NEED TO KNOW

The following four Bills relating to the Government's Stronger Super reforms were passed by the Senate on 24 June 2013 and now await Royal Assent:

  • Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013;
  • Tax and Superannuation Laws Amendment (Increased Concessional Contributions Caps and Other Measures) Bill 2013;
  • Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013; and
  • Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013.

BACKGROUND

As part of the Government's Stronger Super reforms, the Government has introduced a new low-cost default superannuation product called 'MySuper' which will be offered from 1 July 2013. It has also introduced governance measures intended to heighten the obligations of superannuation trustees in managing superannuation fund assets.

The legislation to implement the MySuper and governance elements of the reforms was divided into four legislative tranches. The Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013, which was introduced into the House of Representatives on 18 November 2012, was the fourth tranche of legislation awaiting passage by the Parliament.

The earlier three tranches which received Royal Assent and are currently law include:

  • Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012;
  • Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012; and
  • Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012.

In addition to the four main tranches of legislation, the Government has also introduced other amending legislation to support its reforms aimed at what the Government describes as making the superannuation system more transparent, efficient and fair.

SUMMARY OF THE BILLS

The table below summarises the reforms introduced under each of the amending Bills.

Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013 amends the following:
Superannuation Industry (Supervision) Act 1993 (SIS Act) to:
  • override any provision in the governing rules of a registrable superannuation entity (RSE) that requires the superannuation fund's trustee to use a specified service provider, investment entity or financial product;
  • enable the Australian Prudential Regulation Authority (APRA) to issue infringement notices for a broader range of breaches of the SIS Act;
  • require trustees of superannuation funds to provide eligible persons the reasons for decisions made in relation to a complaint;
  • require persons seeking to take legal action against a director in respect of breach of directors' duties to first seek leave from the court;
  • extend the availability of certain legal defences to directors and trustees in relation to proceedings involving breaches of MySuper obligations; and
  • clarify that the definition of 'superannuation contribution' includes defined benefits;
Corporations Act 2001 to: require RSE licensees that are also responsible entities of registered managed investment schemes to comply with requirements on adequate resources and risk management systems;
First Home Saver Accounts Act 2008 to: make consequential amendments;
Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 to: make technical amendments to the MySuper regime;
Superannuation (Resolution of Complaints) Act 1993 to:

increase the time limits within which beneficiaries can lodge complaints with the Superannuation Complaints Tribunal in relation to total and permanent disability (TPD) claims. The time limits for such complaints will be:

  • 4 years for persons who, before the decision of a trustee in relation to the payment of a disability benefit because of TPD, permanently ceased particular employment because of certain conditions; and
  • 6 years in all other cases.
Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 and Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013 were introduced together into Parliament on 15 May 2013 to:
amend the Income Tax Assessment Act 1997 (ITAA 97) and the Income Tax (Transitional Provisions) Act 1997 to:

increase the superannuation concessional contributions cap to:

  • $35,000 for the 2013-14 financial year for individuals aged 60 years and over; and
  • $35,000 for the 2014-15 and later financial years for individuals aged 50 years and over;
amend the ITAA 97 and Taxation Administration Act 1953 to: reduce the tax concession that individuals whose income exceeds $300,000 receive on their concessionally taxed superannuation contributions made from 1 July 2012 onwards to 15 per cent; and
introduce a new Act (Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Act 2013) to: impose a 15 per cent tax on income earners whose income and concessionally taxed superannuation contributions exceed $300,000 for an income year.
Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013 amends:
ITAA 97 to: provide income tax relief to superannuation funds where there is a mandatory transfer of default members' account balances to a MySuper product in another superannuation fund;
Fair Work Amendment Act 2012 to:
  • allow contributions for default fund employees to whom a modern award applies to be directed to an employer MySuper product; and
  • require the Fair Work Commission to review terms in modern awards every four years and increase the maximum number of funds that can be specified in a modern award from 10 to 15.

TIMING OF NEW REGIME

The amendments contained in:

  • Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2013 will generally commence on 1 July 2013;
  • Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 and Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013 Tax will commence with effect from the date of Royal Assent; and
  • Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013 will generally commence with effect from the date of Royal Assent.

It is presumed that Royal Assent for the above Bills will need to take place prior to 1 July 2013.

NEXT STEPS

We are available to provide you with further information or guidance about these important reforms. Please contact a team member listed in this publication.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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