Title: 1998-99
Author: Vas Schejnin
Last saved by: 240metsch
Company: Attorney-General's Department

Schedule 1  Amendment of the Superannuation Industry (Supervision) Act 1993 to address investment practices

Amendment of the Superannuation Industry (Supervision) Act 1993 to address investment practices  Schedule 1

1998‑99

The Parliament of the
Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Superannuation Legislation Amendment Bill (No. 4) 1999

No.      , 1999

(Treasury)

A Bill for an Act to amend the law relating to superannuation, and for related purposes

ISBN:  0642 407185  

Contents
1	Short title	1
2	Commencement	1
3	Schedule(s)	1
Schedule 1—Amendment of the Superannuation Industry (Supervision) Act 1993 to address investment practices	3

A Bill for an Act to amend the law relating to superannuation, and for related purposes
The Parliament of Australia enacts:
1  Short title
		This Act may be cited as the Superannuation Legislation Amendment Act (No. 4) 1999.
2  Commencement
		This Act commences on the day on which it receives the Royal Assent.
3  Schedule(s)
		Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Amendment of the Superannuation Industry (Supervision) Act 1993 to address investment practices
  
1  Subsection 10(1)
Insert:
entity means any of the following:
	(a)	 an individual;
	(b)	a body corporate;
	(c)	a partnership;
	(d)	a trust.
2  Subsection 10(1)
Insert:
lease arrangement means any agreement, arrangement or understanding in the nature of a lease (other than a lease) between the 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.
3  Subsection 10(1)
Insert:
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.
4  Subsection 10(1)
Insert:
Part 8 associate has the meaning given by Subdivision B of Division 1 of Part 8.
5  Subsection 10(1)
Insert:
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).
6  Subsection 10(1)
Insert:
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).
7  Subsection 65(6) (definition of relative)
Repeal the definition, substitute:
relative, in relation to an individual, means the following:
	(a)	a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of that individual or of his or her spouse;
	(b)	the spouse of that individual or of any other individual specified in paragraph (a).
8  At the end of section 65
Add:
Effect of Part 8
	(7)	Nothing in Part 8 limits the operation of this section.
9  Subsection 66(1)
Omit all the words after “asset”, substitute “from a related party of the fund”.
10  Subsection 66(2)
Omit “member of the fund or a relative of such a member” (first occurring), substitute “related party of the fund”.
11  Paragraphs 66(2)(a), (b) and (c)
Repeal the paragraphs, substitute:
	(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 written determination, determines may be acquired by:
	(i)	any fund; or
	(ii)	a class of funds in which the fund is included.
12  After subsection 66(2)
Insert:
Exception—certain in‑house assets
	(2A)	Subsection (1) does not prohibit the acquisition of an asset by the 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 any of paragraphs 71(1)(b) to (f) or paragraph 71(1)(h); 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.
Disallowable instrument
	(2B)	A determination under paragraph (2)(d) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.
13  Paragraph 66(3)(a)
Omit all the words after “trusts)”, substitute “with a related party of the fund; and”.
14  Subsection 66(5) (definition of acceptable percentage)
Repeal the definition.
15  Subsection 66(5) (definition of business real property)
Repeal the definition, substitute:
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.
16  Subsection 66(5) (definition of close associate)
Repeal the definition.
17  Subsection 66(5) (definition of direct control interest)
Repeal the definition.
18  Subsection 66(5) (definition of exempt business real property)
Repeal the definition.
19  Subsection 66(5) (definition of listed security)
Omit “in Australia”, substitute “in Australia, an approved stock exchange within the meaning of section 470 of the Income Tax Assessment Act 1936 or an exempt stock market within the meaning of section 771 of the Corporations Law”.
20  Subsection 66(5)
Insert:
primary production business has the same meaning as in the Income Tax Assessment Act 1997.
21  Subsection 66(5) (definition of relative)
Repeal the definition.
22  Subsections 66(6), (7) and (8)
Repeal the subsections, substitute:
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.
23  After the heading to Division 1 of Part 8
Insert:
Subdivision A—General
24  Section 70
Repeal the section.
25  After section 70A
Insert:
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.
relative, in relation to an individual, means the following:
	(a)	a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of that individual or of his or her spouse;
	(b)	the spouse of that individual or of any other individual specified in paragraph (a).
Subdivision C—In‑house assets
26  Subsection 71(1)
Omit “a standard employer‑sponsor, or an associate of a standard employer‑sponsor, of the fund,”, substitute “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 the trustee of the fund and a related party of the fund,”.
27  At the end of subsection 71(1)
Add:
	; 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 the 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 (within the meaning of subsection 66(5)); 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 the trustee of the fund and a related party.
28  After subsection 71(1)
Insert:
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.
29  Subsection 71(2)
Repeal the subsection, substitute:
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), (ba), (c) or (h).
30  Subsection 71(3)
Omit all the words after “loan to,”, substitute “an investment in, or an asset subject to a lease or lease arrangement with, 2 or more persons”.
Note:	The heading to subsection 71(3) is altered by omitting “purposes” and substituting “persons”.
31  Paragraph 71(4)(a)
Omit “or an investment”, substitute “an investment, or an asset subject to a lease or lease arrangement”.
32  Paragraph 71(4)(b)
Omit all the words after “loan to,”, substitute “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;”.
33  Subsection 71(4)
Omit all the words from and including “then:”, substitute “then, despite paragraphs (1)(a) to (i), 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 the trustee of the fund and the related party”.
34  At the end of section 71
Add:
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.
Subdivision D—Transitional arrangements in relation to in‑house assets
71A  Exceptions—pre‑12 May 1998 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‑12 May 1998 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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 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 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 of a fund makes 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.
71F  Meaning of certain terms used in Subdivision D
		In this Subdivision:
test time means 7.30 pm by legal time in the Australian Capital Territory on 12 May 1998.
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
35  Paragraph 72(1)(a)
Omit “an associate”, substitute “a Part 8 associate”.
36  Paragraph 72(1)(b)
Before “associates”, insert “Part 8”.
37  Paragraph 72(2)(a)
Omit “loans to, or investments in, the employer‑sponsor or an associate of the employer‑sponsor;”, substitute:
	: (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);
38  Paragraph 72(2)(b)
Omit “loans to, or investments in, any of them or any associates of any of them.”, substitute: 
	: (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).
39  Subsection 72(5)
Repeal the subsection, substitute:
	(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.
40  At the end of section 72
Add:
	(6)	This section does not apply to a self managed superannuation fund.
41  At the end of section 75
Add:
	(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:

42  At the end of section 83
Add:
	(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.
43  After subsection 103(2)
Insert:
	(2A)	The trustee or trustees must also retain for at least 10 years an election, or a copy of an election, under section 71E.
44  Subsection 103(3)
Omit “or (2)”, substitute “, (2) or (2A)”.
45  Application provisions
Amendments relating to the acquisition of assets
(1)	The amendments made by items 9 and 10, 12 and 13 and 15 to 22 of this Schedule apply to the acquisition of an asset after the time at which the Superannuation Legislation Amendment Bill (No. 4) 1999 was introduced into the Parliament (the introduction time), unless the asset was acquired under a contract entered into before 7.30 pm by legal time in the Australian Capital Territory on 12 May 1998 (the test time).
Amendments relating to the acquisition of assets—business real property
(2)	The amendments made by items 11 and 14 of this Schedule apply to the acquisition of an asset after the test time.
Amendments relating to in‑house assets—basic rule
(3)	Subject to Subdivision D of Division 1 of Part 8 of the Superannuation Industry (Supervision) Act 1993, as inserted by this Schedule, the amendments made by items 23 to 28, 31 to 34, and 42 to 44 of this Schedule apply to the following:
	(a)	making a loan or an investment after the test time;
	(b)	an asset subject to a lease or lease arrangement after the test time.
Amendment of subsections 71(2) and (3)
(4)	The amendments made by items 29 and 30 of this Schedule apply to an agreement entered into after the introduction time, unless the agreement concerned is a contract entered into before the test time.
Amendment of sections 72 and 75
(5)	The amendments made by items 35 to 41 of this Schedule apply to the assets of a superannuation fund after the introduction time.
Criminal and civil penalties only apply after commencement
(6)	Despite the amendments made by this Schedule:
	(a)	a person is not guilty of an offence; and
	(b)	the consequences of contravening a civil penalty provision that are set out in Part 21 of the Superannuation Industry (Supervision) Act 1993 do not apply to a person;
in respect of conduct engaged in before the commencement of this Act, if the conduct would not have constituted an offence or contravention if those amendments had not been enacted.
46  Transitional provision
The Governor‑General may make regulations, not inconsistent with Subdivision D of Division 1 of Part 8 of the Superannuation Industry (Supervision) Act 1993, providing for matters of a transitional nature in respect of the amendments and repeals made by this Act.

Superannuation Legislation Amendment Bill (No. 4) 1999       No.      , 1999