An Act to make provision for the supervision of certain entities engaged in the superannuation industry, and for related purposes
Part 1—Preliminary
Division 1—Preliminary
1 Short title [see Note 1]
This Act may be cited as the Superannuation Industry (Supervision) Act 1993.
2 Commencement [see Note 1]
(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, 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.
3 Object of Act
Supervision of certain superannuation entities
(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 APRA, ASIC and the Commissioner of Taxation.
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.
4 Summary of provisions
The Act contains provisions dealing with the following matters:
| Part No. | Matter dealt with |
| 1 | interpretation |
| 2A | licensing of trustees and groups of individual trustees |
| 2B | registrable superannuation entities |
| 3 | operating standards for funds and trusts |
| 4 | accounts, audit and reporting obligations for 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 |
| 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 |
| 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 | amalgamation of funds |
| 19 | rules about dealing with superannuation interests in public offer entities |
| 21 | civil and criminal consequences of serious breaches of the Act |
| 23 | financial assistance to funds that suffer loss as a result of fraud or theft |
| 24 | facility to pay benefits to eligible rollover funds |
| 24A | transitional provisions relating to pre‑1 July 1995 automatic rollovers of benefits between funds |
| 25 | monitoring and investigating superannuation entities |
| 25A | tax file numbers |
| 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 |
| 32 | additional transitional provisions relating to tax file numbers |
6 General administration of Act
(1) Subject to subsections (3) and (4):
(a) APRA has the general administration of the following provisions, to the extent that administration of the provisions is not conferred on the Commissioner of Taxation by paragraph (e) or (g):
(i) Parts 2A and 2B;
(ii) Parts 4 to 5;
(iii) section 60A;
(iv) Part 7 (other than sections 64A and 68A);
(v) Parts 8 to 11;
(vi) Part 12 (other than sections 101, 103 and 105);
(vii) Part 14 to 16;
(viii) Part 17;
(ix) Part 21;
(x) Parts 23 to 24A;
(xi) Division 3 of Part 25;
(xii) Part 25A (except Division 1);
(xiii) Part 32; and
(b) APRA also has the general administration of Parts 3 and 6 (other than section 60A) and section 105 to the extent that that administration is not conferred on any of the following:
(i) the Chief Executive Medicare by paragraph (ba);
(ii) ASIC by paragraph (d);
(iii) the Commissioner of Taxation by paragraph (f); and
(ba) the Chief Executive Medicare has the general administration of regulations made under Part 3 to the extent that the regulations relate to making determinations that an amount of benefits in a superannuation entity may be released on compassionate grounds; and
(c) ASIC has the general administration of:
(i) sections 64A and 68A; and
(ii) sections 101 and 103; and
(iii) Part 19;
to the extent that administration is not conferred on the Commissioner of Taxation by paragraph (e); and
(d) ASIC also has the general administration of Parts 3 and 6 (other than section 60A) and section 105 to the extent to which they relate to:
(i) the keeping of reports to members of, or beneficiaries in, funds; or
(ii) disclosure of information to members of, or beneficiaries in, funds; or
(iii) disclosure of information about funds (including disclosure of information to ASIC but not including disclosure of information to APRA); or
(iv) any other matter prescribed by the regulations for the purposes of this paragraph; and
(e) the Commissioner of Taxation has the general administration of the following provisions to the extent that they relate to self managed superannuation funds:
(i) Parts 4, 5, 7 (other than section 68A) and 8;
(ii) Part 12 (other than section 105);
(iii) Parts 13 and 14;
(iv) Part 15;
(v) Parts 16, 17 (other than section 140), 21 and 24, and Divisions 2, 3, 4 and 5 of Part 25A; and
(f) the Commissioner of Taxation also has the general administration of Parts 3 and 6 (other than section 60A) and section 105:
(i) to the extent that they relate to self managed superannuation funds; and
(ia) to the extent that administration is not conferred on the Chief Executive Medicare by paragraph (ba); and
(ii) to the extent that administration is not conferred on ASIC by paragraph (d); and
(g) the Commissioner of Taxation also has the general administration of Divisions 1 and 3A of Part 25A.
Note: An effect of paragraphs (e), (f) and (g) is that people who acquire information under those provisions (to the extent that they relate to self‑managed superannuation funds) are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.
(2) Powers and duties are also conferred by Parts 1, 25 (other than Division 3) and 26 27, 28, 29 (other than section 332) and 30 on:
(a) APRA for the purposes of APRA’s administration of the provisions it administers; and
(b) ASIC for the purposes of ASIC’s administration of the provisions it administers.
Note: Generally neither APRA nor ASIC are referred to in these provisions, Regulator is used instead. See the definition of Regulator in section 10.
(2A) Powers and duties are also conferred by Parts 1, 25 (other than Division 3), 26 to 28, 29 (other than section 332) and 30 (other than section 342) on the Commissioner of Taxation for the purposes of the administration of the provisions he or she administers.
Note: Generally, the Commissioner of Taxation is not referred to in these provisions, Regulator is used instead.
(2B) Powers and duties are also conferred on APRA by section 332 for the purposes of the administration of provisions administered by APRA or by the Commissioner of Taxation.
(3) The Minister may give APRA or ASIC directions about the performance or exercise of its functions or powers under this Act.
(4) Despite subsection (1):
(a) if an entity is not a self managed superannuation fund on the last day of a year of income, APRA has (subject to any later application of this subsection) the general administration of subsections 40(1) and (2), in relation to the entity, in respect of the following:
(i) the doing of anything after the end of that year of income, in relation to that year of income;
(ii) the doing of anything after the end of that year of income, in relation to any previous year of income; and
(b) if an entity is a self managed superannuation fund on the last day of a year of income, the Commissioner of Taxation has (subject to any later application of this subsection) the general administration of subsections 40(1) and (2), in relation to the entity, in respect of the following:
(i) the doing of anything after the end of that year of income, in relation to that year of income;
(ii) the doing of anything after the end of that year of income, in relation any previous year of income; and
(c) the following rules apply in relation to the general administration of subparagraphs 42(1AA)(b)(ii) and (c)(ii), subsection 42(1AC), subparagraphs 42A(3)(c)(ii) and (d)(ii) and subsection 42A(4):
(i) subject to subparagraph (ii), APRA has the general administration of those provisions;
(ii) if another person or body is specified in regulations under subsection 19(4) in respect of a class of superannuation funds, that person or body has the general administration of those provisions to the extent that they relate to funds belonging to that class.
7 Application of Act not to be excluded or modified
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.
8 Act extends to external Territories
This Act extends to all the external Territories.
9 Crown to be bound
(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.
9A Application of the Criminal Code
Chapter 2 of the Criminal Code (except Part 2.5) applies to all offences against this Act.
Division 2—Interpretation
10 Definitions
(1) In this Act, unless the contrary intention appears:
ABN has the meaning given by section 41 of the A New Tax System (Australian Business Number) Act 1999.
acquirable asset has the meaning given by section 67A.
actuary means a person who is a Fellow or an Accredited Member of the Institute of Actuaries of Australia.
ADI (authorised deposit‑taking institution) means:
(a) a body corporate that is an ADI for the purposes of the Banking Act 1959; or
(b) a State bank.
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) a person who is disqualified from being or acting as an auditor of all superannuation entities under section 130D; or
(b) a person in respect of whom a disqualification order is in force under section 131.
approved deposit fund means a fund that:
(a) is an indefinitely continuing fund; and
(b) is maintained by an RSE licensee that is a constitutional corporation; and
(c) is maintained solely for approved purposes.
approved form has the meaning given by section 11A.
approved guarantee has the meaning given by section 11E.
approved purposes, in relation to a fund, means:
(a) the purpose of receiving on deposit:
(i) amounts of roll‑over superannuation benefits (within the meaning of the Income Tax Assessment Act 1997); and
(ia) amounts of directed termination payments (within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997); and
(ii) amounts paid under Part 24 of this Act; and
(iii) amounts paid under section 65 of the Superannuation Guarantee (Administration) Act 1992; and
(b) the purpose of 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 inconsistent requirement in the standards from time to time applicable to the fund under section 32, the purpose of paying to beneficiaries, or to the legal personal representatives of beneficiaries, upon request, amounts equal to the beneficiary’s interest in the fund; and
(d) such other purposes (if any) as APRA approves in writing.
APRA means the Australian Prudential Regulation Authority.
ASIC means the Australian Securities and Investments Commission.
asset means any form of property and, to avoid doubt, includes money (whether Australian currency or currency of another country).
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 a person authorised by the Regulator under section 298A for the purposes of the provision in which the expression occurs.
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.
Chief Executive Medicare has the same meaning as in the Human Services (Medicare) Act 1973.
child, in relation to a person, includes:
(a) an adopted child, a stepchild or an ex‑nuptial child of the person; and
(b) a child of the person’s spouse; and
(c) someone who is a child of the person within the meaning of the Family Law Act 1975.
civil penalty order means a declaration or order made under section 196.
civil penalty provision has the meaning given by section 193.
class, in relation to an RSE licensee, means (except in subsections 29E(7) and (8)) a class of RSE licence provided for under subsection 29B(2) or (3), or under regulations made for the purposes of subsection 29B(4).
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 a trustee of the entity) who, under a contract with a 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.
defined benefit fund has (except in Division 3A of Part 8 and in Part 23) the meaning given by the regulations.
defined benefit member has (except in Division 3A of Part 8 and in Part 23) the meaning given by the regulations.
dependant, in relation to a person, includes the spouse of the person, any child of the person and any person with whom the person has an interdependency relationship.
director, in relation to a body corporate, has the same meaning as in the Corporations Act 2001.
disclose, in relation to information, means give, reveal or communicate in any way.
employee has the meaning given by section 15A.
employer has the meaning given by section 15A.
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).
entity means any of the following:
(a) an individual;
(b) a body corporate;
(c) a partnership;
(d) a trust.
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 instalment trust, of a superannuation fund, means a trust:
(a) that arises because a trustee or investment manager of the superannuation fund makes an investment under which a listed security (the underlying security) is held in trust until the purchase price of the underlying security is fully paid; and
(b) where the underlying security, and property derived from the underlying security, is the only trust property; and
(c) where an investment in the underlying security held in trust would not be an in‑house asset of the superannuation fund.
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.
financial services licensee has the meaning given by Chapter 7 of the Corporations Act 2001.
function includes duty.
governing rules, in relation to a fund, scheme or trust, means:
(a) any rules contained in a trust instrument, other document or legislation, or combination of them; or
(b) any unwritten rules;
governing the establishment or operation of the fund, scheme or trust.
group of individual trustees means a group of trustees each of whom is an individual trustee.
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 or the Income Tax Assessment Act 1997.
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.
Note: Subsection (2) sets out the circumstances in which a director of a corporate trustee of a fund is not taken to be an associate of an employer‑sponsor 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 executed a personal insolvency agreement 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;
if a certificate has not been given under section 232 of that Act or the corresponding provision of the law of the external Territory or foreign country, as the case may be, in respect of the agreement.
inspector has the meaning given by section 265.
instalment receipt means an investment under which:
(a) a listed security is held in a trust until the purchase price of the security is fully paid; and
(b) the security, and property derived from the security, is the only trust property.
interdependency relationship has the meaning given by section 10A.
invest means:
(a) apply assets in any way; or
(b) make a contract;
for the purpose of gaining interest, income, profit or gain.
investment manager means a person appointed by a trustee of a fund or trust to invest on behalf of the trustee, or the trustees, 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.
lease arrangement means any agreement, arrangement or understanding in the nature of a lease (other than a lease) between a trustee of a superannuation fund and another person, under which the other person is to use, or control the use of, property owned by the fund, whether or not the agreement, arrangement or understanding is enforceable, or intended to be enforceable, by legal proceedings.
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.
licensing transition period means the period:
(a) starting on the commencement of Part 1 of Schedule 1 to the Superannuation Safety Amendment Act 2004; and
(b) ending immediately before the commencement of Part 2 of that Schedule.
life insurance company means:
(a) a body corporate registered under section 21 of the Life Insurance Act 1995; or
(b) a public authority:
(i) that is constituted by a law of a State or Territory; and
(ii) that carries on life insurance business within the meaning of section 11 of that Act.
listed security has the meaning given by subsection 66(5).
loan includes the provision of credit or any other form of financial accommodation, whether or not enforceable, or intended to be enforceable, by legal proceedings.
lodge means lodge with the Regulator.
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 has a meaning affected by section 15B.
member of staff means:
(a) in relation to APRA—a person who is an APRA staff member within the meaning of the Australian Prudential Regulation Authority Act 1998; and
(b) in relation to ASIC—a person who is a staff member within the meaning of the Australian Securities and Investments Commission Act 2001; and
(c) in relation to the Commissioner of Taxation—a taxation officer.
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.
Part 8 associate has the meaning given by Subdivision B of Division 1 of Part 8.
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 a 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 covered by paragraph (a) of the definition of superannuation fund, other than a public sector fund.
procure includes cause.
produce includes permit access to.
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 entity licence means an RSE licence of a class provided for under subsection 29B(2).
public offer superannuation fund has the meaning given by section 18.
public sector fund means a superannuation fund that is:
(a) covered by paragraph (a) of the definition of superannuation fund; and
(b) 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, or recognised, under the Fair Work (Registered Organisations) Act 2009.
registrable superannuation entity means:
(a) a regulated superannuation fund; or
(b) an approved deposit fund; or
(c) a pooled superannuation trust;
but does not include a self managed superannuation fund.
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.
Regulator means:
(a) APRA if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by APRA; and
(b) ASIC if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by ASIC; and
(c) the Commissioner of Taxation if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Commissioner of Taxation; and
(d) the Chief Executive Medicare if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Chief Executive Medicare under paragraph 6(1)(ba).
related, in relation to bodies corporate, has the meaning given by section 20.
related party, of a superannuation fund, means any of the following:
(a) a member of the fund;
(b) a standard employer‑sponsor of the fund;
(c) a Part 8 associate of an entity referred to in paragraph (a) or (b).
related trust, of a superannuation fund, means a trust that a member or a standard employer‑sponsor of the fund controls (within the meaning of section 70E), other than an excluded instalment trust of the fund.
relative of an individual means the following:
(a) a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the individual or of his or her spouse;
(b) a spouse of the individual or of any other individual referred to in paragraph (a).
Note: Subsection (5) may be relevant to determining relationships for the purposes of paragraph (a) of the definition of relative.
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; or
(e) a person who is a custodian in relation to the fund or trust.
resident approved deposit fund has the meaning given by section 20A.
resident regulated superannuation fund means a regulated superannuation fund that is an Australian superannuation fund within the meaning of the Income Tax Assessment Act 1997.
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 APRA under subsection 18(6) or (7) to make a declaration; or
(aa) a decision of APRA under subsection 18(7A) to make a declaration under subsection 18(7) subject to conditions; or
(ab) a decision of APRA under subsection 18(7C) to revoke a declaration that a superannuation fund is not a public offer superannuation fund or;
(b) a decision of APRA under subsection 18(10) to revoke a declaration; or
(dd) a decision of APRA under subsection 29CA(2) to treat an application for an RSE licence as having been withdrawn; or
(de) a decision of APRA under subsection 29D(2) refusing an application for an RSE licence; or
(df) a decision of APRA under subsection 29EA(1) to impose additional conditions on an RSE licence; or
(dg) a decision of APRA under subsection 29FA(2) to treat an application for variation of an RSE licence so that it is an RSE licence of a different class as having been withdrawn; or
(dh) a decision of APRA under subsection 29FA(2) to treat an application for variation or revocation of a condition imposed on an RSE licence as having been withdrawn; or
(di) a decision of APRA to refuse to vary an RSE licence under subsection 29FC(1) so that it is an RSE licence of a different class; or
(dj) a decision of APRA to refuse to vary or revoke under subsection 29FC(1) any conditions imposed on an RSE licence; or
(dk) a decision of APRA under subsection 29FD(1) to vary or revoke any conditions imposed on an RSE licence; or
(dl) a decision of APRA under subsection 29G(1) to cancel an RSE licence; or
(dla) a decision of APRA to give a direction under subsection 29HB(3); or
(dm) a decision of APRA under subsection 29M(2) refusing an application for registration of a registrable superannuation entity; or
(dn) a decision of APRA under subsection 29N(2) to cancel the registration of a registrable superannuation entity; or
(do) a decision of APRA to give a direction under subsection 29PB(3); or
(dp) a decision of the Regulator refusing to give an approval under paragraph 35A(2)(b); or
(dq) a decision of the Regulator to give such an approval subject to conditions under subsection 35A(2A); or
(e) a decision of the Regulator to give a notice under section 40; or
(f) a decision of the Regulator refusing to give a notice under section 40; or
(fa) a decision of the Regulator under subsection 42(1AA) or (1AC) or paragraph 50(1)(c); or
(fb) a refusal of the Regulator to give an approval under subparagraph 62(1)(b)(v); or
(g) a decision of the Regulator to give a direction under section 63; or
(h) a decision of the Regulator refusing to revoke a direction under section 63; or
(ha) a decision of the Regulator to make a determination under subsection 70A(1); or
(hb) a decision of the Regulator refusing to revoke a determination under subsection 70A(1); or
(i) a decision of the Regulator refusing to make a determination under paragraph 71(1)(e); or
(j) a decision of the Regulator to revoke a determination under paragraph 71(1)(e); or
(k) a decision of the Regulator to make a determination under subsection 71(4); or
(l) a decision of the Regulator refusing to revoke a determination under subsection 71(4); or
(m) a decision of APRA under section 92 refusing to grant an arrangement approval; or
(n) a decision of APRA under section 92 revoking an arrangement approval; or
(na) a decision of APRA under subsection 93A(2) or (3) to approve or not approve a higher percentage; or
(nb) a decision of APRA under subsection 93A(4) to specify conditions to which an approval is subject; or
(nc) a decision of APRA under subsection 93A(5) to vary an approval; or
(o) a decision of APRA under subsection 95(2) refusing to approve a borrowing; or
(p) a decision of APRA under subsection 117(6) refusing to waive a requirement; or
(q) a decision of APRA under subparagraph 123(2)(b)(ii) or (3)(c)(ii); or
(qa) a decision of the Regulator under subsection 126A(1), (2) or (3) to disqualify an individual; or
(qb) a decision of the Regulator under subsection 126A(5) refusing to revoke the disqualification of an individual; or
(r) a decision of the Regulator under subsection 126B(4) refusing to allow a longer period than 14 days to make an application for waiver; or
(ra) a decision of the Regulator under subsection 126D(3) refusing to make a declaration waiving an applicant’s status as a disqualified person; or
(rb) a decision of the Regulator under subsection 126F(3) refusing to waive, in whole or in part, the requirement to pay an amount under subsection 126F(2); or
(s) a decision of the Regulator to make a disqualification order under section 131; or
(t) a decision of the Regulator refusing to revoke a disqualification order under section 131; or
(ta) a decision of APRA to give a direction under section 131AA, other than a direction on the ground mentioned in paragraph 133AA(2)(a); or
(taa) a decision of the Regulator to suspend or remove a trustee of a superannuation entity under section 133; or
(u) a decision of the Regulator under section 141; or
(z) a decision of the Regulator under section 328 to make an exemption that applies to a particular person or a particular group of individual trustees; or
(zb) a decision of the Regulator under section 332 to make a declaration that applies to a particular person or a particular group of individual trustees; or
(zd) a decision of the Regulator under section 335 to vary or revoke an exemption or declaration that applies to a particular person or a particular group of individual trustees; or
(ze) a decision of APRA refusing to give a notice under subsection 342(2) in relation to a fund; or
(zf) a decision of APRA to give a notice under subsection 342(6) in relation to a fund; or
(zg) a decision of the Regulator under subsection 347A(9).
RSA has the same meaning as in the Retirement Savings Accounts Act 1997.
RSA provider has the same meaning as in the Retirement Savings Accounts Act 1997.
RSE licence means a licence granted under section 29D.
RSE licensee means a constitutional corporation, body corporate, or group of individual trustees, that holds an RSE licence granted under section 29D.
RSE licensee law means:
(a) this Act or the regulations; and
(b) the Financial Sector (Collection of Data) Act 2001; and
(c) the Financial Institutions Supervisory Levies Collection Act 1998; and
(d) the provisions of the Corporations Act 2001 listed in a subparagraph of paragraph (b) of the definition of regulatory provision in section 38A of this Act or specified in regulations made for the purposes of subparagraph (b)(xvi) of that definition, as applying in relation to superannuation interests; and
(e) any other provisions of any other law of the Commonwealth specified in regulations made for the purposes of this paragraph.
self managed superannuation fund has the meaning given by section 17A.
Note: Subsection (4) of this section extends the meaning of self managed superannuation fund for the purposes of sections 6, 42 and 42A.
signed, in relation to a body corporate, means executed by or on behalf of the body corporate in a way that is effective in law and that binds the body corporate.
spouse of a person includes:
(a) another person (whether of the same sex or a different sex) with whom the person is in a relationship that is registered under a law of a State or Territory prescribed for the purposes of section 22B of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and
(b) another person who, although not legally married to the person, lives with the person on a genuine domestic basis in a relationship as a couple.
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).
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.
taxation officer means:
(a) a Second Commissioner of Taxation; or
(b) a Deputy Commissioner of Taxation; or
(c) a person engaged under the Public Service Act 1999, or an officer or employee of an authority of the Commonwealth, performing duties in the Australian Taxation Office; or
(d) a person engaged to provide services relating to the Australian Taxation Office.
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.
unit trust means:
(a) a unit trust within the meaning of Division 6C of Part III of the Income Tax Assessment Act 1936 (whether established by a law of the Commonwealth or of a State or Territory, by a government agency or otherwise); or
(b) the trustee of such a trust;
as appropriate.
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).
(2) For the purposes of paragraph (b) of the definition of independent director in subsection (1), a director of a corporate trustee of a fund that is also an employer‑sponsor of the fund is not taken to be an associate of that employer‑sponsor by reason only of being such a director.
(3) Without limiting the meaning of the expression member in this Act, that expression, in relation to a self managed superannuation fund, includes a person:
(a) who receives a pension from the fund; or
(b) who has deferred his or her entitlement to receive a benefit from the fund.
(4) Treat an entity that is a superannuation fund as a self managed superannuation fund for the purposes of sections 6, 42 and 42A if:
(a) it has ceased being a self managed superannuation fund for the purposes of the rest of this Act; and
(b) the trustee of the fund is not an RSE licensee.
(5) For the purposes of paragraph (a) of the definition of relative in subsection (1), if one individual is the child of another individual because of the definition of child in subsection (1), relationships traced to, from or through the individual are to be determined in the same way as if the individual were the natural child of the other individual.
10A Interdependency relationship
(1) Subject to subsection (3), for the purposes of this Act, 2 persons (whether or not related by family) have an interdependency relationship if:
(a) they have a close personal relationship; and
(b) they live together; and
(c) one or each of them provides the other with financial support; and
(d) one or each of them provides the other with domestic support and personal care.
(2) Subject to subsection (3), for the purposes of this Act, if:
(a) 2 persons (whether or not related by family) satisfy the requirement of paragraph (1)(a); and
(b) they do not satisfy the other requirements of an interdependency relationship under subsection (1); and
(c) the reason they do not satisfy the other requirements is that either or both of them suffer from a physical, intellectual or psychiatric disability;
they have an interdependency relationship.
(3) The regulations may specify:
(a) matters that are, or are not, to be taken into account in determining under subsection (1) or (2) whether 2 persons have an interdependency relationship; and
(b) circumstances in which 2 persons have, or do not have, an interdependency relationship.
11 Approvals, determinations etc. by Regulator
If:
(a) a provision of this Act refers to an approval given, determination made or other act or thing done by the Regulator; and
(b) there is no other provision of this Act expressly authorising the Regulator to give the approval, make the determination or do the act or thing;
the Regulator is authorised to give the approval, make the determination or do the act or thing.
11A Approved forms
(1) In this Act, a reference to an approved form is a reference to a form approved by the Regulator, in writing, for the purposes of the provision in which the expression appears.
(2) An approved form may require particular information to be included in the completed form.
(3) An approved form may do either or both of the following:
(a) require or permit the form to be attached to, or to form part of, another document;
(b) require or permit the form to be given on a specified kind of data processing device or by specified electronic transmission, in accordance with specified software or other requirements.
(4) An approved form may require the form to be signed by a particular person or persons. This applies whether or not a provision of this Act also requires the form to be signed.
(5) An approved form may make different requirements to be complied with according to whether or not the form is given in a way that is required or permitted as mentioned in paragraph (3)(b).
(6) If an approved form makes a requirement as mentioned in subsection (2), (3) or (4), a purported use of the form is not effective for the purposes of this Act unless the requirement has been complied with.
11B Electronic lodgment of approved forms
(1) If a person gives the Regulator an approved form in a way that is required or permitted as mentioned in paragraph 11A(3)(b):
(a) the form is taken to constitute a written notice; and
(b) if the form includes the electronic signature of a person—the form is taken to be signed by that person.
(2) The person’s electronic signature is a unique identification, in an electronic form, that is approved by the Regulator for use by the person.
(3) A person is guilty of an offence if:
(a) the person gives the Regulator an approved form in a way that is required or permitted as mentioned in paragraph 11A(3)(b); and
(b) either:
(i) the form purports to be given by another person; or
(ii) the form purports to be given on behalf of another person, and that other person has not consented to the giving of the form.
Penalty: 50 penalty units.
(4) A person is guilty of an offence if:
(a) the person gives the Regulator an approved form in a way that is required or permitted as mentioned in paragraph 11A(3)(b); and
(b) the form includes the electronic signature of another person who has not consented to the inclusion of the signature.
Penalty: 50 penalty units.
(5) Subsections (3) and (4) are offences of strict liability within the meaning of section 6.1 of the Criminal Code.
11C Declaration required if approved form lodged electronically on trustee’s behalf
(1) This section applies if:
(a) the Regulator is given an approved form in a way that is required or permitted as mentioned in paragraph 11A(3)(b); and
(b) the form is given to the Regulator by a person on behalf of the trustee, or one or more of the trustees, of a superannuation entity.
In this section, the trustee, or each of the trustees, on whose behalf the form is given is referred to as the responsible trustee.
(2) The responsible trustee is guilty of an offence if the responsible trustee does not, before the form is given to the Regulator, make a signed declaration that states that:
(a) the person is authorised to give the form to the Regulator on the responsible trustee’s behalf; and
(b) the information in the form is correct.
Penalty: 50 penalty units.
(3) The responsible trustee is guilty of an offence if the responsible trustee does not retain the declaration for 5 years after it is made.
Penalty: 50 penalty units.
(4) The responsible trustee is guilty of an offence if:
(a) within the 5 year period, the Regulator requests the responsible trustee to produce the declaration to the Regulator; and
(b) the responsible trustee does not comply with the request.
Penalty: 50 penalty units.
(5) Subsections (2), (3) and (4) are offences of strict liability within the meaning of section 6.1 of the Criminal Code.
11D Electronic lodgment—documents other than approved forms
(1) A document that is not required to be lodged in an approved form may be lodged with the Regulator electronically only if:
(a) the Regulator and the person seeking to lodge it (either on the person’s own behalf or on another person’s behalf) have agreed, in writing, that it may be lodged electronically; or
(b) the Regulator has approved, in writing, the electronic lodgment of documents of that kind.
(2) The document is taken to be lodged with the Regulator if it is lodged in accordance with the agreement or approval (including any requirements of the agreement or approval as to authentication).
11E Approved guarantees
In this Act, an approved guarantee is:
(a) a guarantee given by an ADI; or
(b) a guarantee given by or on behalf of the Commonwealth, a State or a Territory;
that meets the requirements that APRA, by legislative instrument, determines.
12 Associates
(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 Act 2001 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 that Act had not been enacted;
(b) that section 13 of that Act were not limited to Chapter 7, but extended to all provisions of that Act.
13 Single trustees
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.
13A RSE licensees that are groups of individual trustees
(1) Subject to this section, for the purposes of this Act and the regulations, a change in the composition of a group of individual trustees that is an RSE licensee does not affect the continuity of the group of individual trustees for the duration of the period during which the RSE licence continues in force.
Note: So, for example, an RSE licence granted to a group of individual trustees will not cease to continue in force, merely because of a change in the membership of the group.
(2) An obligation that would be imposed on an RSE licensee that is a group of individual trustees of a registrable superannuation entity by a provision of this Act or the regulations is imposed instead on each of the trustees but, subject to the entity’s governing rules, may be discharged by any of them.
(3) A person who is a member of a group of individual trustees that is an RSE licensee is not liable under any offence of strict liability or civil penalty provision of this Act or the regulations in respect of any breach of a provision of this Act or the regulations, or failure, by the RSE licensee if the person proves that he or she:
(a) made all inquiries (if any) that were reasonable in the circumstances; and
(b) after doing so, believed on reasonable grounds that the obligations of the RSE licensee were being complied with.
Note: In a prosecution for an offence of strict liability against a provision of this Act or the regulations, a defendant bears a legal burden in relation to the matters in subsection (3) (see section 13.4 of the Criminal Code).
(4) If a group of individual trustees is an RSE licensee, a direction, notice or other document is taken, for the purposes of a provision of this Act or the regulations, to be given to the RSE licensee if it is given it to any member of the group.
(5) If a group of individual trustees of a registrable superannuation entity is an RSE licensee, a request is taken, for the purposes of a provision of this Act or the regulations, to have been made to the RSE licensee if it is made to any member of the group and, subject to the entity’s governing rules, may be dealt with by any member of the group.
(6) Any requirement under this Act or the regulations that a document be signed by an RSE licensee is taken, if the RSE licensee is a group of individual trustees, to be a requirement that the document be signed by each of the members of the group.
(7) An RSE licensee that is a group of individual trustees is taken, for the purposes of a provision of this Act or the regulations, to have provided something to a person if one of the members of the group has provided that thing to the person.
(8) For the purposes of this Act and the regulations, if an RSE licensee that is a group of individual trustees is affected by a reviewable decision, each member of the group is taken to be affected by that decision.
(9) The regulations may exclude or modify the effect of the subsections of this section (other than subsections (2) and (3)) in relation to specified provisions.
(10) This section has effect subject to a contrary intention in a provision of this Act or regulations made for the purposes of subsection (9).
14 Indefinitely continuing fund—application of rules against perpetuities
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.
15 Approved deposit funds—payments by trustees
(1) For the purposes of paragraph (c) of the definition of approved purposes in section 10 and for the purposes of section 53, if:
(a) a beneficiary has an interest in a fund; and
(b) on the request of the beneficiary, an amount equal to the beneficiary’s interest is paid by the fund:
(i) to a life insurance company or registered organisation for the purchase of an annuity in the name of the beneficiary; or
(ii) into an RSA specified by the beneficiary;
the trustee of the fund is taken to have paid the amount to the beneficiary on request.
(1A) For the purposes of paragraph (c) of the definition of approved purposes in section 10 and for the purposes of section 53, if:
(a) a beneficiary has an interest in a fund; and
(b) on the request of the beneficiary, an amount equal to the beneficiary’s interest is paid by the fund to:
(i) an approved deposit fund; or
(ii) a regulated superannuation fund;
the trustee of the first‑mentioned fund is taken to have paid the amount to the beneficiary on request.
(1B) For the purposes of paragraph (c) of the definition of approved purposes in section 10, if a payment is not made immediately on request but is deferred for a period determined by the trustee concerned, the payment is taken to have been made on request.
(2) A reference in subsection (1) or (1A) to a beneficiary includes a reference to the legal personal representative of a beneficiary.
15A Definitions of employee and employer
(1) Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (10):
(a) expand the meaning of those terms; and
(b) make particular provision to avoid doubt as to the status of certain persons.
(2) A person who is entitled to payment for the performance of duties as a member of the executive body (whether described as the board of directors or otherwise) of a body corporate is, in relation to those duties, an employee of the body corporate.
(3) If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
(4) A member of the Parliament of the Commonwealth is an employee of the Commonwealth.
(5) A member of the Parliament of a State is an employee of the State.
(6) A member of the Legislative Assembly for the Australian Capital Territory is an employee of the Australian Capital Territory.
(7) A member of the Legislative Assembly of the Northern Territory is an employee of the Northern Territory.
(8) For the purposes of this Act:
(a) a person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills is an employee of the person liable to make the payment; and
(b) a person who is paid to provide services in connection with an activity referred to in paragraph (a) is an employee of the person liable to make the payment; and
(c) a person who is paid to perform services in, or in connection with, the making of any film, tape or disc or of any television or radio broadcast is an employee of the person liable to make the payment.
(9) Subject to subsection (10), a person who:
(a) holds, or performs the duties of, an appointment, office or position under the Constitution or under a law of the Commonwealth, of a State or of a Territory; or
(b) is otherwise in the service of the Commonwealth, of a State or of a Territory (including service as a member of the Defence Force or as a member of a police force);
is an employee of the Commonwealth, the State or the Territory, as the case requires.
(10) A person who holds office as a member of a local government council is an employee of the council.
15B Modified meaning of member
(1) The regulations may provide that a person is to be treated, or is not to be treated, as being a member of a superannuation fund for the purposes of this Act or specified provisions of this Act.
(2) This Act applies with such modifications (if any) as are prescribed in relation to a person who is a member of a superannuation fund because of regulations made for the purposes of this section.
(3) In this section:
modifications includes additions, omissions and substitutions.
16 Definitions associated with employer‑sponsorship
Employer‑sponsor
(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 a 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 a trustee of the fund.
17A Definition of self managed superannuation fund
Basic conditions—funds other than single member funds
(1) Subject to this section, a superannuation fund, other than a fund with only one member, is a self managed superannuation fund if and only if it satisfies the following conditions:
(a) it has fewer than 5 members;
(b) if the trustees of the fund are individuals—each individual trustee of the fund is a member of the fund;
(c) if the trustee of the fund is a body corporate—each director of the body corporate is a member of the fund;
(d) each member of the fund:
(i) is a trustee of the fund; or
(ii) if the trustee of the fund is a body corporate—is a director of the body corporate;
(e) no member of the fund is an employee of another member of the fund, unless the members concerned are relatives;
(f) no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund;
(g) if the trustee of the fund is a body corporate—no director of the body corporate receives any remuneration from the fund or from any person (including the body corporate) for any duties or services performed by the director in relation to the fund.
Basic conditions—single member funds
(2) Subject to this section, a superannuation fund with only one member is a self managed superannuation fund if and only if:
(a) if the trustee of the fund is a body corporate:
(i) the member is the sole director of the body corporate; or
(ii) the member is one of only 2 directors of the body corporate, and the member and the other director are relatives; or
(iii) the member is one of only 2 directors of the body corporate, and the member is not an employee of the other director; and
(b) if the trustees of the fund are individuals:
(i) the member is one of only 2 trustees, of whom one is the member and the other is a relative of the member; or
(ii) the member is one of only 2 trustees, and the member is not an employee of the other trustee; and
(c) no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund;
(d) if the trustee of the fund is a body corporate—no director of the body corporate receives any remuneration from the fund or from any person (including the body corporate) for any duties or services performed by the director in relation to the fund.
Certain other persons may be trustees
(3) A superannuation fund does not fail to satisfy the conditions specified in subsection (1) or (2) by reason only that:
(a) a member of the fund has died and the legal personal representative of the member is a trustee of the fund or a director of a body corporate that is the trustee of the fund, in place of the member, during the period:
(i) beginning when the member of the fund died; and
(ii) ending when death benefits commence to be payable in respect of the member of the fund; or
(b) the legal personal representative of a member of the fund is a trustee of the fund or a director of a body corporate that is the trustee of the fund, in place of the member, during any period when:
(i) the member of the fund is under a legal disability; or
(ii) the legal personal representative has an enduring power of attorney in respect of the member of the fund; or
(c) if a member of the fund is under a legal disability because of age and does not have a legal personal representative—the parent or guardian of the member is a trustee of the fund in place of the member; or
(d) an appointment under section 134 of an acting trustee of the fund is in force.
Circumstances in which entity that does not satisfy basic conditions remains a self managed superannuation fund
(4) Subject to subsection (5), if a superannuation fund that is a self managed superannuation fund would, apart from this subsection, cease to be a self managed superannuation fund, it does not so cease until the earlier of the following times:
(a) the time an RSE licensee of the fund is appointed;
(b) 6 months after it would so cease to be a self managed superannuation fund.
Subsection (4) does not apply if admission of new members
(5) Subsection (4) does not, except for the purposes of section 29J, apply if the reason, or one of the reasons, why the superannuation fund would cease to be a self managed superannuation fund was the admission of one or more new members to the fund.
Extended meaning of employee in certain circumstances
(6) For the purposes of this section, a member of a fund, who is an employee of an employer‑sponsor of the fund, is also taken to be an employee of another person (the other person), if the employer‑sponsor is:
(a) a relative of the other person; or
(b) either of the following:
(i) a body corporate of which the other person, or a relative of the other person, is a director;
(ii) a body corporate related to that body corporate; or
(c) a trustee of a trust of which the other person, or a relative of the other person, is a beneficiary; or
(d) a partnership, where:
(i) the other person, or a relative of the other person, is a partner in the partnership; or
(ii) the other person, or a relative of the other person, is a director of a body corporate that is a partner in the partnership; or
(iii) the other person, or a relative of the other person, is a beneficiary of a trust, if a trustee of the trust is a partner in the partnership.
Note 1: An effect of this subsection is that a fund will not be a self‑managed superannuation fund if a member is employed by an employer‑sponsor of the fund, and another member (who is not a relative) has a specified interest in that employer‑sponsor: see paragraph (1)(e). An example of this would be where the employer‑sponsor is a company of which another member is a director.
Note 2: Another effect is that a fund will not be a self‑managed superannuation fund if its single member is employed by an employer‑sponsor of the fund in which the other trustee of the fund (who is not a relative) has a specified interest: see subsection (2).
(7) Subsection (6) does not limit the meaning of the term employee.
Regulations
(8) For the purposes of this section:
(a) a member of a fund is taken to be an employee of a person belonging to a class specified in the regulations for the purposes of this paragraph; and
(b) despite subsections (6) and (7) and section 15A, a member of a fund is not taken to be an employee of a person belonging to a class specified in the regulations for the purposes of this paragraph.
Meaning of relative
(9) In this section:
relative, in relation to an individual, means:
(a) a parent, child, grandparent, grandchild, sibling, aunt, uncle, great‑aunt, great‑uncle, niece, nephew, first cousin or second cousin of the individual or of his or her spouse or former spouse; or
(b) a spouse or former spouse of the individual, or of an individual referred to in paragraph (a).
(9A) For the purposes of paragraph (a) of the definition of relative in subsection (9), if one individual is the child of another individual because of the definition of child in subsection 10(1), relationships traced to, from or through the individual are to be determined in the same way as if the individual were the natural child of the other individual.
Disqualified persons
(10) For the avoidance of doubt, subsection (3) does not permit a person, in the capacity of legal personal representative of a disqualified person (within the meaning of section 120), to be a trustee of a self managed superannuation fund or a director of a body corporate that is a trustee of a self managed superannuation fund.
18 Public offer superannuation fund
Definition
(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
(aa) the fund is not a self managed superannuation 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 APRA a written notice that is:
(a) in the approved form; and
(b) signed by 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) APRA 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) APRA may, in writing, declare a superannuation fund not to be a public offer superannuation fund.
(7A) A declaration that a superannuation fund is not a public offer superannuation fund may be subject to conditions.
(7B) If a condition has been breached the trustee must immediately notify APRA, in writing, of the breach.
Penalty: 30 penalty units.
(7BA) Subsection (7B) is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1 of the Criminal Code.
(7C) If APRA is satisfied, whether because of a notification under subsection (7B) or otherwise, that a condition to which the declaration is subject has been breached:
(a) APRA may revoke the declaration; and
(b) the superannuation fund is taken, with effect from the revocation, to have become 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) APRA may, in writing, revoke a declaration.
APRA must have regard to guidelines when making or revoking a declaration
(11) When making or revoking a declaration, APRA must have regard to any written guidelines determined by APRA under this subsection.
Copy of declaration or revocation to be given to trustee
(12) As soon as practicable after making or revoking a declaration, APRA must give the trustee of the superannuation fund concerned a copy of the instrument making or revoking the declaration.
19 Regulated superannuation fund
Definition
(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 APRA, or such other body or person as is specified in the regulations, a written notice that is:
(a) in the approved form; and
(b) signed by the trustee or each trustee;
electing that this Act is to apply in relation to the fund.
Note: The approved form of written notice may require the trustee or the trustees to set out the tax file number of the fund. See subsection 299U(1).
Regulations
(4A) Without limiting subsection (4), regulations for the purposes of that subsection may specify that notices are to be given to different persons or bodies in respect of different classes of superannuation funds.
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.
20 Related bodies corporate
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 Act 2001.
20A Resident approved deposit funds
Resident approved deposit funds
(1) For the purposes of this Act, an approved deposit fund is a resident approved deposit fund at a particular time if, and only if:
(a) either:
(i) the fund was established in Australia; or
(ii) at that time, any asset of the fund is situated in Australia; and
(b) at that time, the central management and control of the fund is in Australia; and
(c) at that time, the percentage worked out using the following formula is not less than 50%:
where:
Accumulated entitlements of resident members means the sum of so much of the value of the assets of the fund at that time as is attributable to:
(i) deposits made to the fund before that time by or in respect of members of the fund who are residents at that time; and
(ii) income or accretions arising from those deposits.
Total assets of fund means the value of the assets of the fund at that time.
Definitions
(2) In this section:
Australia has the same meaning as in the Income Tax Assessment Act 1936.
member includes depositor.
resident has the same meaning as in the Income Tax Assessment Act 1936.
Part 2A—Licensing of trustees and groups of individual trustees
Division 1—Object of this Part
29A Object of this Part and the relationship of this Part to other provisions
(1) The object of this Part is to set out provisions relating to the granting of RSE licences to:
(a) constitutional corporations; and
(b) other bodies corporate; and
(c) groups of individual trustees.
(2) The following is a simplified outline showing some key relationships between this Part and other provisions of the Act and the regulations that trustees should be aware of:
Certain provisions may be contravened if unlicensed trustees carry out particular activities (e.g.: sections 29J and 152). The trustee, or group of individual trustees, of a fund or trust may obtain an RSE licence under this Part.
Note 1: If the trustee is a constitutional corporation, the trustee obtaining an RSE licence may result in a fund or trust becoming an approved deposit fund or pooled superannuation trust, which are each registrable superannuation entities.
Note 2: If the trustee or group of individual trustees makes an election under section 19, the fund may become a regulated superannuation fund. Regulated superannuation funds other than self managed superannuation funds are registrable superannuation entities.
Note 3: In order to obtain an RSE licence, the trustee, or group of individual trustees, must have a risk management strategy.
A trustee, or group of individual trustees, that has obtained an RSE licence may have a registrable superannuation entity registered under Part 2B. Certain provisions may be contravened if certain activities are carried out while a registrable superannuation entity is not registered (e.g.: accepting contributions while the entity is unregistered may lead to an offence under section 34.)
Note 1: A failure to register the fund or trust may also lead to a breach of an RSE licence condition and possible loss of the RSE licence.
Note 2: In order to obtain registration of a fund or trust, the trustee, or group of individual trustees, must have a risk management plan for that fund or trust.
Division 2—Classes of RSE licences
29B Classes of RSE licences
(1) There are to be classes of RSE licences.
(2) One class of RSE licences is to be a class that enables a trustee that holds a licence of that class to be a trustee of:
(a) any public offer entity; and
(b) any other registrable superannuation entity included in a class of registrable superannuation entities specified in regulations made for the purposes of this subsection;
subject to any condition imposed on that licence under subsection 29EA(3).
Note 1: An RSE licence of this class is called a public offer entity licence: see subsection 10(1).
Note 2: Only constitutional corporations may hold public offer entity licences: see paragraph 29D(1)(g).
(3) Another class of RSE licences is to be a class that enables a trustee that:
(a) holds a licence of that class; or
(b) is a member of a group of individual trustees that holds a licence of that class;
to be a trustee of any registrable superannuation entity included in a class of registrable superannuation entities (other than a class of public offer entities) specified in regulations made for the purposes of this subsection, subject to any condition imposed on that licence under subsection 29EA(3).
(4) The regulations may provide for other classes of RSE licences. For each such class, the regulations must specify the classes of registrable superannuation entities of which a trustee that:
(a) holds a licence of that class; or
(b) is a member of a group of individual trustees that holds a licence of that class;
is enabled to be a trustee, subject to any condition imposed on that licence under subsection 29EA(3).
(5) The classes of registrable superannuation entity that the regulations may specify in relation to a particular class of RSE licence may include one or more classes of registrable superannuation entity that the regulations specify in relation to another class of RSE licence.
Division 3—Applying for RSE licences
29C Applications for RSE licences
Who may apply for RSE licences
(1) A constitutional corporation may apply to APRA for an RSE licence of any class.
(2) A body corporate that is not a constitutional corporation may apply to APRA for an RSE licence of any class other than a class that would enable it to be a trustee of a public offer entity.
(3) A group of individual trustees may apply to APRA for an RSE licence of any class other than a class that would enable each of the members of the group to be a trustee of a public offer entity.
Requirements for applications
(4) An application for an RSE licence must:
(a) be in the approved form; and
(b) contain the information required by the approved form; and
(c) be accompanied by the application fee (if any) prescribed by regulations made for the purposes of this paragraph; and
(d) be accompanied by an up‑to‑date copy of:
(i) if the applicant is a body corporate—the body corporate’s risk management strategy, signed by the body corporate; or
(ii) if the applicant is a group of individual trustees—the group’s risk management strategy, signed by each member of the group; and
(e) be accompanied by a statement, signed by:
(i) if the applicant is a body corporate—the body corporate; or
(ii) if the applicant is a group of individual trustees—each member of the group;
that the risk management strategy complies with section 29H.
(5) Regulations made for the purposes of paragraph (4)(c) may prescribe different application fees for applications for different classes of RSE licences.
Notifying certain changes while applications are pending
(6) If:
(a) a body corporate applies for an RSE licence; and
(b) after the application is made, but before APRA decides the application, another director is added to, or removed from the board;
the body corporate must notify APRA, in the approved form, about the change to the membership of the board as soon as practicable after that change occurs.
Note: Part 9 has requirements about equal representation rules.
(7) If:
(a) a group of individual trustees applies for an RSE licence; and
(b) after the application is made, but before APRA decides the application, another trustee is added to, or removed from the group;
a member of the group must notify APRA, in the approved form, about the change to the membership of the group as soon as practicable after that change occurs.
Note: Part 9 has requirements about equal representation rules.
(8) If:
(a) a body corporate or group of individual trustees applies for an RSE licence; and
(b) after the application is made but before APRA decides the application, the risk management strategy for the body or group is varied or revoked and replaced;
the body or group must lodge an up‑to‑date copy of the risk management strategy with APRA as soon as practicable after the risk management strategy is varied or revoked and replaced.
(9) An application is taken not to comply with this section if subsection (6), (7) or (8) is contravened.
Note: APRA cannot grant an RSE licence while the application does not comply with this section: see paragraph 29D(1)(c).
29CA APRA may request further information
(1) If a body corporate or group of individual trustees has applied for an RSE licence, APRA may give the body corporate or a member of the group a notice requesting the body or group to give APRA, in writing, specified information relating to the application by a specified time that is reasonable in the circumstances.
(2) APRA may decide to treat an application by a body corporate or group of individual trustees for an RSE licence as having been withdrawn if the body or group:
(a) does not comply with a request to provide information under this section; and
(b) does not have a reasonable excuse for not complying.
(3) If APRA decides under subsection (2) to treat an application for an RSE licence as having been withdrawn, APRA must take all reasonable steps to ensure that the body that made the application, or a member of the group that made the application, is given a notice informing the body or group of:
(a) APRA’s decision; and
(b) the reasons for that decision;
as soon as practicable after making the decision.
29CB Period etc. for deciding applications from existing trustees in licensing transition period
Statements of intention to apply
(1) A person who was a trustee of a registrable superannuation entity at the start of the licensing transition period may give APRA a written statement that:
(a) is in the approved form; and
(b) indicates whether the person intends to apply under section 29C for an RSE licence; and
(c) lists the registrable superannuation entities that the person intends to apply to have registered under Part 2B if the RSE licence is granted.
Period for deciding applications
(2) Subject to subsection (3), APRA must decide an application for an RSE licence before the end of the licensing transition period if:
(a) the application is received by APRA during that period; and
(b) the application is for an RSE licence to be granted to:
(i) a body corporate that was a trustee of a registrable superannuation entity at the start of the licensing transition period; or
(ii) a group of individual trustees that has a member who was a trustee of a registrable superannuation entity at the start of the licensing transition period.
(3) At any time in the last 6 months of the licensing transition period, APRA may refuse to consider under subsection (2) any further applications for RSE licences that are received by APRA in the last 6 months before the end of the licensing transition period for RSE licences to be granted to:
(a) bodies corporate that were trustees of registrable superannuation entities at the start of the licensing transition period; or
(b) groups of individual trustees with one or more members who were each a trustee of a registrable superannuation entity at the start of the licensing transition period.
(4) If APRA decides to refuse, under subsection (3), to consider under subsection (2) any further applications, APRA must, as soon as practicable after making the decision, publish a notice stating APRA’s decision in a daily newspaper that circulates generally in each State and Territory.
(5) If APRA decides to refuse, under subsection (3), to consider under subsection (2) an application, that application is taken, at the end of the licensing transition period, to have been received by APRA immediately after the end of the licensing transition period.
29CC Period for deciding other applications
(1) APRA must decide an application for an RSE licence within 90 days after receiving it if:
(a) the application is received by APRA after the end of the licensing transition period; or
(b) the application is received by APRA during the licensing transition period and is for an RSE license to be granted to:
(i) a body corporate that was not a trustee of a registrable superannuation entity at the start of the licensing transition period; or
(ii) a group of individual trustees that has no members that were a trustee of a registrable superannuation entity at the start of the licensing transition period;
unless APRA extends the period for deciding the application under subsection (2).
(2) APRA may extend the period for deciding an application covered by paragraph (1)(a) or (b) by up to 30 days if APRA informs the body corporate, or a member of the group, that made the application of the extension:
(a) in writing; and
(b) within 90 days after receiving the application.
(3) If APRA extends the period for deciding the application, it must decide the application within the extended period.
(4) If APRA has not decided the application by the end of the period by which it is required to decide the application, APRA is taken to have decided, at the end of the last day of that period, to refuse the application.
Division 4—Grant of RSE licences
29D Grant of RSE licences
(1) APRA must grant an RSE licence to a body corporate, or group of individual trustees, that has applied for an RSE licence if, and only if:
(a) APRA has no reason to believe that:
(i) if the application is made by a body corporate—the body corporate; or
(ii) if the application is made by a group of individual trustees—the group as a whole or any member of the group;
would fail to comply with the RSE licensee law if the RSE licence were granted; and
(b) APRA has no reason to believe that:
(i) if the application is made by a body corporate—the body corporate; or
(ii) if the application is made by a group of individual trustees—the group as a whole or any member of the group;
would fail to comply with any condition imposed on the RSE licence if it were granted; and
(c) the application for the licence complies with section 29C and is for a class of licence that the body corporate or group of individual trustees may apply for under that section; and
(d) APRA is satisfied that:
(i) if the application is made by a body corporate—the body corporate meets the requirements of standards prescribed under Part 3 relating to fitness and propriety for trustees of funds and RSE licensees; or
(ii) if the application is made by a group of individual trustees—the group as a whole meets the requirements of standards prescribed under Part 3 relating to fitness and propriety for RSE licensees and each of the members of the group meets the requirements of standards prescribed under Part 3 relating to fitness and propriety for trustees of funds; and
(e) APRA is satisfied that the risk management strategy for the body corporate or group meets the requirements of section 29H; and
(f) in a case where the applicant is not a constitutional corporation—APRA is satisfied that:
(i) if the application is made by a body corporate—the body corporate; or
(ii) if the application is made by a group of individual trustees—each member of the group;
only intends to act as a trustee of one or more superannuation funds that have governing rules providing that the sole or primary purpose of the fund is the provision of old‑age pensions; and
(g) in a case where the application is for a licence of a class that enables a trustee that holds a licence of that class to be a trustee of a public offer entity subject to any condition imposed under subsection 29EA(3)—APRA is satisfied that the applicant is a constitutional corporation that meets the capital requirements under section 29DA; and
(h) the application has not been withdrawn, treated as withdrawn under subsection 29CA(2), refused consideration under subsection 29CB(3) or taken to have been refused under subsection 29CC(4).
Note 1: Conditions apply to all RSE licences. See Division 5.
Note 2: An RSE licence may only be granted to a body corporate or a group of individual trustees because only bodies corporate and groups of individual trustees may apply for RSE licences. See section 29C.
(2) Otherwise APRA must refuse the application.
29DA Capital requirements
(1) The capital requirements under this section are met by a constitutional corporation if it satisfies at least one of the following subsections.
(2) A constitutional corporation satisfies this subsection if APRA is satisfied that the value of the corporation’s net tangible assets is equal to, or greater than, the amount prescribed by regulations made for the purposes of this subsection.
(3) A constitutional corporation satisfies this subsection if APRA is satisfied that the corporation is entitled to the benefit of an approved guarantee that:
(a) is of an amount equal to, or greater than, the amount prescribed by regulations made for the purposes of this paragraph; and
(b) is in respect of the corporation’s duties as trustee of each registrable superannuation entity of which it is, or is proposing to become, the trustee.
(4) A constitutional corporation satisfies this subsection if APRA is satisfied that:
(a) the corporation is entitled to the benefit of an approved guarantee that is in respect of its duties as trustee of each registrable superannuation entity of which it is, or is proposing to become, the trustee; and
(b) the sum of the amount of the approved guarantee and the value of the corporation’s net tangible assets is equal to, or greater than, the amount prescribed by regulations made for the purposes of this paragraph.
(5) A constitutional corporation satisfies this subsection if it has agreed, in writing, to comply with written requirements that:
(a) were given to it by APRA before:
(i) it was granted an RSE licence; or
(ii) its class of RSE licence was varied, resulting in the RSE licensee being required to meet the capital requirements under this section; and
(b) relate to the custody of the assets of each of the registrable superannuation entities of which it is, or is proposing to become, the trustee.
(6) In this section:
net tangible assets has the meaning given by the regulations.
29DB Notice of class of licence
If APRA decides to grant an RSE licence to a body corporate or group of individual trustees, APRA must give the body corporate or group an RSE licence that specifies the class of licence granted.
29DC Documents required to bear ABNs
(1) An RSE licensee must ensure that its ABN is included in:
(a) each document that it gives to APRA in the capacity of an RSE licensee; and
(b) any other document in which it identifies itself as an RSE licensee of a registrable superannuation entity; and
(c) if the RSE licensee is a body corporate—any document in which the body corporate identifies itself as a trustee of a registrable superannuation entity; or
(d) if the RSE licensee is a group of individual trustees—any document in which a member of the group identifies itself as a trustee of a registrable superannuation entity or as a member of a group of individual trustees that are the RSE licensee of a registrable superannuation entity.
(2) However, an RSE licensee is not required to comply with subsection (1) in respect of a particular document if it has been given written approval by APRA not to be required to ensure that its ABN is included in that document or in a class of documents that includes that document.
29DD Licence period
(1) An RSE licence comes into force at the later of:
(a) the time when it is granted; or
(b) the time specified on the licence as the time when it comes into force.
(2) An RSE licence continues in force, subject to:
(a) any imposition of licence conditions under Division 5; or
(b) any variation or revocation of the licence conditions, or variation of the licence class, under Division 6;
until the RSE licence is cancelled under Division 7.
29DE APRA to give notice of refusal of applications
If APRA refuses an application by a body corporate or a group of individual trustees for an RSE licence, APRA must take all reasonable steps to ensure that the body or a member of the group is given a notice informing the body or group of:
(a) APRA’s refusal of the application; and
(b) the reasons for that refusal;
as soon as practicable after refusing the application.
Division 5—Conditions on RSE licences
29E Conditions imposed on all licences and on groups of licences
Conditions imposed on all RSE licences
(1) The following conditions are imposed on all RSE licences:
(a) the RSE licensee and, if the RSE licensee is a group of individual trustees, each of the members of the group, must comply with the RSE licensee law;
(b) the duties of a trustee in respect of each registrable superannuation entity of which it is an RSE licensee must be properly performed by:
(i) if the RSE licensee is a body corporate—the body corporate; or
(ii) if the RSE licensee is a group of individual trustees—each of the members of the group;
(ba) the RSE licensee must:
(i) have an ABN; or
(ii) have made an application for an ABN that has not been refused under the A New Tax System (Australian Business Number) Act 1999;
(c) the RSE licensee must have a risk management strategy that complies with Division 8, and must comply with that strategy;
(d) the RSE licensee must ensure that each registrable superannuation entity of which it is the RSE licensee is:
(i) registered under Part 2B; or
(ii) the subject of an application for registration under Part 2B that has not been finally determined or otherwise disposed of;
(e) the RSE licensee must comply with each measure and procedure set out in the risk management plan for each registrable superannuation entity of which it is the RSE licensee;
(ea) the RSE licensee must ensure that each registrable superannuation entity of which it is an RSE licensee has an ABN;
(f) the RSE licensee must notify APRA of any change in the composition of the RSE licensee (see subsection (2)) within 14 days after the change takes place;
(g) the RSE licensee must comply with any other conditions prescribed by regulations made for the purposes of this paragraph.
Note 1: Breach of a licence condition may lead to consequences such as a direction from APRA to comply with the condition (see section 29EB) or cancellation of the licence (see section 29G).
Note 2: An RSE licensee must notify APRA if the RSE licensee breaches a licence condition: see section 29JA.
Note 3: Additional conditions may be imposed on various types of RSE licences (see subsections (3) to (7)) or a particular RSE licence (see section 29EA).
Change in the composition of the RSE licensee
(2) For the purposes of paragraph (1)(f), a change in the composition of the RSE licensee is:
(a) if the RSE licensee is a body corporate—a person becoming, or ceasing to be, a director of the body corporate; or
(b) if the RSE licensee is a group of individual trustees—an individual becoming, or ceasing to be, a member of the group.
Classes enabling RSE licensees to be trustees of public offer entities
(3) The following additional conditions are imposed on each RSE licence that enables a trustee that holds a licence of that class to be a trustee of a public offer entity:
(a) the RSE licensee that holds the licence must continue to be a constitutional corporation that meets the capital requirements under section 29DA; and
(b) if the RSE licensee that holds the licence met the capital requirements by satisfying subsection 29DA(5) (and not subsection 29DA(2), (3) or (4)) when APRA granted the licence—the RSE licensee must continue to comply with the written requirements mentioned in that subsection.
Licences held by RSE licensees that are not constitutional corporations
(4) The following additional condition is imposed on each RSE licence that is not held by a constitutional corporation:
(a) if the RSE licensee that holds the licence is a body corporate—that the body; or
(b) if the RSE licensee is a group of individual trustees—that the members of the group;
only act as a trustee of superannuation funds that have governing rules providing that the sole or primary purpose of the fund is the provision of old‑age pensions.
Licences held by groups of individual trustees
(5) The following additional conditions are imposed on each RSE licence held by a group of individual trustees:
(a) the members of the group must make all reasonable efforts to ensure that the group always has at least 2 members;
(b) any continuous period for which the group has less than 2 members must be 90 days or less.
Note: Paragraph 29E(1)(f) requires APRA to be notified of any change in the composition of the RSE licensee.
Licences held by RSE licensees of transferee funds
(6) An additional condition is imposed on each RSE licence held by an RSE licensee of a fund that has had benefits of members and beneficiaries transferred to it from a transferor fund under Part 18 (whether while the RSE licensee was the RSE licensee of the fund or earlier). The condition is that, while the RSE licensee is the RSE licensee of the fund, the RSE licensee assumes the obligation to pay benefits to those who were members or beneficiaries of the transferor fund immediately before the transfer.
Prescribed conditions imposed on classes of licences
(7) An additional condition prescribed by a regulation made for the purposes of this subsection as a condition applying to all RSE licences of a specified class is imposed on each RSE licence of that class.
(8) A specified class mentioned in subsection (7) may be a class other than a class provided for under subsection 29B(2) or (3) or under regulations made for the purposes of subsection 29B(4).
29EA Additional conditions imposed on individual licences by APRA
(1) APRA may, at any time, impose an additional condition on an RSE licence by giving the RSE licensee a notice setting out the additional condition.
(2) A condition imposed under subsection (1) must not be inconsistent with any condition imposed by, or under, section 29E on an RSE licence.
Note 1: Breach of a licence condition may lead to consequences such as a direction from APRA to comply with the condition (see section 29EB) or cancellation of the licence (see section 29G).
Note 2: An RSE licensee must notify APRA if the RSE licensee breaches a licence condition: see section 29JA.
Note 3: RSE licensees may apply to APRA to have conditions imposed under this section varied or revoked: see section 29F.
(3) Without limiting subsection (1), an additional condition imposed under that subsection on an RSE licence may provide that the body corporate that is the RSE licensee, or each of the members of a group of individual trustees that is the RSE licensee, must not act as a trustee under that RSE licence for a registrable superannuation entity other than:
(a) a registrable superannuation entity specified in the condition; or
(b) a registrable superannuation entity included in the class of registrable superannuation entities specified in the condition.
(4) Without limiting subsection (1), an additional condition imposed under that subsection on an RSE licence may provide that the RSE licensee must ensure that a fund specified in the condition, or in a class of funds specified in the condition, must comply with the alternative agreed representation rules whenever section 92 applies to the fund. However, before imposing such a condition, APRA must have regard to any written guidelines determined by APRA under this subsection.
(5) If the RSE licensee is also a financial services licensee:
(a) APRA must consult ASIC before imposing a condition that, in APRA’s opinion, might reasonably be expected to affect the RSE licensee’s ability to provide one or more of the financial services (within the meaning of the Corporations Act 2001) that the RSE licensee provides; and
(b) APRA must inform ASIC about the imposition of any condition not covered by paragraph (a) within one week after the condition is imposed.
(6) A failure to comply with a requirement of subsection (5) does not invalidate the imposition of any condition.
(7) An additional condition imposed under this section comes into force on the later of:
(a) the day on which APRA gives the RSE licensee the notice of the condition; or
(b) the day specified in the notice as the day on which the condition comes into force.
29EB Directions to comply with licence conditions
APRA may direct an RSE licensee to comply with a specified condition of its RSE licence by a specified time if APRA has reasonable grounds to believe that the RSE licensee has breached the condition. The direction must:
(a) be by notice in writing given to the RSE licensee; and
(b) specify a time that is reasonable in the circumstances.
Note: A failure to comply with a direction may lead to cancellation of the RSE licence (see section 29G) and may be an offence (see section 29JB).
Division 6—Varying RSE licences
29F Applications for variation of RSE licences
(1) An RSE licensee may apply to APRA for one or both of the following:
(a) variation of its RSE licence so that the RSE licence is an RSE licence of a different class;
(b) variation or revocation of a condition that APRA has imposed on its RSE licence under section 29EA.
(2) An application under this section must:
(a) be in the approved form; and
(b) contain the information required by the approved form; and
(c) if the application is for a variation of an RSE licence so that it is an RSE licence of a different class—be accompanied by the application fee (if any) prescribed for the type of variation by regulations made for the purposes of this paragraph.
29FA APRA may request further information
(1) APRA may give an RSE licensee that makes an application under section 29F a notice requesting the RSE licensee to give APRA, in writing, specified information relating to the application by a specified time that is reasonable in the circumstances.
(2) APRA may decide to treat an application under section 29F as having been withdrawn if the RSE licensee:
(a) does not comply with a request to provide information under this section; and
(b) does not have a reasonable excuse for not complying.
(3) If APRA decides to treat an application under section 29F as having been withdrawn, APRA must take all reasonable steps to ensure that the RSE licensee is given a notice informing the RSE licensee of:
(a) APRA’s decision; and
(b) the reasons for that decision;
as soon as practicable after making the decision.
29FB Period for deciding applications
(1) APRA must decide an application under section 29F within 60 days of receiving the application, unless APRA extends the period for deciding the application under subsection (2).
(2) APRA may extend the period for deciding an application under section 29F by up to 60 days if APRA informs the RSE licensee of the extension:
(a) in writing; and
(b) within 60 days of receiving the application.
(3) If APRA extends the period for deciding an application under section 29F, it must decide the application within the extended period.
(4) If APRA has not decided an application under section 29F by the end of the period by which it is required to decide the application, APRA is taken to have decided, at the end of the last day of that period, to refuse the application.
29FC APRA may vary RSE licences in accordance with applications
(1) APRA may, by notice to an RSE licensee:
(a) vary the RSE licensee’s RSE licence so that it is an RSE licence of a different class; or
(b) vary or revoke a condition that APRA has imposed on the RSE licence under section 29EA;
in accordance with an application under section 29F.
(2) However:
(a) an RSE licence must not be varied so that it becomes an RSE licence of a particular class unless APRA is satisfied that the RSE licensee will comply with any conditions imposed on that class of RSE licence; and
(b) a condition as varied under paragraph (1)(b) must not be inconsistent with any condition imposed by section 29E; and
(c) if the RSE licensee is also a financial services licensee:
(i) APRA must consult ASIC before varying the RSE licence so that it is an RSE licence of a different class, if, in APRA’s opinion, the variation might reasonably be expected to affect the RSE licensee’s ability to provide one or more of the financial services (within the meaning of the Corporations Act 2001) that the RSE licensee provides; and
(ii) APRA must consult ASIC before varying or revoking a condition that, in APRA’s opinion, might reasonably be expected to affect the RSE licensee’s ability to provide one or more of the financial services (within the meaning of the Corporations Act 2001) that the RSE licensee provides; and
(iii) APRA must consult ASIC before varying a condition so that it would, in APRA’s opinion, become a condition that might reasonably be expected to have an effect as described in subparagraph (ii); and
(iv) APRA must inform ASIC about the variation or revocation of any condition not covered by subparagraph (i), (ii) or (iii) within one week after the condition is varied or revoked.
(3) A failure to comply with a requirement of paragraph (2)(c) does not invalidate:
(a) the variation of an RSE licence so that it is an RSE licence of a different class; or
(b) the variation or revocation of a licence condition.
(4) APRA is not required to vary the class of, or vary or revoke any condition of, an RSE licence in the terms requested by an RSE licensee in an application under section 29F.
29FD APRA may vary or revoke licence conditions on its own initiative
(1) APRA may, on its own initiative, vary or revoke any condition that it imposed on an RSE licence under section 29EA.
(2) However:
(a) a condition as varied under subsection (1) must not be inconsistent with any condition imposed by section 29E; and
(b) if the RSE licensee that holds the licence is also a financial services licensee:
(i) APRA must consult ASIC before varying or revoking a condition that, in APRA’s opinion, might reasonably be expected to affect the RSE licensee’s ability to provide one or more of the financial services (within the meaning of the Corporations Act 2001) that the RSE licensee provides; and
(ii) APRA must consult ASIC before varying a condition so that it would, in APRA’s opinion, become a condition that might reasonably be expected to have an effect as described in subparagraph (i); and
(iii) APRA must inform ASIC about the variation or revocation of any condition not covered by subparagraph (i) or (ii) within one week after the condition is varied or revoked.
(3) A failure to comply with a requirement of paragraph (2)(b) does not invalidate the variation or revocation of a condition.
29FE Notification of APRA’s decisions under this Division
(1) APRA must give a notice to an RSE licensee if APRA:
(a) varies the RSE licensee’s RSE licence under section 29FC so that it is an RSE licence of a different class; or
(b) varies or revokes, under section 29FC or 29FD, a condition that APRA imposed on the RSE licence under section 29EA.
(2) The notice must:
(a) if paragraph (1)(a) applies—specify the class of the RSE licence after the variation; and
(b) if paragraph (1)(b) applies:
(i) identify the licence condition being varied or revoked; and
(ii) specify any conditions imposed under section 29EA to which the licence is subject after the variation or revocation comes into force; and
(c) state the reasons for the variation or revocation; and
(d) specify the day, not earlier than the day on which APRA gives the notice, on which the variation or revocation comes into force.
(3) If APRA refuses an application for a variation or revocation under section 29FC, APRA must take all reasonable steps to ensure that the RSE licensee that made the application is given a notice informing it of:
(a) APRA’s refusal of the application; and
(b) the reasons for the refusal;
as soon as practicable after refusing the application.
29FF When variations or revocations come into force etc.
(1) If, under section 29FC, APRA varies an RSE licence so that it is an RSE licence of a different class:
(a) the variation comes into force on the day specified in the notice under paragraph 29FE(2)(d); and
(b) the variation remains in force until:
(i) the licence is again varied so that it is an RSE licence of a different class; or
(ii) the licence is cancelled.
(2) If, under section 29FC or 29FD, APRA varies a condition imposed on an RSE licence:
(a) the variation comes into force on the day specified in the notice under paragraph 29FE(2)(d); and
(b) the variation remains in force until:
(i) the condition is varied in an inconsistent manner; or
(ii) the condition is revoked; or
(iii) the licence is cancelled.
(3) If, under section 29FC or 29FD, APRA revokes a condition imposed on an RSE licence, the revocation comes into force on the day specified in the notice under paragraph 29FE(2)(d).
Division 7—Cancelling RSE licences
29G Cancellation of RSE licences
(1) APRA may, in writing, cancel an RSE licence.
Note: In some circumstances, APRA must inform or consult ASIC (see section 29GA).
(2) Without limiting subsection (1), APRA may cancel an RSE licence under that subsection if:
(a) the RSE licensee has requested, in the approved form, that the licence be cancelled; or
(b) the RSE licensee is a body corporate and is a disqualified person for the purposes of Part 15; or
(c) the RSE licensee has breached a condition imposed on the licence; or
(d) APRA has reason to believe that the RSE licensee will breach a condition imposed on the licence; or
(e) the RSE licensee has failed to comply with a direction by APRA under section 29EB; or
(f) APRA has reason to believe that the RSE licensee will fail to comply with a direction by APRA under section 29EB;
(v) where the RSE licensee is an FHSA provider (within the meaning of the First Home Saver Accounts Act 2008)—circumstances exist as described in paragraph 107(2)(b), (c), (d), (e) or (f) of that Act.
(4) If APRA cancels an RSE licence it must take all reasonable steps to ensure that the body corporate or a member of the group that held the RSE licensee is given a notice informing the body corporate or group:
(a) that APRA has cancelled the licence; and
(b) of the reasons for the cancellation.
29GA Cancellation of RSE licences of financial services licensees
(1) Before cancelling the RSE licence of an RSE licensee that is also a financial services licensee, APRA must consult ASIC if, in APRA’s opinion, the cancellation might reasonably be expected to affect the RSE licensee’s ability to provide one or more of the financial services (within the meaning of the Corporations Act 2001) that the RSE licensee provides.
(2) If APRA cancels the RSE licence of an RSE licensee that is also a financial services licensee, APRA must inform ASIC of the cancellation within one week after the cancellation.
(3) A failure to comply with a requirement of this section does not invalidate the cancellation of an RSE licence.
29GB APRA may allow RSE licence to continue in effect
In a notice that APRA gives to an RSE licensee cancelling its RSE licence, APRA may specify that the RSE licence continues in effect as though the cancellation had not happened for the purposes of:
(a) a specified provision, administered by APRA, of this Act or the regulations; or
(b) a specified provision, administered by APRA, of any other law of the Commonwealth;
in relation to specified matters, a specified period, or both.
Division 8—Risk management strategies
Subdivision A—Contents of risk management strategies
29H Contents of risk management strategies
(1) A risk management strategy must set out reasonable measures and procedures that a body corporate or group of individual trustees is to apply to identify, monitor and manage risks that arise:
(a) in relation to its activities, or proposed activities, as an RSE licensee; and
(b) in relation to all its other activities, or proposed activities, to the extent that they are relevant to its activities, or proposed activities, as an RSE licensee.
(2) Without limiting subsection (1), the risk management strategy of a body corporate or group of individual trustees must set out:
(a) reasonable measures and procedures that the body or group is to apply to identify, monitor and manage:
(i) the risks associated with governance and decision‑making processes; and
(ii) the risks that arise as a result of entering into outsourcing arrangements (other than arrangements that relate only to a particular registrable superannuation entity); and
(iii) the risks arising from any changes to the RSE licensee law; and
(iv) the risks of potential fraud and theft; and
(b) the circumstances in which an audit of the risks referred to in this section is to be undertaken; and
(c) such other matters as are prescribed by regulations made for the purposes of this paragraph.
(3) The risk management strategy must be signed:
(a) if it is the risk management strategy of a body corporate—by the body; or
(b) if it is the risk management strategy of a group of individual trustees—by each member of the group.
Note: An RSE licence will not be granted unless there is a risk management strategy that meets the requirements of this section: see paragraph 29D(1)(e).
(4) The risk management strategy must not by reference incorporate provisions of any other document unless that other document is available, without charge, to members of the public.
(5) A risk management strategy does not fail to comply with this section merely because it reproduces information contained in the risk management plan for an entity of which an applicant for an RSE licence is, or proposes to be, the RSE licensee.
Subdivision B—Maintaining and reviewing risk management strategies
29HA Requirement to maintain and review risk management strategies
(1) An RSE licensee must:
(a) ensure that at all times its risk management strategy is up to date; and
(b) ensure that its risk management strategy is reviewed at least once each year to ensure that it complies with section 29H; and
(c) modify, or replace, its risk management strategy in accordance with section 29HB if at any time the RSE licensee becomes aware that the risk management strategy no longer complies with section 29H.
(2) An RSE licensee must review its risk management strategy within 60 days after the RSE licensee:
(a) becomes the RSE licensee of a registrable superannuation entity (other than a registrable superannuation entity of which, at the time of the application for an RSE licence, the RSE licensee proposed to become the RSE licensee); or
(b) becomes an acting trustee appointed under Part 17 of a superannuation entity following the suspension or removal of a former trustee of the entity under that Part.
However, this subsection does not apply if review of the RSE licensee’s risk management strategy is due under paragraph (1)(b) within the 60 days after the RSE licensee becomes an RSE licensee, or trustee, of the entity.
Note: Only a person may be appointed as an acting trustee under Part 17: see section 134.
29HB Modifications etc. to risk management strategies
(1) An RSE licensee may:
(a) modify its risk management strategy; or
(b) repeal its risk management strategy and replace it with a new risk management strategy.
(2) However, after the modification or the repeal and replacement, the risk management strategy must comply with section 29H.
(3) APRA may direct an RSE licensee to modify its risk management strategy as set out in the direction, by a specified time, to ensure that the strategy complies with section 29H. The direction is to be given by notice to the RSE licensee.
Note: A failure to comply with a direction may be an offence: see section 29JC.
(4) A time specified in a direction given to an RSE licensee under subsection (3) must be at least 14 days after the direction is given to the RSE licensee.
29HC Notification of modifications etc. to risk management strategies
(1) If an RSE licensee modifies its risk management strategy, the RSE licensee must give APRA:
(a) a copy of the modification; and
(b) a copy of the strategy as modified;
within 14 days after making the modification.
(2) If an RSE licensee repeals its risk management strategy (the old strategy) and replaces it with another risk management strategy (the new strategy), the RSE licensee must give APRA:
(a) a copy of the new strategy; and
(b) a written statement to the effect that the new strategy replaces the old strategy;
within 14 days after the old strategy is repealed.
(3) Any copy or statement given to APRA by an RSE licensee under this section must be signed by the RSE licensee.
Note: If the RSE licensee is a group of individual trustees, the copy or statement must be signed by each of the members of the group: see subsection 13A(6).
(4) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1), (2) or (3).
Penalty: 50 penalty units.
(5) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1), (2) or (3).
This is an offence of strict liability.
Penalty: 25 penalty units.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
Subdivision C—Miscellaneous
29HD APRA to be given information
(1) APRA may give an RSE licensee a notice requesting it to give APRA, in a specified way, specified information relating to its risk management strategy by a specified time that is reasonable in the circumstances.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) there has been a failure by the RSE licensee to comply with a notice under subsection (1).
Penalty: 50 penalty units.
(3) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) there has been a failure by the RSE licensee to comply with a notice under subsection (1).
This is an offence of strict liability.
Penalty: 25 penalty units.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
Note 3: Sections 137.1 and 137.2 of the Criminal Code also create offences for providing false or misleading information or documents.
(4) Subsection (2) or (3) does not apply if the RSE licensee has a reasonable excuse for the failure to comply with the notice under subsection (1).
Note: A defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
Division 9—Offences and self‑incrimination
29J Being trustee of a registrable superannuation entity while unlicensed etc.
(1) A person must not be a trustee, or act as a trustee, of a registrable superannuation entity unless at least one of the following paragraphs apply:
(a) the person holds an RSE licence that enables the person to be the trustee of the entity;
(b) the person is a member of a group of individual trustees that holds an RSE licence that enables the members of the group to each be a trustee of the entity.
(2) Despite subsection 13.3(3) of the Criminal Code, a defendant does not bear an evidential burden in relation to any matter in subsection (1) of this section.
(3) A person that contravenes subsection (1) commits an offence.
Penalty: Imprisonment for 2 years, or 120 penalty units, or both.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
(4) A person must not be a trustee of a registrable superannuation entity, or act as a trustee of a registrable superannuation entity, if the person:
(a) is a body corporate; and
(b) is not the only trustee of the registrable superannuation entity.
(5) A person that contravenes subsection (4) commits an offence.
Penalty: Imprisonment for 2 years, or 120 penalty units, or both.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
(6) This section does not prevent an RSE licensee from engaging or authorising persons to act on its behalf.
29JA Failing to notify breach of licence condition
(1) If an RSE licensee becomes aware that:
(a) the RSE licensee has breached or will breach a condition imposed on its RSE licence; and
(b) the breach is or will be significant (see subsection (1A));
the RSE licensee must give APRA a written report about the breach as soon as practicable, and in any case no later than 10 business days, after becoming aware of the breach.
(1A) For the purposes of subsection (1), a breach is or will be significant if the breach is or will be significant having regard to any one or more of the following factors:
(a) the number or frequency of similar previous breaches;
(b) the impact the breach has or will have on the RSE licensee’s ability to fulfil its obligations as trustee of the superannuation entity;
(c) the extent to which the breach indicates that the RSE licensee’s arrangements to ensure compliance with the RSE licensee law might be inadequate;
(d) the actual or potential financial loss arising or that will arise from the breach to the beneficiaries of the entity or to the RSE licensee;
(e) any other matters prescribed by regulations made for the purposes of this paragraph.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1).
Penalty: 50 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
29JB Not complying with direction to comply with licence conditions
(1) An RSE licensee must comply with a direction given to it under section 29EB within the time specified in the direction.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1).
Penalty: 60 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
29JC Not complying with direction to modify risk management strategy
(1) An RSE licensee must comply with a direction given to it under section 29HB within the time specified in the direction.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1).
Penalty: 60 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
29JCA False representation about status as RSE licensee
(1) A person commits an offence if:
(a) the person makes a representation; and
(b) the representation is that the person is, or is a member of a group that is, an RSE licensee; and
(c) the representation is false.
Penalty: 60 penalty units.
(2) Strict liability applies to subsection (1).
Note: For strict liability, see section 6.1 of the Criminal Code.
29JD Breach does not affect validity of issue of superannuation interests etc.
A breach of section 29J, 29JA, 29JB or 29JC does not affect the validity of the issue of a superannuation interest or of any other act.
Part 2B—Registrable superannuation entities
Division 1—Object of this Part
29K Object etc. of this Part
(1) The object of this Part is to provide for the registration of registrable superannuation entities.
(2) Registration is significant because an RSE licensee may breach the licence condition imposed by paragraph 29E(1)(d) if a registrable superannuation entity of which it is the RSE licensee is not registered.
Note: Breach of a licence condition may lead to consequences such as a direction from APRA to comply with the condition (see section 29EB) or cancellation of the licence (see section 29G).
Division 2—Applying for registration
29L Applications for registration
Who may apply for registration
(1) An RSE licensee may apply to APRA for registration of a registrable superannuation entity.
Requirements for applications
(2) An application for registration of a registrable superannuation entity must:
(a) be in the approved form; and
(b) contain the information required by the approved form; and
(ba) state the RSE licensee’s and the entity’s ABNs; and
(c) be accompanied by an up‑to‑date copy of the trust deed by which the registrable superannuation entity is constituted (except to the extent that the trust deed is constituted by the governing rules of the entity); and
(d) be accompanied by an up‑to‑date copy of the governing rules of the registrable superannuation entity (except to the extent that the governing rules are constituted by the law of the Commonwealth or by unwritten rules); and
(e) be accompanied by an up‑to‑date copy of the risk management plan for the registrable superannuation entity, signed by the RSE licensee that made the application; and
(f) be accompanied by a statement, signed by the RSE licensee that made the application, to the effect that the risk management plan accompanying the application complies with section 29P.
Note: If the RSE licensee is a group of individual trustees, the copy or statement must be signed by each of the members of the group: see subsection 13A(6).
Notifying certain changes while applications are pending
(3) If:
(a) an RSE licensee applies for registration of a registrable superannuation entity; and
(b) after the application is made but before APRA decides the application, the trust deed (other than the governing rules of the entity) by which the entity is constituted is varied or revoked and replaced;
the RSE licensee must lodge an up‑to‑date copy of the trust deed with APRA as soon as practicable after the trust deed is varied or revoked and replaced.
(4) If:
(a) an RSE licensee applies for registration of a registrable superannuation entity; and
(b) after the application is made but before APRA decides the application, any governing rules of the entity (that are not constituted by the law of the Commonwealth or by unwritten rules) are varied or revoked and replaced;
the RSE licensee must lodge an up‑to‑date copy of the governing rules (that are not constituted by the law of the Commonwealth or by unwritten rules) with APRA as soon as practicable after the governing rules are varied or revoked and replaced.
(5) If:
(a) an RSE licensee applies for registration of a registrable superannuation entity; and
(b) after the application is made but before APRA decides the application, the risk management plan for the entity is varied or revoked and replaced;
the RSE licensee must lodge an up‑to‑date copy of the risk management plan with APRA as soon as practicable after the risk management plan is varied or revoked and replaced.
(6) An application is taken not to comply with this section if subsection (3), (4) or (5) is contravened.
Note: APRA cannot register an entity while the application does not comply with this section: see paragraph 29M(1)(a).
Lapsed applications
(7) An application for registration lapses if:
(a) it was made by an RSE licensee; and
(b) the RSE licensee ceases to be an RSE licensee before:
(i) APRA makes a decision on the application for registration; or
(ii) if APRA’s decision with respect to the application is subject to review under this Act—before the review is finally determined or otherwise disposed of.
29LA APRA may request further information
APRA may give an RSE licensee that has applied for registration of a registrable superannuation entity a notice requesting the RSE licensee to give APRA, in writing, specified information relating to the application.
Note: A failure to give the requested information delays the time within which APRA must decide the application: see paragraph 29LB(1)(b).
29LB Period for deciding applications for registration
(1) APRA must decide an application by an RSE licensee for registration of a registrable superannuation entity:
(a) within 21 days after receiving the application; or
(b) if the applicant was requested to provide information under section 29LA—within 21 days after:
(i) receiving from the RSE licensee all of the information the RSE licensee was requested to provide under that section; or
(ii) all notices relating to that information being disposed of;
unless APRA extends the period for deciding the application under subsection (2).
(2) APRA may extend the period for deciding an application by an RSE licensee for registration of a registrable superannuation entity by up to 7 days if APRA informs the RSE licensee of the extension:
(a) in writing; and
(b) within the period in which it would otherwise be required to decide the application under subsection (1).
(3) If APRA extends the period for deciding an application for registration of a registrable superannuation entity, it must decide the application within the extended period.
(4) If APRA has not decided an application for registration of a registrable superannuation entity by the end of the period by which it is required to decide the application, APRA is taken to have decided, at the end of the last day of that period, to refuse the application.
Division 3—Registration
29M Registration of registrable superannuation entity
(1) APRA must register a registrable superannuation entity if, and only if:
(a) the application for registration complies with section 29L; and
(b) the applicant has provided to APRA all information that the applicant was requested, under section 29LA, to provide, or the request has been disposed of; and
(c) APRA is satisfied that nothing in the governing rules of the entity conflicts with Part 6; and
(d) APRA is satisfied that the risk management plan for the entity meets the requirements of section 29P; and
(e) the applicant for registration holds an RSE licence that enables:
(i) if the applicant is a body corporate—the body corporate; or
(ii) if the applicant is a group of individual trustees—each member of the group;
to be a trustee of that entity.
(2) Otherwise APRA must refuse to register the entity.
29MA Notice of registration
If APRA registers a registrable superannuation entity, APRA must notify the RSE licensee of the entity in writing of the registration.
29MB Documents required to bear ABNs
(1) After a registrable superannuation entity is registered, the RSE licensee of the entity must ensure that the entity’s ABN is included in:
(a) each document that the RSE licensee gives to APRA that relates to the entity; and
(b) any other document in which the RSE licensee identifies itself as the RSE licensee of the entity; and
(c) if the RSE licensee is a body corporate—any document in which the body corporate identifies itself as a trustee of the entity; and
(d) if the RSE licensee is a group of individual trustees—any document that a member of the group gives to APRA or in which a member of the group identifies itself as a trustee of the entity or as a member of a group of individual trustees that are the RSE licensee of the entity.
(2) However, an RSE licensee is not required to comply with subsection (1) in respect of a particular document if the RSE licensee has been given written approval by APRA not to ensure that the ABN is included in that document or in a class of documents that includes that document.
29MC APRA to give notice of refusal of applications
If APRA refuses an application by an RSE licensee for registration of a registrable superannuation entity, APRA must take all reasonable steps to ensure that the RSE licensee is given a notice:
(a) informing it of APRA’s refusal of the application; and
(b) setting out the reasons for the refusal;
as soon as practicable after refusing the application.
Division 4—Cancelling registration
29N Cancelling registration
(1) APRA must cancel the registration of a registrable superannuation entity if a document that:
(a) is a reporting document within the meaning of the Financial Sector (Collection of Data) Act 2001; and
(b) relates to the entity; and
(c) was given to APRA under that Act;
states that the entity has been wound up.
(1A) APRA may cancel the registration of a superannuation entity that has become a self‑managed superannuation fund.
(2) APRA may cancel the registration of a registrable superannuation entity if APRA is satisfied, on reasonable grounds, that:
(a) the entity has no beneficiaries and no assets; and
(b) there are no outstanding claims against the entity for benefits or other payments; and
(c) other circumstances (if any) prescribed by regulations made for the purposes of this paragraph exist.
(3) If APRA cancels the registration of a registrable superannuation entity under subsection (2), APRA must take all reasonable steps to ensure that the RSE licensee of the entity is given a notice:
(a) stating that APRA has cancelled the registration of the entity; and
(b) setting out the reasons for the cancellation;
as soon as practicable after cancelling the registration of the entity.
Division 5—Risk management plans
Subdivision A—Contents of risk management plans
29P Contents of risk management plans
(1) The risk management plan for a registrable superannuation entity must set out reasonable measures and procedures that the RSE licensee of the entity is to apply to identify, monitor and manage the risks that arise in operating the entity.
(2) Without limiting subsection (1), the risk management plan for a registrable superannuation entity must set out:
(a) reasonable measures and procedures that the RSE licensee of the entity is to apply to identify, monitor and manage:
(i) the risks to the investment strategy relevant to the entity; and
(ii) the risks to the entity’s financial position; and
(iii) the risks from entering into outsourcing arrangements relating to the entity; and
(b) the circumstances in which an audit of the risks referred to in this section is to be undertaken; and
(c) such other matters as are prescribed by regulations made for the purposes of this paragraph.
(3) The risk management plan must be signed by the RSE licensee of the entity.
Note: If the RSE licensee is a group of individual trustees, the plan must be signed by each of the individual trustees: see subsection 13A(6).
(4) The risk management plan must not by reference incorporate provisions of any other document unless that other document is available, without charge, to members of the public.
(5) A risk management plan does not fail to comply with the above section merely because it reproduces information contained in the risk management strategy of the RSE licensee of the entity or in a risk management plan for another entity that has the same RSE licensee.
Subdivision B—Maintaining and reviewing risk management plans
29PA Requirement to maintain and review risk management plans
(1) An RSE licensee of a registrable superannuation entity that has been registered under this Part must:
(a) ensure that at all times the risk management plan for the entity is up‑to‑date; and
(b) ensure that the risk management plan for the entity is reviewed at least once each year to ensure that it complies with section 29P; and
(c) modify, or replace, the risk management plan for the entity in accordance with section 29PB if at any time the trustee becomes aware that the risk management plan no longer complies with section 29P.
(2) An RSE licensee of a registrable superannuation entity must review the risk management plan for the entity within 60 days after the RSE licensee:
(a) becomes the RSE licensee of the entity (unless the entity is a registrable superannuation entity of which, at the time of the application for an RSE license, the RSE licensee proposed to become the RSE licensee); or
(b) becomes an acting trustee appointed under Part 17 of a superannuation entity following the suspension or removal of a former trustee of the entity under that Part.
However, this subsection does not apply if a review of the risk management plan is due under paragraph (1)(b) within the 60 days after the RSE licensee becomes the RSE licensee, or trustee, of the entity.
Note: Only a person may be appointed as an acting trustee under Part 17: see section 134.
29PB Modifications etc. to risk management plans
(1) An RSE licensee of a registrable superannuation entity that has been registered under this Part may:
(a) modify the risk management plan for the entity; or
(b) repeal the risk management plan for the entity and replace it with a new risk management plan.
(2) However, after the modification or the repeal and replacement, the risk management plan must comply with section 29P.
(3) APRA may direct an RSE licensee of a registrable superannuation entity that has been registered under this Part to modify the risk management plan for the entity, as set out in the direction, by a specified time, to ensure that the plan complies with section 29P. The direction is to be given by notice to the RSE licensee.
Note: A failure to comply with a direction may be an offence: see section 29Q.
(4) A time specified in a direction given to an RSE licensee under subsection (3) must be at least 14 days after the direction is given to the RSE licensee.
29PC Notification of modifications etc. to risk management plans
(1) If an RSE licensee modifies a risk management plan for a registrable superannuation entity that has been registered under this Part, the RSE licensee must give APRA:
(a) a copy of the modification; and
(b) a copy of the plan as modified;
within 14 days after making the modification.
(2) If an RSE licensee repeals a risk management plan (the old plan) for a registrable superannuation entity that has been registered under this Part and replaces it with another risk management plan (the new plan), the RSE licensee must give APRA:
(a) a copy of the new plan; and
(b) a written statement to the effect that the new plan replaces the old plan;
within 14 days after the old plan is repealed.
(3) Any copy or statement given to APRA under this section must be signed by the RSE licensee.
Note: If the RSE licensee is a group of individual trustees, the copy or statement must be signed by each of the individual trustees: see subsection 13A(6).
(4) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1), (2) or (3).
Penalty: 50 penalty units.
(5) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1), (2) or (3).
This is an offence of strict liability.
Penalty: 25 penalty units.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
Subdivision C—Miscellaneous
29PD Access to risk management plans
(1) If a member or unit holder of a registrable superannuation entity that has been registered under this Part requests a copy of the risk management plan for the entity, the RSE licensee of the entity must make a copy of the plan available, without charge, to the member or unit holder as soon as practicable after the RSE licensee receives the request.
(2) If an employer‑sponsor of a registrable superannuation entity that:
(a) has been registered under this Part; and
(b) is a defined benefit fund;
requests a copy of the risk management plan for the entity, the RSE licensee of the entity must make a copy of the plan available, without charge, to the employer‑sponsor as soon as practicable after the RSE licensee receives the request.
29PE APRA to be given information
(1) APRA may give an RSE licensee of a registrable superannuation entity that has been registered under this Part a notice requesting the RSE licensee to give APRA, in a specified way, specified information relating to the risk management plan for the entity by a specified time that is reasonable in the circumstances.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) there has been a failure by the RSE licensee to comply with the notice.
Penalty: 50 penalty units.
(3) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) there has been a failure by the RSE licensee to comply with the notice.
This is an offence of strict liability.
Penalty: 25 penalty units.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
Note 3: Sections 137.1 and 137.2 of the Criminal Code also create offences for providing false or misleading information or documents.
(4) Subsection (2) or (3) does not apply if the RSE licensee has a reasonable excuse for the failure to comply with the notice under subsection (1).
Note: A defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
Division 6—Offences and self‑incrimination
29Q Not complying with direction to modify risk management plan
(1) An RSE licensee must comply with a direction given to it under section 29PB within the time specified in the direction.
(2) A person commits an offence if:
(a) the person is:
(i) a body corporate that is an RSE licensee; or
(ii) a member of a group of individual trustees that is an RSE licensee; and
(b) the RSE licensee is in breach of subsection (1).
Penalty: 60 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note 1: For strict liability, see section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility and Part IA of the Crimes Act 1914 contains provisions dealing with penalties.
29QA Breach does not affect validity of issue of superannuation interests etc.
A breach of section 29Q does not affect the validity of the issue of a superannuation interest or of any other act.
Part 3—Operating standards
30 Object of Part
The object of this Part is to provide for a system of prescribed standards applicable to:
(a) the operation of regulated superannuation funds, approved deposit funds and pooled superannuation trusts; and
(b) the trustees and RSE licensees of those funds and trusts.
31 Operating standards for regulated superannuation funds
(1) The regulations may prescribe standards applicable to the operation of regulated superannuation funds (funds) and to trustees and RSE licensees of those 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 and the management of the investment;
(m) the number of trustees, and the composition of boards or committees of trustees, of funds;
(ma) the requirements relating to fitness and propriety for RSE licensees of funds and 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;
(pa) the disclosure of information by a trustee of a fund who is a member of a group of individual trustees to the other trustees in that group;
(q) the disclosure of information about funds to the Regulator;
(r) the disclosure of information about funds to persons other than beneficiaries or the Regulator;
(s) the financial position of funds;
(sa) the outsourcing arrangements relating to the operation of funds;
(sb) the adequacy of resources (including human resources, technical resources, and financial resources) of, or available to, trustees of funds;
(t) the funding and solvency of funds;
(u) the winding‑up of funds.
32 Operating standards for approved deposit funds
(1) The regulations may prescribe standards applicable to the operation of approved deposit funds (funds) and to trustees and RSE licensees of those 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;
(aa) the circumstances in which amounts 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 and the management of the investment;
(fa) the requirements relating to fitness and propriety for RSE licensees of funds and trustees 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 Regulator;
(k) the disclosure of information about funds to persons other than beneficiaries or the Regulator;
(l) the financial position of funds;
(la) the outsourcing arrangements relating to the operation of funds;
(lb) the adequacy of resources (including human resources, technical resources, and financial resources) of, or available to, trustees of funds;
(m) the funding and solvency of funds;
(n) the winding‑up of funds.
33 Operating standards for pooled superannuation trusts
(1) The regulations may prescribe standards applicable to the operation of pooled superannuation trusts (trusts) and to trustees and RSE licensees of those trusts.
(2) The standards that may be prescribed include, but are not limited to, standards relating to the following matters:
(aa) the circumstances in which units in trusts may be acquired;
(a) the ownership and disposal of units in trusts;
(b) the investment of assets of trusts and the management of the investment;
(ba) the requirements relating to fitness and propriety for RSE licensees of trusts and trustees 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 Regulator;
(i) the disclosure of information about trusts to persons other than unit‑holders or the Regulator;
(j) the financial position of trusts;
(ja) the outsourcing arrangements relating to the operation of trusts;
(jb) the adequacy of resources (including human resources, technical resources and financial resources) of, or available to, trustees of trusts;
(k) the funding and solvency of trusts.
34 Prescribed operating standards must be complied with
Standards must be complied with
(1) Each 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.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
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—Accounts, audit and reporting obligations for superannuation entities
35 Objects of Part
The objects of this Part are:
(a) to set out rules about the accounts, statements and audits of superannuation entities; and
(b) to require certain reports and returns relating to superannuation entities to be given to the Regulator.
35A Accounting records (all superannuation entities)
Accounting records must be kept etc.
(1) Each trustee of a superannuation entity must ensure that:
(a) accounting records that correctly record and explain the transactions and financial position of the entity are kept; and
(b) if the entity is a registrable superannuation entity—the accounts of the entity are kept in a way that enables the preparation of reporting documents referred to in section 13 of the Financial Sector (Collection of Data) Act 2001; and
(c) if the entity is a self managed superannuation fund—the accounting records of the entity are kept in a way that enables the following to be prepared:
(i) the accounts and statements of the entity referred to in section 35B;
(ii) the returns of the entity referred to in section 35D; and
(d) the accounting records of the entity are kept in a way that enables 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), each trustee of the superannuation entity must ensure that:
(a) the records are retained for at least 5 years after the end of the year of income to which the transactions relate; and
(b) the records are kept either:
(i) in any case—in Australia; or
(ii) in the case of a registrable superannuation entity—in another country if the Regulator gives written approval for the records to be kept in that country, and the conditions (if any) specified in the approval are met; and
(c) the records are kept:
(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.
(2A) An approval given under paragraph (2)(b) may be given subject to specified conditions.
Notification of address where accounting records are kept
(2B) A trustee of a superannuation entity that is a registrable superannuation entity must notify APRA, in the approved form, of the address where the entity’s accounting records are kept:
(a) if, immediately before the commencement of this subsection, the entity is registered under section 29M—within 28 days after that commencement; or
(b) otherwise—within 28 days after the entity is registered under that section.
(2C) If:
(a) a trustee of a superannuation entity has notified APRA of the address where the entity’s accounting records are kept; and
(b) the entity moves the accounting records to a new address;
a trustee of the entity must notify APRA, in the approved form, of the new address where the accounting records are kept.
(2D) The notification must be given within 28 days after the day on which the accounting records are moved to the new address.
Offences
(3) A trustee commits an offence if the trustee contravenes subsection (1) or (2).
Penalty: 100 penalty units.
(4) A trustee commits an offence if the trustee contravenes subsection (1) or (2). This is an offence of strict liability.
Penalty: 50 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
35B Accounts and statements (self‑managed superannuation funds only)
(1) Each trustee of a superannuation entity that is a self managed superannuation fund must, in respect of each year of income of the fund, ensure that the following accounts and statements are prepared 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) the accounts and statements specified in the regulations.
(2) The regulations may provide for or in relation to the preparation of accounts and statements covered by subsection (1). If the regulations do so, 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:
(i) if there is only one director of the corporate trustee—that director; or
(ii) otherwise—at least 2 directors of the corporate trustee; or
(b) if there is a group of individual trustees—by at least 2 of those trustees.
(4) Each trustee must ensure that the accounts and statements prepared in accordance with subsection (1) are retained for a period of 5 years after the end of the year of income to which they relate.
(5) A person commits an offence if the person contravenes this section.
Penalty: 100 penalty units.
(6) A person commits an offence if the person contravenes this section. This is an offence of strict liability.
Penalty: 50 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
35C Audit of accounts and statements (all superannuation entities)
(1) For each year of income, each trustee of a superannuation entity must ensure that an approved auditor is appointed to give the trustee or trustees a report, in the approved form, of the operations of the entity, and the RSE licensee (if any) of the entity, for that year. The appointment must be made within whichever of the periods set out in the regulations applies to the entity.
(1A) For the purposes of subsection (1), a person is not an approved auditor, in relation to a superannuation entity, if the person is disqualified from being or acting as an approved auditor of that superannuation entity under section 130D.
(2) If an auditor requests, in writing, a trustee of a superannuation entity to give the auditor a document, each trustee of the entity must ensure that the document is given to the auditor within 14 days of the request being made. Only documents that are relevant to the preparation of the report may be requested.
(3) A trustee commits an offence if the trustee contravenes subsection (1) or (2).
Penalty: Imprisonment for 2 years.
(4) A trustee commits an offence if the trustee contravenes subsection (1) or (2). This is an offence of strict liability.
Penalty: 50 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
(5) Without limiting subsection (1), an approved form:
(a) must, if it is approved for a registrable superannuation entity, either:
(i) relate solely to the audit of financial statements given to APRA under the Financial Sector (Collection of Data) Act 2001 and prepared in respect of a year of income; or
(ii) relate only to the audit of those statements and of any other accounts and statements, prepared in respect of a year of income, that are identified in the form; and
(b) must, if it is approved for a superannuation entity that is a self managed superannuation fund—either:
(i) relate solely to the audit of the accounts and statements referred to in subsection 35B(1) and prepared in respect of a year of income; or
(ii) relate only to the audit of those accounts and statements and of any other accounts and statements, prepared in respect of a year of income, that are identified in the form; and
(c) must include a statement by the auditor as to whether, in the auditor’s opinion, each trustee of the entity and the RSE licensee (if any) of the entity has, during the year of income, complied with the provisions of:
(i) this Act and the regulations; and
(ii) if the entity is a registrable superannuation entity—the Financial Sector (Collection of Data) Act 2001, the Corporations Act 2001 and the regulations under that Act;
that are identified in the form; and
(d) must, if it is approved for a registrable superannuation entity that is registered under Part 2B, include a statement by the auditor as to whether, in the opinion of the auditor, the RSE licensee of the entity:
(i) has complied with each risk management plan for the entity that applied during that year; and
(ii) has adequate systems to ensure future compliance with any risk management plan for the entity; and
(iii) has complied with each risk management strategy that applied to the RSE licensee during that year in relation to risks arising from any activities, and proposed activities, as RSE licensee of the entity, and all other activities, or proposed activities, relevant to those activities; and
(iv) has adequate systems to ensure future compliance with the risk management strategy for the RSE licensee in relation to future risks arising from any proposed future activities as RSE licensee of the entity, and all other proposed future activities relevant to those activities.
(6) The auditor must give the report to each trustee of the entity within the prescribed period after the end of the year of income.
(7) The auditor commits an offence if the auditor contravenes subsection (6).
Penalty: Imprisonment for 6 months.
(8) The auditor commits an offence if the auditor contravenes subsection (6). This is an offence of strict liability.
Penalty: 50 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
35D Trustee to lodge annual returns (self‑managed superannuation funds only)
Lodgment
(1) Each trustee of a superannuation entity that was a self managed superannuation fund at any time during a year of income must, within the reporting period, or within such longer period as the Commissioner of Taxation allows, ensure that the Commissioner of Taxation is given a return under this section.
Period for lodgment
(2) The reporting period is the period that begins at the end of the year of income and whose length is:
(a) prescribed by the regulations for the purposes of this paragraph; or
(b) if the length of the period is not prescribed—specified, by legislative instrument, by the Commissioner of Taxation.
Form of return
(3) The return must:
(a) be in the approved form; and
(b) contain the information required by the form in relation to the fund in respect of that year of income or in relation to another year of income, or both.
Note: The approved form of return may require a trustee to set out the tax file number of the entity. See subsection 299U(2).
(4) A person commits an offence if the person contravenes this section.
Penalty: 50 penalty units.
(5) A person commits an offence if the person contravenes this section. This is an offence of strict liability.
Penalty: 25 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
36 Trustee to give copy of audit report to APRA (registrable superannuation entities only)
Lodgment
(1) Each trustee of a registrable superannuation entity must, within the prescribed period after the year of income, ensure that APRA is given a copy of the report given to a trustee of the entity by an approved auditor under section 35C in relation to the entity, and any RSE licensee of the entity, in respect of that year of income, certified to be a true copy of the report by:
(a) if the trustee is a body corporate—a responsible officer of the body corporate; or
(b) if the trustee is a member of a group of individual trustees—at least one of those trustees; or
(c) in any other case—the trustee.
Note: The Financial Sector (Collection of Data) Act 2001 makes provision for annual returns and other reporting documents to be given by trustees to APRA.
(2) A trustee commits an offence if the trustee contravenes subsection (1).
Penalty: 50 penalty units.
(3) A trustee commits an offence if the trustee contravenes subsection (1). This is an offence of strict liability.
Penalty: 25 penalty units.
Note: For strict liability, see section 6.1 of the Criminal Code.
Part 5—Notices about complying fund status
Division 1—Objects and interpretation
37 Objects of Part
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).
38 Meaning of entity
In this Part:
entity means a fund, scheme or trust.
Division 2—The Regulator may give notices about complying fund status
38A Meaning of regulatory provision
In this Division:
regulatory provision, in relation to a superannuation entity, means:
(a) a provision of this Act or the regulations; or
(aa) a provision of the Financial Sector (Collection of Data) Act 2001; or
(ab) for a superannuation entity that is a self managed superannuation fund—any of the following provisions in Schedule 1 to the Taxation Administration Act 1953:
(i) subsections 284‑75(1) and (4) and section 284‑95;
(ii) Division 390; or
(b) any of the following provisions of the Corporations Act 2001 as applying in relation to financial products (within the meaning of Chapter 7 of that Act) that are interests in the superannuation entity:
(i) subsection 1013K(1) or (2);
(ii) subsection 1016A(2) or (3);
(iii) subsection 1017B(1);
(iv) subsection 1017C(2), (3) or (5);
(v) subsection 1017D(1);
(vi) subsection 1017DA(3);
(vii) subsection 1017E(3) or (4);
(viii) subsection 1020E(8) or (9);
(ix) subsection 1021C(1) or (3);
(x) subsection 1021D(1);
(xi) subsection 1021E(1);
(xii) subsection 1021O(1) or (3);
(xiii) section 1041E;
(xiv) subsection 1041F(1);
(xv) subsection 1043A(1) or (2);
(xvi) any other provisions that are specified in regulations made for the purposes of this subparagraph.
39 Meaning of contravention
(1) For the purposes of this Division, a contravention of a regulatory provision is to be ignored unless the contravention is:
(a) an offence; or
(b) a contravention of a civil penalty provision; or
(c) a contravention of a provision mentioned in paragraph 38A(ab).
(1A) In relation to a regulatory provision that states that a person commits an offence if they engage, or fail to engage, in specified conduct, a person is, for the purposes of this Division, taken to contravene the provision if the person engages, or fails to engage, in that conduct.
(1B) To avoid doubt, for the purposes of this Division, treat conduct giving rise to an administrative penalty under subsection 284‑75(1) or (4) in Schedule 1 to the Taxation Administration Act 1953 as a contravention of that subsection.
(2) For the purposes of this Division, it is sufficient if a contravention is established on the balance of probabilities.
40 Notices by the Regulator to trustee
Notice about complying fund status
(1) The Regulator may give a written notice to a 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 Regulator gives a notice to a 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 Regulator so stated.
Commissioner of Taxation to be told about notice
(3) When the APRA gives a notice under this section, APRA must give particulars of the notice to the Commissioner of Taxation.
Note: A statement of the tax file number of the entity may accompany the particulars of the notice. See subsection 299U(3).
Revocation
(4) If:
(a) the Regulator gives a notice under this section (the original notice) to a 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 Regulator subsequently gives a notice under this section (the second notice) to a 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.
Note: Because “the Regulator” is whichever of APRA or the Commissioner of Taxation is administering this provision in respect of a fund, a notice could initially be given to a fund by APRA under paragraph 40(4)(a), and later the Commissioner of Taxation could give a notice to the same fund under paragraph 40(4)(b). This is because the fund could have become a self managed superannuation fund after the first notice was given.
41 When the Regulator obliged to give notice of compliance
(1) Except as provided by subsection (2), the Regulator is not obliged to give a notice under section 40.
(2) The Regulator must give a notice under section 40 to a 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 Regulator has not given a notice to a trustee of the entity 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 Regulator has given a notice to a trustee of the entity 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 Regulator has not given a notice to a trustee of the entity 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.
42 Complying superannuation fund
(1) An entity is a complying superannuation fund in relation to a year of income for the purposes of this Division if:
(a) either:
(i) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence; or
(ii) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence other than a time, before it became a resident regulated superannuation fund, when the entity was a resident approved deposit fund; and
(b) either of the following conditions is satisfied:
(i) no trustee of the entity contravened any of the regulatory provisions in relation to the entity in respect of the year of income;
(ii) both:
(A) a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of the year of income on one or more occasions; and
(B) the entity did not fail the culpability test set out in subsection (1A) in relation to any of those contraventions; and
(c) the entity was not a self managed superannuation fund at any time during the year of income.
(1AA) An entity is also a complying superannuation fund in relation to the 1994‑95 year of income or a later year of income if:
(a) the entity:
(i) is a superannuation fund that came into existence during the year of income; or
(ii) was a resident approved deposit fund that became a superannuation fund during the year of income; and
(b) the entity complied with subsections 19(2) to (4):
(i) within 60 days after the day on which it came into existence or became a superannuation fund, as the case may be; or
(ii) within such further period, if any, as APRA (whether before or after the end of the period of 60 days) allows; and
(c) either of the following conditions is satisfied:
(i) no trustee of the entity contravened any of the regulatory provisions in relation to the entity in respect of the whole of the period (the pre‑lodgment period) that began when the entity came into existence or became a superannuation fund, as the case may be, and ended when the entity complied with subsections 19(2) to (4);
(ii) a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of the pre‑lodgment period on one or more occasions but APRA is satisfied that, because of special circumstances that existed in relation to the fund during the pre‑lodgment period, it would be reasonable for the fund to be treated as if it had satisfied the regulatory provisions; and
(d) the entity was a resident regulated superannuation fund at all times during the part of the year of income occurring after the end of the pre‑lodgment period; and
(da) the entity was not a self managed superannuation fund at any time during the year of income; and
(e) either of the conditions stated in paragraph (1)(b) is satisfied in relation to the entity in respect of the part of the year of income occurring after the end of the pre‑lodgment period.
(1AB) In determining for the purpose of paragraph (1AA)(c) whether any of the regulatory provisions were contravened in respect of the entity in respect of the pre‑lodgment period, the regulatory provisions are taken to have applied in relation to the entity in respect of that period as if the entity were a resident regulated superannuation fund during that period.
(1AC) An entity is also a complying superannuation fund in relation to the 1994‑95 year of income or a later year of income if:
(a) the trustee, or the trustees, of the entity have purported to make an election under subsection 19(4); and
(b) the requirements of subsections 19(2) to (4) (to the extent that they have not already been complied with) are complied with within 28 days after a trustee of the entity finds out (whether by written notice from APRA or otherwise) that they were not complied with, or within such further period, if any, as APRA (whether before or after the end of the period of 28 days) allows; and
(c) except where a trustee of the entity received written notice from APRA about the non‑compliance—a trustee of the entity tells APRA in writing of the compliance within 7 days after the requirements are complied with or within such further period, if any, as APRA (whether before or after the end of the period of 7 days) allows; and
(d) either of the following conditions is satisfied:
(i) no trustee of the entity contravened any of the regulatory provisions in relation to the entity in respect of the whole of the period (the rectification period) that began when the trustee, or the trustees, of the entity lodged the purported election under subsection 19(4) and ended when the entity complied with subsections 19(2) to (4);
(ii) a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of the rectification period on one or more occasions but APRA is satisfied that, because of special circumstances that existed in relation to the fund during the rectification period, it would be reasonable for the fund to be treated as if it had satisfied the regulatory provisions; and
(e) if the fund was in existence before the beginning of its 1994‑95 year of income—under regulations made for the purposes of section 50, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period that began at the beginning of the fund’s 1994‑95 year of income and ended when the trustee, or the trustees, of the entity lodged the purported election under subsection 19(4); and
(f) the entity was a resident regulated superannuation fund at all times during the part of the year of income occurring after the end of the rectification period; and
(fa) the entity was not a self managed superannuation fund at any time during the year of income; and
(g) either of the conditions stated in paragraph (1)(b) is satisfied in relation to the entity in respect of the part of the year of income occurring after the end of the rectification period.
(1AD) In determining for the purpose of paragraph (1AC)(d) whether any of the regulatory provisions were contravened in respect of the entity in respect of the rectification period, the regulatory provisions are taken to have applied in relation to the entity in respect of that period as if the entity were a resident regulated superannuation fund during that period.
Note: Subsection 50(2) provides that certain superannuation funds that have been wound up or terminated are taken to have been complying superannuation funds before the winding up or termination.
(1A) For the purposes of subparagraph (1)(b)(ii), an entity fails the culpability test in relation to a particular contravention of a regulatory provision if:
(a) both:
(i) all of the members of the entity were in any way directly or indirectly knowingly concerned in, or party to, the contravention; and
(ii) the Regulator, after considering:
(A) the taxation consequences that would arise if the entity were to be treated as a non‑complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to the year of income concerned; and
(B) the seriousness of the contravention; and
(C) all other relevant circumstances;
thinks that a notice should be given stating that the entity is not a complying superannuation fund in relation to the year of income concerned; or
(b) all of the following conditions are satisfied:
(i) one or more members of the entity were in any way directly or indirectly knowingly concerned in, or party to, the contravention;
(ii) one or more members of the entity (the innocent members) were not in any way directly or indirectly knowingly concerned in, or party to, the contravention;
(iii) none of the innocent members would suffer any substantial financial detriment if the entity were to be treated as a non‑complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to the year of income concerned;
(iv) the Regulator, after considering:
(A) the taxation consequences that would arise if the entity were to be treated as a non‑complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to the year of income concerned; and
(B) the seriousness of the contravention; and
(C) all other relevant circumstances;
thinks that a notice should be given stating that the entity is not a complying superannuation fund in relation to the year of income concerned.
Note: The culpability test is still relevant to a fund that has been a self managed fund during only part of a year of income—see subparagraph 42A(2)(b)(ii), paragraph 42A(3)(g) and subparagraph 42A(4)(f)(ii).
(1B) For the purposes of subsection (1A), if there is a question whether a person was in any way directly or indirectly knowingly concerned in, or party to, a particular contravention, that question may be decided on the balance of probabilities.
(2) In this section, a reference to a member of an entity means, if the entity is an approved deposit fund, a beneficiary of the fund.
(3) If a person or body is specified in the regulations for the purposes of subsection 19(4), a reference to APRA in subparagraph (1AA)(b)(ii) or (c)(ii) or subsection (1AC) of this section is taken to be a reference to that person or body.
42A Complying superannuation fund—fund that has been a self managed superannuation fund at any time during a year
Entity that was a self managed superannuation fund throughout a year of income
(1) An entity that was a self managed superannuation fund at all times during a year of income is a complying superannuation fund in relation to that year of income for the purposes of this Division if:
(a) either:
(i) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence; or
(ii) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence other than a time, before it became a resident regulated superannuation fund, when the entity was a resident approved deposit fund; and
(b) the entity passes the test in subsection (5) in relation to the year of income.
Entity that was a self managed superannuation fund during only part of a year of income
(2) An entity that was a self managed superannuation fund during a part or parts of a year of income is a complying superannuation fund in relation to that year of income for the purposes of this Division if:
(a) either:
(i) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence; or
(ii) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence other than a time, before it became a resident regulated superannuation fund, when the entity was a resident approved deposit fund; and
(b) both:
(i) the entity passes the test in subsection (5) in respect of the part or parts of the year of income during which the entity was a self managed superannuation fund; and
(ii) if a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of any other part or parts of the year of income—the entity did not fail the culpability test set out in subsection 42(1A) in relation to any of those contraventions.
Funds coming into existence during year of income etc.
(3) An entity that:
(a) is a superannuation fund that came into existence during the year of income and at that time or later in the year of income became a self managed superannuation fund; or
(b) was a resident approved deposit fund that became a superannuation fund during the year of income;
is also a complying superannuation fund in relation to the year of income if:
(c) the entity complied with subsections 19(2) to (4):
(i) within 60 days after the day on which it came into existence or became a superannuation fund, as the case may be; or
(ii) within such further period, if any, as APRA (whether before or after the end of the period of 60 days) allows; and
(d) either of the following conditions is satisfied:
(i) no trustee of the entity contravened any of the regulatory provisions in relation to the entity during the whole of the period (the pre‑lodgment period) that began when the entity came into existence or became a superannuation fund, as the case may be, and ended when the entity complied with subsections 19(2) to (4);
(ii) a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity during the pre‑lodgment period on one or more occasions but APRA is satisfied that, because of special circumstances that existed in relation to the fund during the pre‑lodgment period, it would be reasonable for the fund to be treated as if it had satisfied the regulatory provisions; and
(e) the entity was a resident regulated superannuation fund at all times during the part of the year of income occurring after the pre‑lodgment period; and
after the pre‑lodgment period:
(f) the entity passed the test in subsection (5) in respect of the part or parts of the year of income, occurring after the pre‑lodgment period, during which the entity was a self managed superannuation fund; and
(g) if a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of any part or parts of the year of income, occurring after the pre‑lodgment period, during which the entity was not a self managed superannuation fund—the entity did not fail the culpability test set out in subsection 42(1A) in relation to any of those contraventions.
Trustee makes an election
(4) An entity that was a self managed superannuation fund at some time, or at all times, during a year of income is also a complying superannuation fund in relation to the year of income if:
(a) the trustee, or the trustees, of the entity have purported to make an election under subsection 19(4); and
(b) if, when the election was made, the requirements of subsections 19(2) to (4) are not complied with:
(i) the requirements of subsections 19(2) to (4) (to the extent that they have not already been complied with) are complied with within 28 days after a trustee of the entity finds out (whether by written notice from APRA or otherwise) that they were not complied with, or within such further period, if any, as APRA (whether before or after the end of the period of 28 days) allows; and
(ii) except where a trustee of the entity received written notice from APRA about the non‑compliance—a trustee of the entity tells APRA in writing of the compliance within 7 days after the requirements are complied with or within such further period, if any, as APRA (whether before or after the end of the period of 7 days) allows; and
(c) either of the following conditions is satisfied:
(i) no trustee of the entity contravened any of the regulatory provisions in relation to the entity during the whole of the period (the rectification period) that began when the trustee, or the trustees, of the entity lodged the purported election under subsection 19(4) and ended when the entity complied with subsections 19(2) to (4);
(ii) a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity during the rectification period on one or more occasions but APRA is satisfied that, because of special circumstances that existed in relation to the fund during the rectification period, it would be reasonable for the fund to be treated as if it had satisfied the regulatory provisions; and
(d) if the fund was in existence before the beginning of its 1994‑95 year of income—under regulations made for the purposes of section 50, the fund is treated as if it had satisfied the transitional superannuation fund conditions at all times during the period that began at the beginning of the fund’s 1994‑95 year of income and ended when the trustee, or the trustees, of the entity lodged the purported election under subsection 19(4); and
(e) the entity was a resident regulated superannuation fund at all times during the part of the year of income occurring after the end of the rectification period; and
(f) in respect of the part of the year of income occurring after the end of the rectification period, both:
(i) the entity passed the test in subsection (5) in respect of the part or parts of the year of income occurring after the end of the rectification period, during which the entity was a self managed superannuation fund; and
(ii) if a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity in respect of any other part or parts of the year of income occurring after the end of the rectification period, during which the entity was not a self managed superannuation fund—the entity did not fail the culpability test set out in subsection 42(1A) in relation to any of those contraventions.
Circumstances in which entity passes the test in this subsection
(5) An entity passes the test in this subsection in relation to a year of income or part of a year of income if:
(a) no trustee of the entity contravened any of the regulatory provisions in relation to the entity during the year of income or the part of the year of income; or
(b) if a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity during the year of income or the part of the year of income, the Regulator, after considering:
(i) the taxation consequences that would arise if the entity were to be treated as a non‑complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to the year of income concerned; and
(ii) the seriousness of the contravention or contraventions; and
(iii) all other relevant circumstances;
thinks that a notice should nevertheless be given stating that the entity is a complying superannuation fund in relation to the year of income concerned.
Determining whether contravention
(6) In determining for the purposes of this section whether any of the regulatory provisions were contravened in respect of the entity in respect of the pre‑lodgment period or the rectification period, the regulatory provisions are taken to have applied in relation to the entity in respect of that period as if the entity were a resident regulated superannuation fund during that period.
References to APRA
(7) If a person or body is specified in the regulations for the purposes of subsection 19(4), a reference to APRA in subparagraph (3)(c)(ii), (3)(d)(ii), or subsection (4) is taken to be a reference to that person or body.
43 Complying approved deposit fund
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 a resident approved deposit fund; and
(b) any of the following conditions is satisfied:
(i) the trustee did not contravene any of the regulatory provisions in relation to the entity in respect of the year of income;
(ii) both:
(A) the trustee contravened one or more of the regulatory provisions 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 APRA allows;
(iii) both:
(A) the trustee contravened one or more of the regulatory provisions in relation to the entity in respect of the year of income on one or more occasions; and
(B) APRA 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) APRA, 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.
44 Pooled superannuation trust
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 any of the regulatory provisions in relation to the entity in respect of the year of income;
(ii) both:
(A) the trustee contravened one or more of the regulatory provisions 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 APRA allows;
(iii) both:
(A) the trustee contravened one or more of the regulatory provisions in relation to the entity in respect of the year of income on one or more occasions; and
(B) APRA 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) APRA, 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 3—Complying fund status for tax purposes
45 Complying superannuation fund
(1) A fund is a complying superannuation fund for the purposes of the Income Tax Assessment Act in relation to a year of income (the current year of income) if, and only if:
(a) the Regulator has given a notice to a trustee of the fund under section 40 stating that the fund is a complying superannuation fund in relation to the current year of income; or
(b) the Regulator has given a notice to a trustee of the fund 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 a trustee of the fund 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 the Income Tax Assessment Act.
46 Complying superannuation scheme—superannuation guarantee charge
An exempt public sector superannuation scheme is taken to be a complying superannuation scheme for the purposes of the Superannuation Guarantee (Administration) Act 1992.
47 Complying approved deposit fund
(1) A fund is a complying approved deposit fund for the purposes of the Income Tax Assessment Act in relation to a year of income (the current year of income) if, and only if:
(a) APRA 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) APRA 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.
48 Pooled superannuation trust
(1) A unit trust is a pooled superannuation trust for the purposes of the Income Tax Assessment Act in relation to a year of income (the current year of income) if, and only if:
(a) APRA 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) APRA 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.
49 Transitional—notices under the repealed provisions of the Occupational Superannuation Standards Act 1987
Superannuation funds—positive
(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 funds—negative
(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.
ADFs—negative
(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.
PSTs—negative
(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.
OSSA—continued 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.
50 Transitional—late lodgment of elections by trustees of superannuation funds
28 days late
(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, or the trustees, of a superannuation fund have lodged or lodge an election under section 19; and
(b) the lodgment day was or is after 28 July 1994; and
(c) the Regulator is satisfied that this subsection should apply in relation to the fund; and
(d) the trustee, or the trustees, of the fund have 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;
as are set out 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.
(2) For the purposes of this Part, if:
(a) a superannuation fund is wound up or terminated; and
(b) the winding up or termination is completed on a particular day (the termination day); and
(c) the termination day is before a day named by the Regulator in a written notice given to a trustee of the fund for the purposes of this paragraph; and
(d) the trustee, or the trustees, of the fund told the Regulator in writing before the commencement of this subsection that they:
(i) did not intend to lodge an election under section 19 in respect of the fund; and
(ii) intended to take advantage of the subsection (4A) that, immediately before 1 July 1996, was taken to be inserted in this section by a declaration made under subsection 333(1); and
(e) the trustee, or the trustees, have complied with such requirements relating to notifying members and prospective members of the fund that:
(i) the fund would be wound up or terminated; and
(ii) the trustee, or trustees, of the fund intended to take advantage of the subsection (4A) mentioned in subparagraph (d)(ii);
as were set out in regulations made for the purposes of that subsection (4A); and
(f) as soon as practicable after the termination day, a trustee of the fund tells the Regulator in writing that the winding up or termination of the fund had been completed; and
(g) 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‑termination period):
(i) beginning at the beginning of the fund’s 1994‑95 year of income; and
(ii) ending at the end of the termination day;
the fund is taken to have been a complying superannuation fund at all times during the pre‑termination period.
Regulations may apply OSS system
(5) Regulations made for the purposes of paragraph (1)(e) or (2)(g) may:
(a) confer functions or powers on the Regulator; 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 14 of the Legislative Instruments Act 2003
(6) Subsection (5) of this section does not limit the application of section 14 of the Legislative Instruments Act 2003 to regulations made for the purposes of this section.
Part 6—Provisions relating to governing rules of superannuation entities
51 Object of Part
The object of this Part is to set out rules about the content of the governing rules of superannuation entities.
52 Covenants to be included in governing rules
Governing rules taken to contain covenants
(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 each trustee of the entity:
(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.
53 Covenants to repay amounts to beneficiaries in approved deposit funds
Governing rules to contain 2 covenants
(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:
(i) 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; and
(ii) compliance by the trustee with the request would not be inconsistent with the standards applicable to the fund under section 32;
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).
Legal personal representatives of beneficiaries
(2A) A reference in subsection (2) to a beneficiary includes a reference to the legal personal representative of a beneficiary.
Note: Section 15 sets out additional rules relating to the interpretation of subsection (2).
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) ASIC has consented in writing to the variation; or
(b) the requirements of section 54 have been complied with.
54 Prerequisites to variation of repayment period
(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.
55 Consequences of contravention of covenant
(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 a 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 a 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.
55A Rules about cashing benefits after death of members
(1) The governing rules of a regulated superannuation fund must not permit a fund member’s benefits to be cashed after the member’s death otherwise than in accordance with standards prescribed for the purposes of section 31.
(2) If the governing rules of a fund are inconsistent with subsection (1):
(a) subsection (1) prevails; and
(b) the governing rules are invalid, to the extent of the inconsistency.
56 Indemnification of trustee from assets of entity
(1) A provision in the governing rules of a superannuation entity is void if:
(a) it purports to preclude a trustee of the entity 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 a trustee of the entity from, or indemnifying a trustee of the entity 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 a 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 a trustee. A provision in the governing rules that purports to preclude a trustee of the entity 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.
57 Indemnification of directors of trustee from assets of entity
(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 Act 2001.
58 Trustee not to be subject to direction
(1) Subject to subsection (2), the governing rules of a superannuation entity other than a superannuation fund with fewer than 5 members or an excluded approved deposit fund must not permit a 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 Regulator; 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; or
(g) a direction given by a member (within the meaning of the Superannuation Contributions Tax (members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997) that is permitted to be given by subsection 15(8A) of that Act.
(3) If the governing rules of a superannuation entity are inconsistent with subsection (1), that subsection prevails, and the governing rules are, to the extent of the inconsistency, invalid.
59 Exercise of discretion by person other than trustee
(1) Subject to subsection (1A), the governing rules of a superannuation entity other than a self managed superannuation fund must not permit a discretion under those rules that is exercisable by a person other than a trustee of the entity to be exercised unless:
(a) those rules require the consent of the trustee, or the trustees, of the entity 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.
(1A) Despite subsection (1), the governing rules of a superannuation entity may, subject to a trustee of the entity complying with any conditions contained in the regulations, permit a member of the entity, by notice given to a trustee of the entity in accordance with the regulations, to require a trustee of the entity to provide any benefits in respect of the member on or after the member’s death to a person or persons mentioned in the notice, being the legal personal representative or a dependant or dependants of the member.
(2) If the governing rules of a superannuation entity are inconsistent with subsection (1), that subsection prevails, and the governing rules are, to the extent of the inconsistency, invalid.
60 Amendment of governing rules
(1) The governing rules of a superannuation entity other than a self managed superannuation fund must not permit those rules to be amended unless:
(a) the trustee, or the trustees, of the entity have 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, or the trustees, 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) a person other than a constitutional corporation 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.
60A Dismissal of trustee of public offer entity
(1) Subject to subsection (2), the governing rules of a public offer entity must not permit the trustee to be removed by a person other than APRA.
Note: Part 17 provides for the removal of trustees by APRA.
(2) Subsection (1) does not apply to a removal of a kind specified in regulations made for the purposes of this subsection.
(3) If the governing rules of the public offer entity are inconsistent with subsection (1), that subsection prevails, and the governing rules are, to the extent of the inconsistency, invalid.
Part 7—Provisions applying only to regulated superannuation funds
61 Object of Part
The object of this Part is to set out special rules which apply only to regulated superannuation funds.
62 Sole purpose test
(1) Each 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 Regulator approves in writing.
(1A) Subsection (1) does not imply that a trustee of a regulated superannuation fund is required to maintain the fund so that the same kind of benefits will be provided:
(a) to each member of the fund; or
(b) in respect of each member of the fund.
(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 Regulator for the purposes of subsection (1) may be expressed to relate to:
(a) a specified fund; or
(b) a specified class of funds.
62A Self managed superannuation funds—investment in collectables and personal use assets
The regulations may prescribe rules in relation to the trustees of regulated superannuation funds that are self managed superannuation funds making, holding and realising investments involving:
(a) artwork (within the meaning of the Income Tax Assessment Act 1997); or
(b) jewellery; or
(c) antiques; or
(d) artefacts; or
(e) coins or medallions; or
(f) postage stamps or first day covers; or
(g) rare folios, manuscripts or books; or
(h) memorabilia; or
(i) wine; or
(j) cars; or
(k) recreational boats; or
(l) memberships of sporting or social clubs; or
(m) assets of a particular kind, if assets of that kind are ordinarily used or kept mainly for personal use or enjoyment (not including land).
Note: The regulations may prescribe penalties of not more than 10 penalty units for offences against the regulations. See paragraph 353(1)(d).
63 Certain regulated superannuation funds not to accept employer contributions in certain circumstances
Directions
(1) The Regulator may give a trustee of a regulated superannuation fund a written notice directing the trustee, or the trustees, 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 Regulator must not give a direction under this section to a trustee of a fund after the beginning of the fund’s 1994‑95 year of income unless:
(a) a trustee of the fund has contravened one or more of the regulatory provisions (as defined in section 38A) on one or more occasions after the beginning of that year of income; and
(b) the Regulator 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 Regulator may revoke a direction under this section if the Regulator is satisfied that there is, and is likely to continue to be, substantial compliance by each trustee of the fund with the regulatory provisions (as defined in section 38A) 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, or the trustees of the fund are, taken to have contravened the applicable provisions of that Part.
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.
(7A) Subsection (7) is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1 of the Criminal Code.
Additional rule for certain funds not complying with equal representation rules
(7B) An RSE licensee of a fund that is not a public offer superannuation fund must not, while subsection (7D) applies to the fund, accept any contributions made to the fund by an employer‑sponsor.
Penalty: 60 penalty units.
(7C) Subsection (7B) is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1 of the Criminal Code.
(7D) This subsection applies to the fund if:
(a) the fund is failing to comply with subsection 92(4) or 93(4) (whichever is applicable); or
(b) having previously failed to comply, the fund does so comply but the RSE licensee has not given to APRA a notice in the approved form that:
(i) states that the fund so complies; and
(ii) if the RSE licensee is a group of individual trustees and the compliance is as a result of the appointment of one or more other individual trustees to the group—states the appointee’s name or the appointees’ names; and
(iii) if the RSE licensee is a body corporate and the compliance is as a result of the appointment of one or more directors to the board of directors of the body corporate—states the appointee’s name or the appointees’ names.
Refund of contributions
(8) A contravention of subsection (7) or (7B) does not result in the invalidity of a transaction. However, if a contribution is accepted in contravention of either of those subsections, a trustee of the fund concerned must refund the contribution within 28 days or such further period as the Regulator allows.
Notification to employer‑sponsors
(9) If a trustee of a fund is given a direction under this section, each trustee of the fund must ensure that all reasonable steps are taken 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.
(10A) Subsection (10) is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1 of the Criminal Code.
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 charge—shortfall 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.
64 Superannuation contributions—deductions from salary or wages to be remitted promptly
Application
(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 a 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 a 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.
(2A) Subsection (2) does not apply if:
(a) the employer pays to an approved clearing house (within the meaning of the Superannuation Guarantee (Administration) Act 1992) the amount of the deduction before the end of the period mentioned in that subsection; and
(b) the approved clearing house accepts the payment.
(3) The employer is guilty of an offence if the employer contravenes subsection (2).
Penalty: 100 penalty units.
(3A) The employer is guilty of an offence if the employer contravenes subsection (2). This is an offence of strict liability.
Penalty: 50 penalty units.
Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1 of the Criminal Code.
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.
64A Compliance with determinations of the Superannuation Complaints Tribunal
(1) If:
(a) a complaint has been made to the Superannuation Complaints Tribunal under section 14 of the Superannuation (Resolution of Complaints) Act 1993 concerning a disability benefit (whether under a contract of insurance or otherwise); and
(b) the Tribunal decides that a person other than a trustee or an insurer is responsible for determining the existence of the disability; and
(c) the Tribunal joins the person under paragraph 18(1)(d) of that Act as a party to the complaint;
the person must comply with any determination made in respect of the person by the Tribunal.
(2) In this section:
Superannuation Complaints Tribunal means the Superannuation Complaints Tribunal established under section 6 of the Superannuation (Resolution of Complaints) Act 1993.
65 Lending to members of regulated superannuation fund prohibited
Prohibition
(1) A 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.
Effect of Part 8
(7) Nothing in Part 8 limits the operation of this section.
66 Acquisitions of certain assets from members of regulated superannuation funds prohibited
Prohibition
(1) Subject to subsection (2), a trustee or an investment manager of a regulated superannuation fund must not intentionally acquire an asset from a related party of the fund.
Exception—acquisitions of business real property and listed securities
(2) Subsection (1) does not prohibit a trustee or investment manager acquiring an asset from a related party of the fund if:
(a) the asset is a listed security acquired at market value; or
(b) if the fund is a superannuation fund with fewer than 5 members—the asset is business real property of the related party acquired at market value; or
(c) the trustee of a regulated superannuation fund acquired the asset under a merger between regulated superannuation funds; or
(d) the asset is an asset of a kind which the Regulator, by legislative instrument, determines may be acquired by:
(i) any fund; or
(ii) a class of funds in which the fund is included.
Exception—certain in‑house assets
(2A) Subsection (1) does not prohibit the acquisition of an asset by a trustee or investment manager of a superannuation fund from a related party of the fund if:
(a) the acquisition of the asset constitutes an investment that:
(i) is an in‑house asset of the fund within the meaning of subsection 71(1); or
(ii) would be an in‑house asset of the fund within the meaning of subsection 71(1) apart from the operation of Subdivision D of Part 8; or
(iii) is a life insurance policy issued by a life insurance company (other than a policy acquired from a member of the fund or from a relative of a member); or
(iv) is referred to in paragraph 71(1)(b), (ba), (c), (d), (e), (f), (h) or (j); and
(b) the asset is acquired at market value; and
(c) the acquisition of the asset would not result in the level of in‑house assets of the superannuation fund exceeding the level permitted by Part 8.
Exception—breakdown of relationships
(2B) Subsection (1) does not prohibit a trustee or investment manager acquiring an asset from a related party of the fund (the acquiring fund) if:
(a) the asset is acquired:
(i) for the benefit of a particular member of the acquiring fund; and
(ii) from a trustee or investment manager of another regulated superannuation fund (the transferring fund); and
(b) at the time of the acquisition:
(i) the member and his or her spouse or former spouse are separated; and
(ii) there is no reasonable likelihood of cohabitation being resumed; and
(c) the acquisition occurs because of reasons directly connected with the breakdown of the relationship between the spouses or former spouses; and
(d) the asset represents the whole, or a part, of either:
(i) the member’s own interests in the transferring fund; or
(ii) the member’s entitlements as determined under Part VIIIB of the Family Law Act 1975 in relation to the interests of the member’s spouse, or former spouse, in the transferring fund.
(2C) For the purposes of subsection (2B), the question whether the spouses, or former spouses, have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).
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 a 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 a related party of the fund; and
(b) that acquisition 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:
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, in relation to an entity, means:
(a) any freehold or leasehold interest of the entity in real property; or
(b) any interest of the entity in Crown land, other than a leasehold interest, being an interest that is capable of assignment or transfer; or
(c) if another class of interest in relation to real property is prescribed by the regulations for the purposes of this paragraph—any interest belonging to that class that is held by the entity;
where the real property is used wholly and exclusively in one or more businesses (whether carried on by the entity or not), but does not include any interest held in the capacity of beneficiary of a trust estate.
listed security means a security listed for quotation in the official list of any of the following:
(a) a licensed market within the meaning of section 761A of the Corporations Act 2001; or
(b) an approved stock exchange within the meaning of the Income Tax Assessment Act 1997; or
(c) a market exempted under section 791C of the Corporations Act 2001.
primary production business has the same meaning as in the Income Tax Assessment Act 1997.
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.
Real property used in primary production business
(6) For the purposes of the definition of business real property in subsection (5), real property used in one or more primary production businesses does not cease to be used wholly and exclusively in that business or those businesses only because:
(a) an area of the real property, not exceeding 2 hectares, contains a dwelling used primarily for domestic or private purposes; and
(b) the area is also used primarily for domestic or private purposes;
provided that the use for domestic or private purposes referred to in paragraphs (a) and (b) is not the predominant use of the real property.
67 Borrowing
Prohibition
(1) Subject to this section and section 67A, a trustee of a regulated superannuation fund must not:
(a) borrow money; or
(b) maintain an existing borrowing of money.
Note: Section 67A contains an exception for certain limited recourse borrowing arrangements.
Exception—temporary borrowing to pay beneficiary
(2) Subsection (1) does not prohibit a 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.
(2A) Subsection (1) does not prohibit a 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 of surcharge or advance instalment which the trustee is required to make under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 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.
Exception—temporary borrowing to cover settlement of securities transactions
(3) Subsection (1) does not prohibit a 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 determination made, by legislative instrument, by the Regulator, 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.
Exception—private sector funds
(5) Subsection (1) does not prohibit a 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.
67A Limited recourse borrowing arrangements
Exception
(1) Subsection 67(1) does not prohibit a trustee of a regulated superannuation fund (the RSF trustee) from borrowing money, or maintaining a borrowing of money, under an arrangement under which:
(a) the money is or has been applied for the acquisition of a single acquirable asset, including:
(i) expenses incurred in connection with the borrowing or acquisition, or in maintaining or repairing the acquirable asset (but not expenses incurred in improving the acquirable asset); and
Example: Conveyancing fees, stamp duty, brokerage or loan establishment costs.
(ii) money applied to refinance a borrowing (including any accrued interest on a borrowing) to which this subsection applied (including because of section 67B) in relation to the single acquirable asset (and no other acquirable asset); and
(b) the acquirable asset is held on trust so that the RSF trustee acquires a beneficial interest in the acquirable asset; and
(c) the RSF trustee has a right to acquire legal ownership of the acquirable asset by making one or more payments after acquiring the beneficial interest; and
(d) the rights of the lender or any other person against the RSF trustee for, in connection with, or as a result of, (whether directly or indirectly) default on:
(i) the borrowing; or
(ii) the sum of the borrowing and charges related to the borrowing;
are limited to rights relating to the acquirable asset; and
Example: Any right of a person to be indemnified by the RSF trustee because of a personal guarantee given by that person in favour of the lender is limited to rights relating to the acquirable asset.
(e) if, under the arrangement, the RSF trustee has a right relating to the acquirable asset (other than a right described in paragraph (c))—the rights of the lender or any other person against the RSF trustee for, in connection with, or as a result of, (whether directly or indirectly) the RSF trustee’s exercise of the RSF trustee’s right are limited to rights relating to the acquirable asset; and
(f) the acquirable asset is not subject to any charge (including a mortgage, lien or other encumbrance) except as provided for in paragraph (d) or (e).
Meaning of acquirable asset
(2) An asset is an acquirable asset if:
(a) the asset is not money (whether Australian currency or currency of another country); and
(b) neither this Act nor any other law prohibits the RSF trustee from acquiring the asset.
(3) This section and section 67B apply to a collection of assets in the same way as they apply to a single asset, if:
(a) the assets in the collection have the same market value as each other; and
(b) the assets in the collection are identical to each other.
Example: A collection of shares of the same class in a single company.
(4) For the purposes of this section and section 67B, the regulations may provide that, in prescribed circumstances, an acquirable asset ceases to be that particular acquirable asset.
RSF trustee
(5) Paragraphs (1)(d) and (e) do not apply to a right of:
(a) a member of the regulated superannuation fund; or
(b) another trustee of the regulated superannuation fund;
to damages against the RSF trustee for a breach by the RSF trustee of any of the RSF trustee’s duties as trustee.
(6) A reference in paragraph (1)(d) or (e) (but not in subsection (5)) to a right of any person against the RSF trustee includes a reference to a right of a person who is the RSF trustee, if the person holds the right in another capacity.
67B Limited recourse borrowing arrangements—replacement assets
(1) Subsection (2) applies to:
(a) a reference in paragraph 67A(1)(b), (c), (d), (e) or (f) to an acquirable asset (the original asset); or
(b) a reference in subsection 71(8) to an acquirable asset (the original asset) mentioned in paragraph 67A(1)(b);
(including a reference resulting from a previous application of subsection (2) of this section).
(2) Treat the reference as being a reference to another single acquirable asset (the replacement asset) if:
(a) the replacement asset replaces the original asset; and
(b) subsection (3), (4), (5), (6), (7) or (8) applies.
(3) This subsection applies if:
(a) the original asset consists of:
(i) a share in a company, or a collection of shares in a company; or
(ii) a unit in a unit trust, or a collection of units in a unit trust; and
(b) the replacement asset consists of:
(i) a share in that company, or a collection of shares in that company; or
(ii) a unit in that unit trust, or a collection of units in that unit trust; and
(c) at the time the replacement occurs, the original asset and the replacement asset have the same market value.
(4) This subsection applies if:
(a) the original asset consists of an instalment receipt that confers a beneficial interest in:
(i) a share in a company; or
(ii) a collection of shares in a company; and
(b) the replacement asset consists of that share or collection.
(5) This subsection applies if:
(a) the original asset consists of:
(i) a share in a company, or a collection of shares in a company; or
(ii) a unit in a unit trust, or a collection of units in a unit trust; and
(b) the replacement asset consists of:
(i) a share in another company, or a collection of shares in another company; or
(ii) a unit in another unit trust, or a collection of units in another unit trust; and
(c) the replacement occurs as a result of a takeover, merger, demerger or restructure of the company or unit trust mentioned in paragraph (a).
(6) This subsection applies if:
(a) the original asset consists of a share in a company, or a collection of shares in a company; and
(b) the replacement asset consists of a stapled security, or a collection of stapled securities; and
(c) each of those stapled securities consists of a single share, or a single collection of shares of the same class, stapled together with a single unit, or a single collection of units of the same class, in a unit trust; and
(d) the replacement occurs under a scheme of arrangement of the company.
(7) This subsection applies if:
(a) the original asset consists of a unit in a unit trust, or a collection of units in a unit trust; and
(b) the replacement asset consists of a unit in that unit trust, or a collection of units in that unit trust; and
(c) the replacement occurs as a result of an exercise of a discretion granted under the trust deed of that unit trust to the trustee of that unit trust.
(8) This subsection applies in the circumstances (if any) prescribed by the regulations for the purposes of this subsection.
68 Victimisation of trustees etc.
Prohibition
(1) A person must not commit an act of victimisation against:
(a) a 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.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Act of victimisation against trustee
(2) For the purposes of this section, a person is taken to commit an act of victimisation against a 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) a 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.)
68A Conduct relating to fund membership
(1) A trustee of a regulated superannuation fund, or an associate of a trustee of a regulated superannuation fund, must not:
(a) supply, or offer to supply, goods or services to a person; or
(b) supply, or offer to supply, goods or services to a person at a particular price; or
(c) give or allow, or offer to give or allow, a discount, allowance, rebate or credit in relation to the supply, or the proposed supply, of goods or services to a person;
on the condition that one or more of the employees of the person will be, or will apply or agree to be, members of the fund.
(2) However, subsection (1) does not apply in relation to a supply of a kind prescribed in the regulations for the purposes of this subsection.
(3) A trustee of a regulated superannuation fund, or an associate of a trustee of a regulated superannuation fund, must not refuse:
(a) to supply, or offer to supply, goods or services to a person; or
(b) to supply, or offer to supply, goods or services to a person at a particular price; or
(c) to give or allow, or offer to give or allow, a discount, allowance, rebate or credit in relation to the supply, or the proposed supply, of goods or services to a person;
for the reason that one or more of the employees of the person are not, or have not applied or agreed to be, members of the fund.
(4) However, subsection (3) does not apply in relation to a supply of a kind prescribed in the regulations for the purposes of this subsection.
Civil liability
(5) If:
(a) a person (the offender) contravenes subsection (1) or (3); and
(b) another person (the victim) suffers loss or damage because of the contravention;
the victim may recover the amount of the loss or damage by action against the offender.
(6) The action must be begun within 6 years after the day on which the cause of action arose.
(7) This section does not affect any liability that the offender or another person has under any other provision of this Act or under any other law.
Part 8—In‑house asset rules applying to regulated superannuation funds
Division 1—Object and interpretation
Subdivision A—General
69 Object of Part
The object of this Part is to set out rules about the level of the in‑house assets of regulated superannuation funds.
69A Sub‑funds to be treated as funds
A sub‑fund within a regulated superannuation fund is taken for the purposes of this Part to be a regulated superannuation fund if the sub‑fund satisfies the following conditions:
(a) the sub‑fund has separately identifiable assets and separately identifiable beneficiaries; and
(b) the interest of each beneficiary of the sub‑fund is determined by reference only to the conditions governing that sub‑fund.
70A The Regulator may determine a person to be a standard employer‑sponsor
(1) For the purposes of this Part, the Regulator may determine in writing that a person, who is not a standard employer‑sponsor of a regulated superannuation fund within the meaning of subsection 16(2), is taken to be a standard employer‑sponsor of the fund.
(2) If the Regulator makes a determination under subsection (1) or revokes a determination so made, the Regulator must as soon as practicable after making or revoking the determination, inform a trustee of the regulated superannuation fund concerned, in writing, of the making or revocation of the determination.
Subdivision B—Part 8 associates
70B Part 8 associates of individuals
For the purposes of this Part, each of the following is a Part 8 associate of an individual (the primary entity), whether or not the primary entity is in the capacity of trustee:
(a) a relative of the primary entity;
(b) if the primary entity is a member of a superannuation fund with fewer than 5 members:
(i) each other member of the fund; and
(ii) if the fund is a single member self managed superannuation fund whose trustee is a company—each director of that company; and
(iii) if the fund is a single member self managed superannuation fund whose trustees are individuals—those individuals;
(c) a partner of the primary entity or a partnership in which the primary entity is a partner;
(d) if a partner of the primary entity is an individual—the spouse or a child of that individual;
(e) a trustee of a trust (in the capacity of trustee of that trust), where the primary entity controls the trust;
(f) a company that is sufficiently influenced by, or in which a majority voting interest is held by:
(i) the primary entity; or
(ii) another entity that is a Part 8 associate of the primary entity because of another paragraph of this section or because of another application of this paragraph; or
(iii) 2 or more entities covered by the preceding subparagraphs.
70C Part 8 associates of companies
For the purposes of this Part, each of the following is a Part 8 associate of a company (the primary entity), whether or not the primary entity is in the capacity of trustee:
(a) a partner of the primary entity or a partnership in which the primary entity is a partner;
(b) if a partner of the primary entity is an individual—the spouse or a child of that individual;
(c) a trustee of a trust (in the capacity of trustee of that trust), where the primary entity controls the trust;
(d) another entity (in this paragraph called the controlling entity) where the primary entity is sufficiently influenced by, or a majority voting interest in the primary entity is held by:
(i) the controlling entity; or
(ii) another entity that is a Part 8 associate of the controlling entity because of section 70B or 70D, another paragraph of this section or another application of this paragraph; or
(iii) 2 or more entities covered by the preceding subparagraphs;
(e) another company (in this paragraph called the controlled company) where the controlled company is sufficiently influenced by, or where a majority voting interest in the controlled company is held by:
(i) the primary entity; or
(ii) another entity that is a Part 8 associate of the primary entity because of another paragraph of this section or because of another application of this paragraph; or
(iii) 2 or more entities covered by the preceding subparagraphs;
(f) if a third entity is a Part 8 associate of the primary entity because of paragraph (d) of this subsection—an entity that is a Part 8 associate of that third entity because of section 70B or 70D or because of another paragraph of this section.
70D Part 8 associates of partnerships
For the purposes of this Part, each of the following is a Part 8 associate of a partnership (the primary entity):
(a) a partner in the partnership;
(b) if a partner in the partnership is an individual—any entity that is a Part 8 associate of that individual because of section 70B;
(c) if a partner in the partnership is a company—any entity that is a Part 8 associate of that company because of section 70C.
70E Meanings of terms used in sections 70B, 70C and 70D
Sufficient influence/majority voting interest
(1) For the purposes of sections 70B, 70C and 70D:
(a) a company is sufficiently influenced by an entity or entities if the company, or a majority of its directors, is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity or entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); and
(b) an entity or entities hold a majority voting interest in a company if the entity or entities are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company.
Control of trust
(2) For the purposes of sections 70B, 70C and 70D, an entity controls a trust if:
(a) a group in relation to the entity has a fixed entitlement to more than 50% of the capital or income of the trust; or
(b) the trustee of the trust, or a majority of the trustees of the trust, is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of a group in relation to the entity (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); or
(c) a group in relation to the entity is able to remove or appoint the trustee, or a majority of the trustees, of the trust.
Group in relation to an entity
(3) For the purposes of subsection (2):
group, in relation to an entity, means:
(a) the entity acting alone; or
(b) a Part 8 associate of the entity acting alone; or
(c) the entity and one or more Part 8 associates of the entity acting together; or
(d) 2 or more Part 8 associates of the entity acting together.
Definitions
(4) For the purposes of sections 70B, 70C and 70D:
company has the same meaning as in the Income Tax Assessment Act 1997.
partnership has the same meaning as in the Income Tax Assessment Act 1997.
Subdivision C—In‑house assets
71 Meaning of in‑house asset
Basic meaning
(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 related party of the fund, an investment in a related trust of the fund, or an asset of the fund subject to a lease or lease arrangement between a trustee of the fund and a related party of the fund, but does not include:
(a) a life policy issued by a life insurance company; or
(b) a deposit with an ADI; or
(c) an investment in a pooled superannuation trust, where a 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 Regulator, by written notice given to a trustee of the fund, determines is not an in‑house asset of the fund; or
(f) an asset which the Regulator, by legislative instrument, determines is not an in‑house asset of:
(i) any fund; or
(ii) a class of funds in which the fund is included; or
(g) if the superannuation fund has fewer than 5 members—real property subject to a lease, or to a lease arrangement enforceable by legal proceedings, between a trustee of the fund and a related party of the fund, if, throughout the term of the lease or lease arrangement, the property is business real property of the fund; or
(h) an investment in a widely held unit trust; or
(i) property owned by the superannuation fund and a related party as tenants in common, other than property subject to a lease or lease arrangement between a trustee of the fund and a related party; or
(j) an asset included in a class of assets specified in the regulations:
(i) not to be in‑house assets of any fund; or
(ii) not to be in‑house assets of a class of funds to which the fund belongs.
For this purpose, a class of assets may consist of, but is not limited to, assets that are investments in entities that undertake, or do not undertake, specified activities.
Widely held trust
(1A) For the purposes of paragraph (1)(h), a trust is a widely held unit trust if:
(a) it is a unit trust in which entities have fixed entitlements to all of the income and capital of the trust; and
(b) it is not a trust in which fewer than 20 entities between them have:
(i) fixed entitlements to 75% or more of the income of the trust; or
(ii) fixed entitlements to 75% or more of the capital of the trust.
For this purpose, an entity and the Part 8 associates of the entity are taken to be a single entity.
Agreements
(2) If:
(a) apart from this subsection, an asset of a fund consists of a loan, an investment or an asset that is subject to a lease or lease arrangement, other than an in‑house asset; and
(b) the loan, investment, lease or lease arrangement was made as a result of entering into or carrying out an agreement; and
(c) any of the persons who entered into or carried out the agreement was aware that the result of carrying out the agreement would be that:
(i) a loan would be made to, an investment would be made in, or an asset would be subject to a lease or lease arrangement with, a related party of the fund; or
(ii) an investment would be made in a related trust of the fund;
then the asset is taken, for the purposes of this Part, to be a loan to, an investment in, or an asset subject to a lease or lease arrangement with, that related party or related trust, as the case requires.
Definition
(2A) In subsection (2):
agreement includes any arrangement, understanding, promise or undertaking whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.
Exceptions
(2B) Subsection (2) does not apply to an investment referred to in paragraph 71(1)(a), (b), (c) or (h).
2 or more persons
(3) Subsection (2) does not stop the same asset from being treated as if it were a loan to, an investment in, or an asset subject to a lease or lease arrangement with, 2 or more persons.
The Regulator’s determination
(4) If:
(a) apart from this subsection, an asset of a fund consists of a loan, an investment, or an asset subject to a lease or lease arrangement, other than an in‑house asset; and
(b) the Regulator, by written notice given to a 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, an investment in, or an asset subject to a lease or lease arrangement with, a specified related party or related trust of the fund, including a person taken to be a standard employer‑sponsor of the fund under section 70A;
then, despite paragraphs (1)(a) to (j), the asset is taken, for the purposes of this Part, to be a loan to or an investment in the related party or related trust, or an asset subject to a lease or lease agreement between a trustee of the fund and the related party.
Paragraph (1)(e) determinations or paragraph (1)(j) regulations may be retrospective
(5) A determination under paragraph (1)(e) or regulations under paragraph (1)(j) may be expressed to have taken effect at a time earlier than the time when the determination or regulations were made.
Public sector superannuation funds
(7) For the purposes of applying this section to determine what is an in‑house asset of a public sector superannuation fund, a reference to a Part 8 associate of an employer‑sponsor of the fund is a reference to a body corporate in respect of which either of the following conditions is satisfied:
(a) the body corporate is sufficiently influenced by, or a majority voting interest in the body corporate is held by, the employer‑sponsor;
(b) the employer‑sponsor is sufficiently influenced by, or a majority voting interest in the employer‑sponsor is held by, the body corporate.
Limit on when investments in related trusts are in‑house assets
(8) If, at a time:
(a) an asset (the investment asset) of a superannuation fund is an investment in a related trust of the fund; and
(b) the related trust is one described in paragraph 67A(1)(b) in connection with a borrowing, by the trustee of the fund, that is covered by subsection 67A(1); and
(c) the only property of the related trust is the acquirable asset mentioned in that paragraph;
the investment asset is an in‑house asset of the fund at the time only if the acquirable asset mentioned in that paragraph would be an in‑house asset of the fund if it were an asset of the fund at the time.
(9) Subsections (1), (2) and (4) have effect subject to subsection (8).
Subdivision D—Transitional arrangements in relation to in‑house assets
71A Exceptions—pre‑11 August 1999 investments and loans
(1) If:
(a) at any time (the post‑test time) after the test time, an asset of a superannuation fund consists of:
(i) a loan or an investment made before the test time, or made after the test time under a contract entered into before the test time; or
(ii) a share or unit in a unit trust, if the share, or the unit, as the case requires, was acquired before the test time or under a contract entered into before the test time (notwithstanding any payments on the share or unit made to the issuer of the share or unit after the test time and before 1 July 2009); and
(b) if the asset was an asset of the fund immediately before the test time—it was not an in‑house asset of the fund; and
(c) if the asset was not an asset of the fund immediately before the test time—it would not have been an in‑house asset if it had been an asset of the fund immediately before the test time; and
(d) apart from this Subdivision, the asset would be an in‑house asset of the fund at the post‑test time;
the asset is not an in‑house asset of the fund at the post‑test time.
Payments on partly paid shares and units after 30 June 2009
(2) However, if:
(a) the post‑test time is after 30 June 2009; and
(b) the asset consists of a share or a unit in a unit trust; and
(c) one or more payments on the share or unit to the issuer of the share or unit has been made since 30 June 2009;
then:
(d) the asset is an in‑house asset of the fund at the post‑test time; and
(e) subsection (3) applies to the share or unit.
Reduced value for the purposes of working out value of in‑house assets
(3) For the purposes of working out the formula component Number of whole dollars in value of in‑house assets of the fund under section 75 at the post‑test time, the value of the share or unit at the post‑test time is taken to be the number of whole dollars in the amount worked out as follows:
where:
excess amount means the total of the amounts that, as at the post‑test time, had been paid after 30 June 2009 on the share or unit to the issuer of the share or unit.
market value of share or unit means the market value of the share or unit as at the post‑test time.
total amount means the total of the amounts that, as at the post‑test time had been paid (whether before or after 30 June 2009) on the share or unit to the issuer of the share or unit.
71B Exceptions—pre‑11 August 1999 leases and lease arrangements
(1) If:
(a) at any time (the post‑test time) after the test time, an asset of a superannuation fund consists of an asset subject to a lease, or a lease arrangement, between a trustee of the fund and a related party of the fund; and
(b) the asset was subject to a lease or lease arrangement, or any uninterrupted sequence of leases and lease arrangements, between a trustee of the fund and a related party, throughout the period beginning immediately before the test time and ending at the post‑test time; and
(c) apart from this section, the asset would be an in‑house asset of the fund at the post‑test time;
the asset is not an in‑house asset of the fund at the post‑test time.
(2) For the purposes of subsection (1), if:
(a) before the test time, a lease or a lease arrangement enforceable by legal proceedings, in respect of an asset, was entered into between a trustee of a superannuation fund and a related party of the fund; and
(b) the lease or lease arrangement came into force after the test time;
the asset is taken to have been subject to a lease or a lease arrangement, between a trustee of the fund and that related party, immediately before the test time.
71C Exceptions—transition period
Investments and loans
(1) If:
(a) at any time (the pre‑1 July 2001 time) during the period after the test time but before 1 July 2001, an asset of a superannuation fund consists of a loan or an investment made during the transition period, other than under a contract entered into before the beginning of that period; and
(b) if the asset had been an asset of the fund immediately before the test time—the asset would not have been an in‑house asset of the fund; and
(c) apart from this section, the asset would be an in‑house asset of the fund at the pre‑1 July 2001 time;
the asset is not an in‑house asset of the fund at the pre‑1 July 2001 time. For this purpose, a loan or an investment is not made during the transition period merely because a contract is entered into during that period for the purpose of gaining interest, income, profit or gain.
Leases and lease arrangements
(2) If:
(a) at any time (the pre‑1 July 2001 time) during the period after the test time but before 1 July 2001, an asset of a superannuation fund consists of an asset subject to a lease, or a lease arrangement, between a trustee of the fund and a related party of the fund; and
(b) section 71B does not apply to the asset at the pre‑1 July 2001 time; and
(c) the asset became subject to a lease or lease arrangement between a trustee of the fund and a related party at a time (the transition time) during the transition period; and
(d) the asset was subject to a lease or a lease arrangement, or any uninterrupted sequence of leases and lease arrangements, between a trustee of the fund and a related party, throughout the period beginning at the transition time and ending at the pre‑1 July 2001 time; and
(e) apart from this section, the asset would be an in‑house asset of the fund at the post‑test time;
the asset is not an in‑house asset of the fund at the pre‑1 July 2001 time.
71D Exception—reinvestments
If:
(a) at any time (the post‑test time) after the test time, an asset of a superannuation fund consists of an investment (the post‑test time investment) in an entity (the original entity) made during the period:
(i) beginning at the test time; and
(ii) ending at the end of 30 June 2009; and
(b) the post‑test time investment is not covered by section 71A; and
(c) if the fund had made the post‑test time investment immediately before the test time, it would not have been an in‑house asset of the fund; and
(d) the sum of the purchase price of the post‑test time investment and any previous investment to which this section applies does not, at the post‑test time, exceed the sum of the following amounts:
(i) the sum of the amounts of all dividends or trust distributions received after the test time, but before the end of 30 June 2009, by the superannuation fund from the original entity, which were derived from an investment in the original entity made by the fund before the test time;
(ii) the sum of the amounts of all dividends or trust distributions received after the test time, but before the end of 30 June 2009, by the superannuation fund, which were derived from investments of dividends and trust distributions taken into account under subparagraph (i) or this subparagraph;
the asset is not an in‑house asset of the fund at the post‑test time.
71E Exception—certain geared investments
(1) If:
(a) at any time (the post‑test time) after the test time, an asset of a superannuation fund that has fewer than 5 members consists of an investment (the post‑test time investment) in a unit trust or a company (the first entity) made during the period:
(i) beginning at the test time; and
(ii) ending at the end of 30 June 2009; and
(b) immediately before the test time, another asset (other than an in‑house asset) of the superannuation fund consisted of an investment (the prior investment) in the first entity; and
(c) immediately before the test time, an amount (the principal) consisting of the principal of a loan was owed by the first entity to any entity other than the superannuation fund; and
(d) apart from this Subdivision, the post‑test time investment would be an in‑house asset of the fund at the post‑test time; and
(e) the trustee, or the trustees, of the fund makes a written election, within:
(i) the period of 12 months beginning on the day on which this section commenced; or
(ii) such later period as is prescribed by the regulations;
that section 71E is to apply to all post‑test time investments of the fund in that entity;
Note: Under subsection 103(2A), the trustee, or the trustees, of the fund must keep the election, or a copy of it, for 10 years after it is made.
then subsection (2) or (3), as the case requires, applies, and is taken always to have applied, to the post‑test time investment.
Sum of purchase prices of post‑test time investments does not exceed the principal—investment not an in‑house asset
(2) The post‑test time investment is not an in‑house asset of the fund at the post‑test time if the sum of the following amounts does not exceed the amount of the principal:
(a) the purchase price of the post‑test time investment;
(b) the purchase price of any previous post‑test time investment in the first entity by the fund.
Sum of purchase prices of post‑test time investments exceeds the principal—formula to be applied
(3) If the sum of the following:
(a) the purchase price of the post‑test time investment;
(b) the purchase price of any previous post‑test time investment in the first entity by the fund;
exceeds the amount of the principal, then:
(c) the post‑test time investment is an in‑house asset of the fund at the post‑test time; and
(d) if the post‑test time investment is the first post‑test time investment in respect of which the sum of the amounts referred to in paragraphs (a) and (b) exceeds the amount of the principal—subsection (4) applies to the investment.
Reduced value for the purposes of working out value of in‑house assets
(4) For the purposes of working out the formula component Number of whole dollars in value of in‑house assets of the fund under section 75 at the post‑test time, the value of the post‑test time investment at the post‑test time is taken to be the number of whole dollars in the amount worked out as follows:
where:
excess amount means the amount of the excess under subsection (3).
market value of post‑test time investment means the market value of the post‑test time investment as at the post‑test time.
purchase price of post‑test time investment means the purchase price of the post‑test time investment.
Effect of election
(5) If the trustee, or the trustees, of a fund make an election under paragraph (1)(e) in respect of the post‑test time investments of the fund in an entity, then:
(a) sections 71A and 71D do not apply, and are taken never to have applied, to any post‑test time investment by the fund in that entity; and
(b) this section applies, and is taken always to have applied, to any post‑test time investment of the fund in that entity.
Note: This means that if a fund makes an election, this section would apply to all investments in the entity after the test time and before 1 July 2009, and sections 71A and 71D would not apply to such investments.
Application of section to loans
(6) A reference in this section to an investment in a trust or company is taken to include a reference to a loan to a trust or company. For this purpose, the purchase price of the loan is taken to be the principal of the loan at the time at which the loan was made.
71EA Relationship breakdowns
Scope
(1) This section applies if:
(a) a trustee or an investment manager of a regulated superannuation fund (the acquiring fund) acquires an asset:
(i) for the benefit of a particular member of the acquiring fund; and
(ii) from a trustee or investment manager of another regulated superannuation fund (the transferring fund); and
(b) at the time of the acquisition:
(i) the member and his or her spouse or former spouse are separated; and
(ii) there is no reasonable likelihood of cohabitation being resumed; and
(c) the acquisition occurs because of reasons directly connected with the breakdown of the relationship between the spouses or former spouses; and
(d) the asset represents the whole, or a part, of either:
(i) the member’s own interests in the transferring fund; or
(ii) the member’s entitlements as determined under Part VIIIB of the Family Law Act 1975 in relation to the interests of the member’s spouse, or former spouse, in the transferring fund.
(2) For the purposes of subsection (1), the question whether the spouses, or former spouses, have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).
Acquiring fund taken to have always held asset
(3) For the purposes of applying this Subdivision to the asset at or after the time (the acquisition time) the trustee or investment manager of the acquiring fund acquires the asset, treat:
(a) the acquisition as having occurred at the time the trustee or investment manager of the transferring fund acquired the asset; and
(b) anything done by, for or in relation to the transferring fund in relation to the asset before the acquisition time as having been done by, for or in relation to the acquiring fund; and
(c) anything done by, for or in relation to the trustee or investment manager of the transferring fund in relation to the asset before the acquisition time as having been done by, for or in relation to the trustee or investment manager of the acquiring fund.
Section 71E elections
(4) In addition to their effect apart from this subsection, subsection 103(2A) (duty to keep record of election) and subsection 103(3), to the extent that it relates to subsection 103(2A), also have the effect they would have if subsection (3) of this section applied to them.
Note: This means that the trustees of both the transferring fund and the acquiring fund must retain, in accordance with subsection 103(2A), any election made under section 71E in relation to the transferring fund before the transfer of the asset.
(5) A person commits an offence if:
(a) the person is a trustee of the transferring fund; and
(b) just before the acquisition time, the trustee had a duty under subsection 103(2A) to retain an election, or a copy of an election, under section 71E in relation to the transferring fund; and
(c) the trustee does not, within 14 days after the acquisition time, give the election or copy to a trustee or investment manager of the acquiring fund.
Penalty: 50 penalty units.
Note: If the trustee gives the election to the acquiring fund, he or she must retain a copy of the election: see subsection (4).
(6) An offence against subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
71F Meaning of certain terms used in Subdivision D
In this Subdivision:
test time means the end of 11 August 1999.
transition period means the period:
(a) beginning at the test time; and
(b) ending on the day on which this section commenced.
Subdivision E—Other provisions in relation to in‑house assets
72 How this Part applies if there are 2 or more employer‑sponsors of whom at least one is an unrelated employer‑sponsor
(1) For the purposes of this section:
(a) 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 a Part 8 associate of the first employer‑sponsor; and
(b) 2 or more standard employer‑sponsors of a superannuation fund are related to each other if they are Part 8 associates.
(2) For the purposes of this section:
(a) 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:
(i) loans to, investments in, or assets subject to leases or lease arrangements with, the employer‑sponsor or a Part 8 associate of the employer‑sponsor; or
(ii) loans to, investments in, or assets subject to leases or lease arrangements with, a standard employer‑sponsored member of the fund, in respect of whom the employer‑sponsor contributes to the fund, or a Part 8 associate of such a member; or
(iii) investments in a trust that is controlled by an entity referred to in subparagraph (i) or (ii); and
(b) the class of the in‑house assets of a fund that corresponds to 2 or more employer‑sponsors who are related to each other is the class of in‑house assets that consists of:
(i) loans to, investments in, or assets subject to leases or lease arrangements with, any of them or a Part 8 associate of any of them; or
(ii) loans to, investments in, or assets subject to leases or lease arrangements with, a standard employer‑sponsored member of the fund, in respect of whom any of them contributes to the fund, or a Part 8 associate of such a member; or
(iii) investments in a trust that is controlled by an entity referred to in subparagraph (i) or (ii).
(3) Subsections (4) and (5) apply if:
(a) there are 2 or more unrelated employer‑sponsors of a superannuation fund (whether or not there are also any employer‑sponsors of the fund who are related to each other); or
(b) there are 2 or more employer‑sponsors of a superannuation fund who are related to each other and there are also one or more unrelated employer‑sponsors of the fund.
(4) This Part does not apply in relation to the fund in relation to the in‑house assets of the fund as a whole.
(5) However, this Part applies in relation to the fund separately in relation to each of the corresponding classes of in‑house assets of the fund.
(6) This section does not apply to a self managed superannuation fund.
73 Cost of in‑house asset
(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.
74 Historical cost ratio of fund’s in‑house assets
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:
75 Market value ratio of fund’s in‑house assets
(1) 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:
(2) Where, because of subsections 72(4) and (5), this Part applies separately to each of the corresponding classes of in‑house assets of a superannuation fund, the market value ratio of the in‑house assets of each corresponding class is a percentage worked out using the formula:
Division 2—Historical 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
(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%.
77 Private sector funds established before 12 March 1985—historical cost ratio for the 1994‑95 year of income
(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).
78 Public sector funds established on or after 1 July 1990—historical cost ratio for the 1994‑95 year of income
(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%.
79 Public sector funds established before 1 July 1990—historical cost ratio for the 1994‑95 year of income
(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).
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
(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 3—Market value ratio of fund’s in‑house assets
80A Division not applicable to certain funds
A superannuation fund is taken not to have been required to comply with this Division in respect of a year of income if:
(a) Division 3A applied to the fund in respect of that year of income; and
(b) an actuary has certified that the fund complied with that Division in respect of that year of income.
81 All funds—market value ratio for the 1998‑99 year of income and the 1999‑2000 year of income
(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%.
82 All funds—market value ratio for the 2000‑2001 year of income and later years of income
(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, or, if the fund has a group of individual trustees, the trustees 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, or, if the fund has a group of individual trustees, the trustees propose, 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) Each trustee of the fund must ensure that the steps in the plan are carried out.
83 Certain new in‑house asset investments prohibited
(1) This section applies to a regulated superannuation fund.
(2) If the market value ratio of the fund’s in‑house assets exceeds 5%, a 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%, a 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%.
(4) For the avoidance of doubt, a reference in this section to acquiring an in‑house asset includes a reference to making an investment or a loan, or entering into a lease or a lease arrangement, if the resulting loan or investment, or the asset subject to the lease or the lease arrangement, would be an in‑house asset.
Division 3A—Limit on in‑house assets of certain defined benefit funds
83A Definitions
In this Division, unless the contrary intention appears:
base amount, in relation to a defined benefit fund at a particular time, means 120% of:
(a) the fund’s liabilities in respect of vested benefits; or
(b) the fund’s accrued actuarial liabilities;
at that time, whichever is the greater.
defined benefit fund means:
(a) a public sector superannuation scheme that:
(i) is a regulated superannuation fund; and
(ii) has at least one defined benefit member; or
(b) a regulated superannuation fund (other than a public sector superannuation scheme):
(i) that has at least one defined benefit member; and
(ii) some or all of the contributions to which (being contributions out of which, together with earnings on those contributions, the benefits are to be paid) are not paid into a fund, or accumulated in a fund, in respect of any individual member but are paid into and accumulated in a fund in the form of an aggregate amount.
defined benefit member means a member entitled, on retirement or termination of his or her employment, to be paid a benefit defined, wholly or in part, by reference to either or both of the following:
(a) the amount of:
(i) the member’s salary at a particular date, being the date of the termination of the member’s employment or of the member’s retirement or an earlier date; or
(ii) the member’s salary averaged over a period before retirement;
(b) a specified amount.
fund’s accrued actuarial liabilities, at a particular time, means the total value, as certified by an actuary, of the future benefit entitlements of members of the fund in respect of membership up to that time based on assumptions about future economic conditions and the future of matters affecting membership of the fund, being assumptions made in accordance with applicable professional actuarial standards (if any).
fund’s liabilities in respect of vested benefits, at a particular time, means the total value of the benefits payable from the fund to which the members of the fund would be entitled if they all voluntarily terminated their service with their employers at that time.
listed public company means a company any of the shares in the capital of which are listed for quotation in the official list of a stock exchange in Australia or elsewhere.
maximum permitted amount, in relation to a defined benefit fund at a particular time, means the sum of:
(a) an amount equal to the prescribed percentage of the base amount in relation to the fund at that time; and
(b) the amount (if any) by which the market value of the fund’s assets at that time exceeds that base amount.
prescribed percentage means:
(a) where the expression is used in relation to a time that occurs during the 1998‑99 year of income or the 1999‑2000 year of income—10%; or
(b) where the expression is used in relation to a time that occurs during a later year of income—5%.
voting share has the same meaning as in the Corporations Act 2001.
83B Application of Division
(1) This Division applies to a superannuation fund in respect of the fund’s 1998‑99 year of income or a later year of income if, and only if:
(a) the fund is a defined benefit fund; and
(b) at the end of that year of income the employer‑sponsor was a listed public company or an associate of a listed public company; and
(c) the market value of the fund’s assets at the end of that year of income was not less than the base amount in relation to the fund at that time; and
(d) the trustee, or the trustees, of the fund have decided that this Division is to apply to the fund in respect of that year of income.
(2) If the trustee, or the trustees, of the fund make a decision referred to in paragraph (1)(d), each trustee must ensure that the decision is recorded in writing.
83C Maximum permitted market value of in‑house assets
The market value of the fund’s in‑house assets at the end of a year of income must not exceed the maximum permitted amount in relation to the fund at that time.
83D Limit on in‑house assets
(1) The market value of the fund’s in‑house assets (other than shares in the capital of listed public companies) at the end of a year of income must not exceed the prescribed percentage of the base amount in relation to the fund at that time.
(2) The fund’s in‑house assets at the end of a year of income must not include more than 5% of the voting shares in any listed public company that is the employer‑sponsor or is an associate of the employer‑sponsor.
83E Acquisition of in‑house assets prohibited in certain circumstances
If the market value of the fund’s in‑house assets at the end of a year of income exceeds the prescribed percentage of the base amount in relation to the fund at that time, a trustee of the fund must not buy, or enter into any contract to buy, on behalf of the fund any in‑house assets until the time when an actuary certifies that the market value of the fund’s in‑house assets has ceased to exceed the prescribed percentage of the base amount in relation to the fund.
Division 4—Enforcement
84 In‑house asset rules must be complied with
(1) Each trustee of a regulated superannuation fund must take all reasonable steps to ensure that the provisions of Division 2, and either Division 3 or 3A (whichever is applicable), 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 5—Anti‑avoidance
85 Prohibition of avoidance schemes
Prohibition
(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
86 Object of Part
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.
87 Consequences of non‑compliance with this Part
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 being directed under section 63 not to accept any contributions made to the fund by an employer‑sponsor (see subsection 63(6)).
88 This Part does not apply if acting trustee appointed under Part 17
This Part does not apply to a fund if the fund has an acting trustee appointed under Part 17.
89 Basic equal representation rules
Basic rule
(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 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.
90 Pre‑1 July 1995 rules—funds with fewer than 200 members
Application
(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.
91 Pre‑1 July 1995 rules—funds with 200 or more members
Application
(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) either:
(i) the trustee of the fund must be an independent trustee; or
(ii) the fund must comply with the basic equal representation rules; 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.
92 Post‑30 June 1995 rules—funds with more than 4, but fewer than 50, members
Application
(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) either:
(i) the trustee of the fund must be an independent trustee; or
(ii) the fund must comply with the basic equal representation rules; 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); or
(c) an arrangement in relation to the management and control of the fund that:
(i) has been agreed to between a majority of the members of the fund and the employer, or employers, of those members; and
(ii) is approved by APRA in writing.
Arrangement approval
(4A) When deciding whether or not to approve an arrangement under subparagraph (4)(c)(ii), APRA must have regard to any written guidelines determined by APRA under this subsection.
(4B) The approval of the arrangement given under subparagraph (4)(c)(ii) (the arrangement approval):
(a) is subject to the conditions set out in the approval (if any); and
(b) may be revoked by APRA by written notice given to a trustee of the fund.
(4C) Without limiting paragraph (4B)(b), APRA may revoke an arrangement approval if:
(a) APRA is satisfied that there has been a contravention of a condition to which the approval is subject; or
(b) a trustee of the fund applies in writing for its revocation.
(4D) APRA may vary or revoke the conditions of the arrangement approval by written notice given to a trustee of the fund.
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 trustee of the fund who is a constitutional corporation; 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) the trustee is an RSE licensee; and
(ca) a condition imposed under section 29EA on the RSE licensee’s RSE licence requires the RSE licensee to ensure that the fund, or a class of funds to which the fund belongs, complies with the alternative agreed representation rule whenever this section applies to the fund; and
(d) the trustee is not an associate of a standard employer‑sponsor of the fund.
Transitional
(13) If, at a particular time, the number of members of a fund increases from a number less than 5 to 5 or more, but less than 50:
(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 beginning at that time and ending:
(i) at the time at which such arrangements are made; or
(ii) 90 days after that time;
whichever is the earlier.
93 Post‑30 June 1995 rules—funds with more than 49 members
Application
(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) either:
(i) the trustee of the fund must be an independent trustee; or
(ii) the fund must comply with the basic equal representation rules; 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:
(a) from a number less than 5 to 50 or more; or
(b) from a number greater than 4, but less than 50, to 50 or more (a paragraph (b) fund);
then:
(c) the trustee of the fund must make such arrangements (if any) as are necessary to enable the fund to comply with this section; and
(d) the fund does not have to comply with this section during the period beginning at that time and ending:
(i) at the time at which such arrangements are made; or
(ii) 90 days after that time;
whichever is the earlier; and
(e) for a paragraph (b) fund—despite subsection 92(1), the fund must comply with subsection 92(3) or (4) during the period of time referred to in paragraph (d).
93A A trustee who is an employer‑sponsor of a fund may still be an independent trustee
(1) For the purposes of subparagraphs 92(3)(a)(i) and 93(3)(a)(i), the trustee of a public offer superannuation fund who is an employer‑sponsor of the fund will be an independent trustee of the fund:
(a) if the trustee satisfies all the requirements of the definition of independent trustee in section 10; or
(b) if:
(i) the trustee together with any other employer‑sponsors of the fund who are associates of the trustee are employer‑sponsors of not more than the allowable percentage of the members of the fund; and
(ii) the value of the accrued benefits of those members of the fund who have as an employer‑sponsor either the trustee or an associate of the trustee is not more than the allowable percentage of the value of the assets of the fund; and
(iii) the trustee satisfies the requirements in paragraphs (a), (c), (d) and (e) of the definition of independent trustee in section 10.
(2) The allowable percentage of the members of the fund is 10% or such higher percentage as is approved by APRA by notice in writing given to the trustee.
(3) The allowable percentage of the value of the assets of the fund is 10% or such higher percentage as is approved by APRA by notice in writing given to the trustee.
(4) If APRA approves a higher percentage under subsection (2) or (3), the approval may be subject to such conditions (if any) as are specified in the notice.
(5) An approval, including any conditions to which the approval is subject, may be varied at any time by APRA by notice in writing given to the trustee.
(6) APRA may only exercise the power conferred under subsection (2) or (3) after considering:
(a) the effect that the approval of a higher percentage will have on the likelihood of the trustee performing its functions independently and impartially; and
(b) all other relevant circumstances.
Part 10—Provisions applying only to approved deposit funds
94 Object of Part
The object of this Part is to set out rules about borrowing by the trustees of approved deposit funds.
95 Borrowing
(1) Except with the approval of APRA under subsection (2) or except as provided by subsection (3), the trustee of an approved deposit fund must not borrow money.
(2) APRA may approve a borrowing by the trustee of an approved deposit fund if the trustee satisfies APRA 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 determination made, by legislative instrument, by APRA, 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.
(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
96 Object of Part
The object of this Part is to set out special rules applying only to pooled superannuation trusts.
97 Borrowing
(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 determination made, by legislative instrument, by APRA, 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.
98 Lending to unit‑holders prohibited
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.
99 Civil penalty provisions
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
100 Object of Part
The object of this Part is to impose special duties on the trustees and investment managers of superannuation entities.
101 Duty to establish arrangements for dealing with inquiries or complaints
(1) Each trustee of a regulated superannuation fund other than a self managed superannuation fund, or of an approved deposit fund, must take all reasonable steps to ensure that there are at all times in force arrangements under which:
(a) a person referred to in subsection (1A) has the right to make an inquiry or a complaint of the kind specified in that subsection in relation to that person; and
(b) an inquiry or complaint so made will be properly considered and dealt with within 90 days after it was made.
(1A) For the purposes of paragraph (1)(a):