Explanatory Memorandum
(Circulated by the authority of the Treasurerthe Hon John Dawkins, M.P.)This Memorandum takes account of amendments made by the House of Representatives to the Bill as introduced.Chapter 11 AMENDMENT OF THE OCCUPATIONAL SUPERANNUATION STANDARDS ACT 1987
Overview
11.1 The amendment will enable a complying approved deposit fund to accept superannuation guarantee shortfall components [Clause 122] .
Summary of the amendments
11.2 Purpose of amendment: To amend subsection 3(1) of the Occupational Superannuation Standards Act 1987 (OSS Act) to amend the definition of "approved purposes" to include acceptance of payments of shortfall components prescribed in section 65 of the Superannuation Guarantee (Administration) Act 1992 (the SGAA) [Clauses 122 and 123] .
11.3 Date of effect: Royal Assent [Clause 124] .
Background to the legislation:
11.4 The SGAA prescribes a minimum level of superannuation support which employers should provide for each of their employees. Employers failing to comply with the prescribed minimum standard are subject to a superannuation guarantee charge based on the shortfall in their superannuation support plus an additional amount for an administrative charge and an amount as proxy for fund earnings.
11.5 An amount equal to the charge less the administrative charge is to be redistributed in the form of vouchers to those employees whose employers did not provide the prescribed minimum level of support. These vouchers are only payable into the account of the named employee held with a complying superannuation fund.
11.6 The majority of these vouchers are likely to be for small amounts. Some superannuation funds are not willing or able to accept vouchers. It has therefore been decided to ensure wider acceptance of the vouchers, or 'shortfall components' in terms of the SGAA, by allowing them to be deposited into complying approved deposit funds (ADFs).
Explanation of the amendments
11.7 Section 3 of the OSS Act will be amended by omitting paragraph (a) of the definition of "Approved Purposes" in subsection (1) and substituting a paragraph which continues the existing provisions as well as inserting a new provision to allow complying ADFs to accept superannuation guarantee shortfall components [Clause 123] .