to the amount of that profit; and

(b)  if the entity has suffered loss or damage as a result of that act or omission—an amount equal to the amount of that loss or damage;

whether or not:

(c)   the first-mentioned person has been convicted of an offence in relation to the contravention; or

(d)  a civil penalty order has been made against the first-mentioned person in relation to the contravention.

(2)  Proceedings under this section may only be begun within 6 years after the contravention.

Effect of sections 215, 216 and 218

219. Sections 215, 216 and 218:

(a)  have effect in addition to, and not in derogation of, any rule of law about the duty or liability of a person because of the person’s office or employment in relation to a superannuation entity; and

(b)  do not prevent proceedings from being instituted in respect of a breach of such a duty or in respect of such a liability.

Certificates evidencing contravention

220. For the purposes of this Part, a certificate that:

(a)  purports to be signed by the Registrar or other proper officer of an Australian court; and

(b)  states:

(i)  that the court has declared that a specified person has, by a specified act or omission, contravened a specified civil penalty provision in relation to a specified superannuation entity; or


(ii)  that a specified person was convicted by that court of an offence constituted by a specified contravention of a civil penalty provision in relation to a specified superannuation entity; or

(iii) that a specified person charged before that court with such an offence was found in that court to have committed the offence but that the court did not proceed to convict the person of the offence;

is, unless it is proved that the declaration, conviction or finding was set aside, quashed or reversed, conclusive evidence:

(c)   that the declaration was made, that the person was convicted of the offence, or that the person was so found, as the case may be; and

(d)  that the person committed the contravention.

Division 6Miscellaneous

Relief from liability for contravention of civil penalty provision

221.(1) In this section:

“eligible proceedings” means proceedings for a contravention of a civil penalty provision (including proceedings under section 218) but does not include proceedings for an offence (except so far as the proceedings relate to the question whether the court should make an order under section 216).

(2)  If, in eligible proceedings against a person, it appears to the court that the person has, or may have, contravened a civil penalty provision but that:

(a)   the person has acted honestly; and

(b)  having regard to all the circumstances of the case, the person ought fairly to be excused for the contravention;

the court may relieve the person either wholly or partly from a liability to which the person would otherwise be subject, or that might otherwise be imposed on the person, because of the contravention.

(3)  If a person thinks that eligible proceedings will or may be begun against him or her, he or she may apply to the Court for relief.

(4)  On the application under subsection (3), the Court may grant relief under subsection (2) as if the eligible proceedings had been begun in the Court.

(5)  For the purposes of subsection (2) as applying for the purposes of a case tried by a judge with a jury:

(a)  a reference in that subsection to the court is a reference to the judge; and

(b)  the relief that may be granted includes withdrawing the case in whole or in part from the jury and directing judgment to be entered for the defendant on such terms as to costs as the judge thinks appropriate.


(6)  Section 323 provides for additional relief from liability.

Part does not limit power to award punitive damages

222.  Nothing in this Part limits a court’s power to order someone to pay damages in the nature of punitive damages because of an act or omission constituting a contravention of a civil penalty provision.

 

PART 22—UNCLAIMED MONEY

Object of Part

223.  The object of this Part is to set out a procedure for dealing with unclaimed superannuation money.

Definition of “fund”

224.  In this Part:

“fund” means a regulated superannuation fund or an approved deposit fund.

Trustee to pay unclaimed money to the Commissioner

Meaning of “unclaimed money”

225.(1) If:

(a)  a beneficiary in a fund has reached the eligibility age for an age pension; and

(b)  the trustee determines that, under the governing rules of the fund, a benefit (other than a pension) is immediately payable in respect of the beneficiary; and

(c)  the beneficiary has not applied to the trustee to have the amount of his or her benefits in the fund paid to him or her; and

(d)  the trustee is unable to pay those benefits to the beneficiary because the trustee, after making reasonable efforts to find the beneficiary, is unable to do so;

the amount payable to the beneficiary is taken to be unclaimed money.

Statement of unclaimed money

(2)  The trustee of a fund must, within 28 days after the end of each half-year, give to the Commissioner a statement in the approved form of all unclaimed money in the fund as at the end of that half-year.

Statement may require tax file number

(3)  If a beneficiary to whom the statement relates has quoted his or her tax file number to the trustee of the fund, the approved form of statement may require the tax file number to be set out in the statement.


Beneficiary may quote tax file number

(4)  A beneficiary may quote the beneficiary’s tax file number to the trustee of a fund in connection with the operation, or the possibility of the future operation, of this section. A beneficiary is taken to have quoted the beneficiary’s tax file number to the trustee under this subsection if the beneficiary has already quoted that number to the trustee under:

(a)  Part 24 of this Act; or

(b)  a provision of the Income Tax Assessment Act 1936; or

(c)  a provision of the repealed Part IIIA of the Occupational Superannuation Standards Act 1987 (including a provision as it continues to apply because of the Taxation Laws Amendment (Superannuation) Act 1992).

Payment of unclaimed money to Commissioner

(5)  The trustee must pay to the Commissioner, when the statement is given, the total amount of unclaimed money shown in the statement.

Payment where money later claimed

(6)  If:

(a)   any unclaimed money has been paid to the Commissioner under this section; and

(b)  the Commissioner is satisfied on application made by a person in the approved form that, if this section had not been enacted, that person would have been paid that unclaimed money by the trustee by whom it was paid to the Commissioner;

the Commissioner must pay that unclaimed money to that person.

Refund of excess payments

(7)  If the trustee of a fund, after paying an amount to the Commissioner under this section, satisfies the Commissioner that the amount so paid exceeds the amount that would have been paid to the person concerned, the Commissioner must refund to the trustee the amount of the excess.

Discharge of trustee from liability

(8)  The trustee is, upon payment to the Commissioner of an amount as required by this section, discharged from further liability in his or her capacity as trustee in respect of that amount.

No obligation on trustee if alternative State/Territory scheme

(9)  The trustee of a fund is not required to comply with subsections (2) and (5) if a law of a State or Territory requires the trustee to:

(a)  pay unclaimed money to, or to an authority of, a State or Territory; or


(b)  lodge a return relating to unclaimed money with, or with an authority of, a State or Territory.

Appropriation of Consolidated Revenue Fund

(10)  The Consolidated Revenue Fund is appropriated for the purposes of this section.

Trustee not to contravene section

(11)  The trustee of a fund must not intentionally or recklessly contravene this section.

Penalty: 100 penalty units.

Register of unclaimed money

226.  The Commissioner must keep a register that contains:

(a)  particulars of unclaimed money paid by a trustee of a fund to the Commissioner under this Part; and

(b)  particulars of the persons to whom, if this section had not been enacted, the money would have been payable by the trustee, which may include the tax file numbers of those persons.

 

PART 23—FINANCIAL ASSISTANCE TO CERTAIN FUNDS

Division 1Preliminary

Object of Part

227.  The object of this Part is to make provision for the grant of financial assistance for certain superannuation entities that have suffered loss as a result of fraudulent conduct or theft.

Interpretation

228.  In this Part:

“fund” means a regulated superannuation fund or an approved deposit fund but does not include an excluded fund;

“levy” means the levy imposed by the Superannuation (Financial Assistance Funding) Levy Act 1993;

“loss”, in relation to a fund, does not include an amount that the fund did not receive because of the failure of a person to pay contributions to the fund.

Application for assistance

229.(1) If:

(a)  a fund suffers a loss as a result of fraudulent conduct or theft that occurs after the commencement of this Part; and


(b)  the loss has caused substantial diminution of the fund leading to difficulties in the payment of benefits;

the trustee may apply to the Minister for a grant of financial assistance for the fund.

(2)  The application must be in writing and be accompanied by such information as the Minister determines.

Minister may request additional information

230. The Minister may request the trustee to give such additional information as the Minister considers necessary to enable the application to be determined.

Division 2Determination of applications for financial assistance

Minister may grant financial assistance

231.(1) If, after considering the application and any additional information given by the trustee, the Minister is satisfied that the fund has suffered loss as mentioned in subsection 229(1), the Minister is to determine in writing:

(a)   whether the public interest requires that a grant of financial assistance should be made to the trustee for the purposes of the fund; and

(b)  if so, the amount of the assistance.

(2)  Financial assistance payable to the trustee of a fund is to be paid in such amounts, at such times, and in such manner, as the Minister determines.

Maximum amount of financial assistance

232.  The amount of financial assistance to be granted to the trustee in respect of the fund must not be greater than the amount that the Minister determines to be the loss suffered by the fund.

Financial assistance to be subject to conditions

233.  The payment to the trustee of a fund of a grant of financial assistance is subject to the following conditions:

(a)   a condition that the amount of financial assistance granted will be deposited in the corpus of the fund;

(b)  a condition that the amount will be applied, within a period determined by the Minister:

(i)    in making payments to beneficiaries in the fund; or

(ii)   for the benefit of the beneficiaries in such other manner as the Minister approves in writing;

(c)   a condition that the trustee will prepare and give to the Minister such reports on the application of the amount as are required by the Minister;


(d)  such other conditions (if any) as the Minister determines and notifies in writing to the trustee.

Division 3How financial assistance is to be paid

Superannuation Protection Account

234.(1) An account called the Superannuation Protection Account is established.

(2)  The Account is a trust account for the purposes of section 62A of the Audit Act 1901.

(3)  So far as practicable, money in the Account that is not required for the purpose of making payments out of the Account must be invested in accordance with section 62B of the Audit Act 1901.

(4)  There must be paid into the Account amounts equal to income derived from the investment of money in the Account.

(5)  The Consolidated Revenue Fund is appropriated for the purposes of subsection (4).

Minister to decide the source from which financial assistance is to be paid

235.(1) If the Minister determines that a grant of financial assistance is to be made to the trustee of a fund, the Minister is also to determine in writing whether:

(a)  the assistance is to be paid out of the Consolidated Revenue Fund; or

(b)  the assistance is to be paid out of the Superannuation Protection Account.

(2)  If the Minister determines that the assistance is to be paid out of the Consolidated Revenue Fund, the Consolidated Revenue Fund is appropriated accordingly.

Purposes of Account

236. The purposes of the Account are to make payments of financial assistance that are payable out of the Account pursuant to a determination by the Minister under paragraph 235(1)(b) and to apply any excess referred to in subsection 237(2) in accordance with that subsection.

Separate notional accounts to be kept within the Account

237.(1) A separate notional account is to be kept within the Account in respect of each levy.

(2)  If the total of the amounts paid by funds into the Account in respect of a levy that was imposed because of a determination made by the Minister to grant financial assistance to a fund exceeds the amount of that financial assistance, the excess is to be applied in such manner as the Minister determines.


Financial assistance to be repaid in certain circumstances

238.(1) The trustee of a fund for which a grant of financial assistance has been made is liable to repay to the Commonwealth the amount of the financial assistance or such part of that amount as the Minister determines if:

(a)   a condition to which the grant of the financial assistance was subject has been contravened; or

(b)  the grant of the financial assistance is subject to a condition that a particular event does not occur and that event has occurred.

(2)  The Minister is to determine the manner in which repayments of financial assistance are to be made.

(3)  If the trustee of a fund is liable to pay an amount to the Commonwealth under subsection (1), the Commonwealth may recover the amount as a debt.

Minister may remit liability

239. The Minister may remit the whole or a part of the liability of the trustee of a fund under section 238.

Repayable grant to have priority over other debts

240. Despite any other law of the Commonwealth or any law of a State or Territory, an amount payable to the Commonwealth by the trustee of a fund under section 238 has priority over all other debts (whether preferential, secured or unsecured).

 

PART 24—ROLLOVER OF CERTAIN BENEFITS BETWEEN FUNDS

Object of Part

241. The object of this Part is to provide for the automatic rollover of certain benefits between funds.

Interpretation

242. In this Part:

“eligible rollover fund” means a fund in respect of which a declaration by the Commissioner under section 243 is in force;

“fund” means a regulated superannuation fund or an approved deposit fund;

“report”, in relation to a fund, means a report that the trustee of the fund is required by the regulations to send to members of, or beneficiaries in, the fund.


Declaration of eligible funds

243. If a fund satisfies such conditions as are prescribed by the regulations, the Commissioner may declare the fund to be a fund that is eligible to receive rolled-over benefits from other funds in accordance with this Part.

Rollover of benefits from superannuation fund

244.(1) If:

(a)  the trustee of a standard employer-sponsored fund determines that, under the governing rules of the fund, a benefit (other than a pension) is immediately payable to:

(i) a member; or

(ii) the trustee of another fund in respect of a member; or

(iii) another person in respect of a member; and

(b)  the member is or was a standard employer-sponsored member of the first-mentioned fund; and

(c)  a period of 90 days has elapsed since the benefit became payable or this Part commenced, whichever is the later; and

(d)  the benefit has not been paid;

the trustee may pay the benefit to an eligible rollover fund.

(2)  Subsection (1) empowers the trustee of a fund to pay the benefit despite anything in the governing rules of the fund.

(3)  Subject to section 248, if:

(a)  subsection (1) applies in relation to a benefit that is payable in respect of a member of a standard employer-sponsored fund; and

(b)  the trustee of the fund is satisfied that at least 2 consecutive prescribed reports to members of the fund have not been received by the member;

the trustee must pay the benefit to an eligible rollover fund.

(4)  A person who intentionally or recklessly contravenes this section is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Trustee to give information to eligible rollover fund

245.(1) If the trustee of a standard employer-sponsored fund pays a benefit to an eligible rollover fund under section 244 in respect of a member or beneficiary, the trustee must also give the prescribed information in the trustee’s possession relating to the member or beneficiary to the trustee of the eligible rollover fund.

(2)  A beneficiary or member of a standard employer-sponsored fund may quote his or her tax file number to the trustee of the fund in connection with the operation, or the possibility of the future operation, of this Part. A


beneficiary or member is taken to have quoted his or her tax file number to the trustee under this subsection if he or she has already quoted that number to the trustee under:

(a)  Part 22 of this Act; or

(b)  a provision of the Income Tax Assessment Act 1936; or

(c)  a provision of the repealed Part IIIA of the Occupational Superannuation Standards Act 1987 (including a provision as it continues to apply because of the Taxation Laws Amendment (Superannuation) Act 1992).

(3)  If the member or beneficiary to whom the benefit relates has quoted his or her tax file number to the trustee of the standard employer-sponsored fund concerned, regulations made for the purposes of subsection (1) may prescribe that tax file number.

(4)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Reports to include reports sent before commencement of Part

246. A reference in section 244 to a report to members of, or beneficiaries in, a fund includes a reference to such a report that was sent before the commencement of this Part.

Notice to members and beneficiaries of circumstances in which benefits may be rolled-over

247.(1) The trustee of a standard employer-sponsored fund must give to each member of the fund:

(a)  in the case of a member who becomes a member after the commencement of this Part—when he or she becomes a member; and

(b)  in any case—at least once in each year;

a written notice:

(c)  setting out the circumstances in which the member’s benefits may be paid to an eligible rollover fund or otherwise dealt with under this Part; and

(d)  specifying the name and address of the place of business of the eligible rollover fund to which any such benefits will be paid in those circumstances.

(2)  The trustee may by written notice to the member or beneficiary, as the case may be, change the eligible rollover fund to which it proposes to pay benefits under this Part.

(3)  The failure of a trustee to notify a member or beneficiary under subsection (1) does not affect the rights and obligations of the trustee under section 244.


(4)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

What happens if benefits are below minimum amount

248. If:

(a)   the trustee of a fund would, apart from this section, be required to pay an amount in respect of a member or beneficiary to an eligible rollover fund; and

(b)  the amount concerned is less than the minimum amount in respect of which standards are prescribed in relation to preservation and portability of benefits;

the trustee may, instead of paying that amount to an eligible rollover fund, deal with the amount under Part 22 as if it were unclaimed money.

Trustee of eligible rollover fund to notify Commissioner of receipt of payments

Section applies to payments from other funds

249.(1) This section applies if a trustee of an eligible rollover fund receives a payment from another fund in respect of benefits of a member of, or beneficiary in, that other fund.

Trustee to give notice

(2)  The trustee must give to the Commissioner, within 28 days after the end of the half-year in which the payment was received, written notice of the amount concerned. The notice must also set out such information as is prescribed by the regulations.

Where tax file number quoted

(3)  If the member or beneficiary has quoted his or her tax file number to the trustee of the eligible rollover fund, regulations made for the purposes of subsection (2) may require the tax file number to be set out in the notice.

Entitlement to quote tax file number

(4)  A member of, or beneficiary in, that other fund may quote his or her tax file number to the trustee of the eligible rollover fund.

Deemed quotation of tax file number

(5)  For the purposes of this Act, if the tax file number of the member or beneficiary is given to the trustee of the eligible rollover fund under section 245, the member or beneficiary is taken to have quoted that tax file number to the trustee of the eligible rollover fund.


Offence

(6)  A person who intentionally or recklessly contravenes subsection (2) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Register of rolled-over benefits

250.(1) The Commissioner must keep a register that contains particulars of which notice has been given to the Commissioner under section 249.

(2)  Any person may request the Commissioner to tell the person whether any particulars in relation to that person are contained in the register.

(3)  The Commissioner may require the person to quote the person’s tax file number for the purpose of enabling the Commissioner to answer the request.

Rights of beneficiary to rolled-over benefits

251. If a fund pays in accordance with this Part to an eligible rollover fund an amount equal to the benefits of a beneficiary in the first-mentioned fund:

(a)  the beneficiary ceases to have any rights against the first-mentioned fund in respect of those benefits; but

(b)  has the corresponding rights against the eligible rollover fund in respect of those benefits.

Claims to rolled-over benefits

252.(1) A person who considers that he or she is entitled to benefits held by an eligible rollover fund may apply in the approved form to the trustee of that fund for payment of the benefits.

(2)  The approved form of application may require the tax file number of the applicant to be set out in the application.

 

PART 25—MONITORING AND INVESTIGATING SUPERANNUATION ENTITIES

Division 1Objects of Part

Objects of Part

253. The objects of this Part are:

(a)   to ensure that the Commissioner has sufficient power to monitor superannuation entities (Division 2); and

(b)  to empower the Commissioner to require the trustee of a superannuation entity to appoint an individual, or a committee, to investigate the financial position of the entity (Division 3); and


(c)  to authorise the Commissioner to conduct an investigation of the whole or a part of the affairs of a superannuation entity (Divisions 4, 5, 6, 7, 8 and 9).

Division 2Monitoring superannuation entities

Information to be given to Commissioner

254.(1) The trustee of a superannuation entity established after the commencement of this section must, within the prescribed period after the establishment of the entity, give the prescribed information to the Commissioner.

(2)  For the purposes of this Act, the Commissioner or an authorised person may, by written notice to the trustee of a superannuation entity, require the trustee, within a specified period, to give to the Commissioner or to an authorised person in relation to a specified year of income of the entity such information, or a report on such matters, as are set out in the notice.

(3)  If the trustee of a superannuation entity gives information to the Commissioner or an authorised person as required by subsection (1), the Commissioner or authorised person must give to the trustee a written statement that the Commissioner or authorised person has received the information.

(4)  A person who intentionally or recklessly contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding 50 penalty units.

Commissioner may require production of books

255.(1) For the purposes of this Act, the Commissioner or an authorised person may by written notice to a relevant person in relation to a superannuation entity, require the relevant person to produce to the Commissioner or an authorised person, at such reasonable time and reasonable place as are specified in a notice, any books relating to the affairs of the entity.

(2)  If any book produced to the Commissioner or an authorised person under subsection (1) is not in writing in the English language, the Commissioner or an authorised person may require the relevant person to produce to the Commissioner or an authorised person a version of the book that is in writing in the English language.

(3)  The Commissioner or an authorised person may inspect, take extracts from and make copies of any book, or of any version of any book, produced to the Commissioner or an authorised person under this section.


Access to premises

256.(1) For the purposes of this Act, an authorised person may enter, at any reasonable time, any premises at which the person has reason to believe books relating to the affairs of a superannuation entity are kept and may:

(a)   inspect any book found on the premises that relates to those affairs or that the authorised person believes on reasonable grounds to relate to those affairs; and

(b)  make copies of, or take extracts from, any such book.

(2)  An authorised person may not, under subsection (1), enter premises unless the occupier of the premises has consented to the entry.

Division 3Commissioner may require trustee of superannuation entity to appoint an individual, or a committee, to investigate the financial position of the entity

Investigation of financial position of superannuation entity

257. The Commissioner may, by written notice given to the trustee of a superannuation entity, require the trustee to appoint an individual, or a committee of individuals, to:

(a)   carry out an investigation of the whole or a specified part of the financial position of the entity as at a specified time or in relation to a specified period; and

(b)  make a report on that investigation.

Qualifications of investigator or investigators

258.(1) If the Commissioner’s notice requires the appointment of a single person, the notice may specify qualifications (whether academic, professional or by way of experience) that must be held by the person.

(2)  If the Commissioner’s notice requires the appointment of a committee of persons, the notice may require that the committee consist of persons holding such respective qualifications (whether academic, professional or by way of experience) as are specified in the notice.

(3)  If the Commissioner’s notice includes a requirement of a kind mentioned in subsection (1) or (2), the person or persons appointed must hold the qualifications required by the notice.

Commissioner may veto appointment of investigator or investigators

259.(1) The trustee must, within 7 days after the date on which the notice was given, advise the Commissioner, in writing, of the name of the person or persons appointed.

(2)  If the Commissioner notifies the trustee that the person is, or any or all of the persons are, not acceptable to the Commissioner, the trustee must, within 7 days after the date on which the notice was given:


(a)  appoint a different individual or individuals; and

(b)  advise the Commissioner, in writing, of the name of the individual or individuals so appointed.

(3)  The Commissioner may, within 7 days after the advice was given under subsection (1) or (2), notify the trustee, in writing, that the person is, or that any or all of the persons are, not acceptable to the Commissioner.

Deadline for receipt of report

260.(1) The Commissioner’s notice under section 257 must specify a date as the deadline for the receipt of the report.

(2)  The trustee must cause the person’s report or the committee’s report, as the case may be, to be given to the Commissioner:

(a)  before the expiry of deadline; or

(b)  within such further time as the Commissioner, by written notice, allows.

Contents of report etc.

261.(1) The Commissioner’s notice under section 257 may require the report to contain a statement of the person’s opinion or the committee’s opinion, as the case may be, about such matters as are specified in the notice.

(2)  Subject to subsection (3), if the Commissioner’s notice under section 257 includes a requirement of a kind mentioned in subsection (1) of this section, the person’s report or the committee’s report must contain a statement of the person’s opinion or the committee’s opinion, as the case may be, about the matters specified in the notice.

(3)  If the members of a committee are divided:

(a)   if the division relates to the content of a statement of the committee’s opinion about a particular matter—the committee’s report must contain statements of the respective members’ opinions about that matter; or

(b)  in any other case—the committee’s report is to be divided accordingly.

(4)  The report must be signed by the person or persons appointed.

Trustee must comply with this Division

262. A trustee who intentionally or recklessly contravenes this Division is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units.

Division 4Investigations by Commissioner

Investigation of superannuation entity

263.(1) If it appears to the Commissioner that:


(a)  a contravention of this Act or the regulations may have occurred or be occurring in relation to a superannuation entity; or

(b)  the financial position of a superannuation entity may be unsatisfactory; or

(c)  the trustee of a regulated superannuation fund or an approved deposit fund has refused or failed to give effect to a determination of the Superannuation Complaints Tribunal under section 37 of the Superannuation (Resolution of Complaints) Act 1993;

the Commissioner may, by written notice to the trustee of the entity, tell the trustee that the Commissioner proposes to conduct an investigation of the whole or a part of the affairs of the entity.