OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS 1987 (REPEALED)

PART II - SUPERANNUATION FUNDS  

Division 1 - General  

REGULATION 16A   INVESTMENT STANDARDS: IN-HOUSE ASSETS  

16A(1)   [ Interpretation ]  

In this regulation, unless the contrary intention appears:

agreement
means any agreement, arrangement or understanding, formal or informal, express or implied, whether or not it is enforceable, or intended to be enforceable, by legal proceedings;

employee
includes:

(a) in relation to a company - a director of the company; or

(b) in relation to a public authority constituted by or under a law of the Commonwealth or of a State or Territory - any officer of the public authority;

in-house asset
, in relation to a superannuation fund, means an asset of the fund that is a loan to, or an investment in, an employer sponsor, or an associate of an employer sponsor, of the fund, but:

(a) if:

(i) the employer sponsor is a life assurance company; and

(ii) the contributions made by the employer sponsor are in respect of an employee, or dependants of an employee, of the employer sponsor;

does not include an asset that is a life policy on the life of that employee; or

(b) if the fund is a public sector fund, does not include an investment in securities issued under the authority of:

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

(ii) a public authority constituted by or under a law of the Commonwealth or of a State or Territory that is not an employer sponsor, or an associate of an employer sponsor, of the fund.

16A(2)   [ " Associate of employer sponsor " ]  

For the purposes of this regulation, a person is an associate of an employer sponsor of a superannuation fund other than a public sector fund if the person is an associate, within the meaning of subsection 26AAB(14) of the Tax Act, of the employer sponsor, the reference in that subsection to " taxpayer " being read as a reference to the employer sponsor.

16A(3)   [ " Associate of employer sponsor " : public sector fund ]  

For the purposes of this regulation, a body corporate, including a public authority constituted by or under a law of the Commonwealth or of a State or Territory, is an associate of an employer sponsor of a public sector fund:

(a) if the body corporate has a controlling interest in, or directs the operations of, the employer sponsor; or

(b) if the employer sponsor has a controlling interest in, or directs the operations of, the body corporate.

16A(4)   [ Cost of asset giving rise to investment income ]  

For the purposes of this regulation, where the investment income of a superannuation fund in a year of income is or includes income arising from an asset:

(a) the asset is taken to be an asset of the fund; and

(b) the cost of the asset at any time during that year of income is taken to be an amount that the Commissioner is satisfied is reasonable in the circumstances.

16A(5)   [ Employer sponsor of fund ]  

For the purposes of this regulation, where a member of a superannuation fund has, or dependants of a member have, a right to receive benefits from the fund:

(a) an employer of the member; or

(b) a company in which an employer of the member has a controlling interest; or

(c) if an employer of the member is a company - a person who is connected with that company;

who contributes to the fund in respect of the member or his or her dependants is an employer sponsor of the fund.

16A(6)   [ Person connected with employer sponsor company ]  

For the purposes of paragraph (5)(c), a person is connected with a company that is an employer of a member only if:

(a) the person has a controlling interest in the employer; or

(b) the person is a company in which a controlling interest is held by a person who also has a controlling interest in the employer; or

(c) the person is a beneficial owner of shares in the employer.

16A(7)   [ Cost of asset: Commissioner ' s discretion ]  

For the purposes of this regulation, where:

(a) an asset of a superannuation fund was acquired:

(i) without consideration; or

(ii) for a consideration other than the 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 the amount that the Commissioner is satisfied is reasonable in the circumstances.

16A(8)   [ Indirect loan to employer sponsor or associate ]  

For the purposes of this regulation, where:

(a) but for this subregulation, an asset of a superannuation fund would be taken to be a loan, or investment, other than an in-house asset; and

(b) that loan or investment was made as the result of entering into or carrying out an agreement; and

(c) any of the persons who entered into or carried out the agreement did so for the purpose, or for purposes that included the purpose, of achieving the result that a loan or investment would be made to or in, or to or in an associate of, an employer sponsor of the fund;

the asset is an in-house asset of the fund.

16A(9)   [ Loan to person with financial link with employer sponsor ]  

For the purposes of this regulation, where:

(a) an asset of a superannuation fund is a loan to, or investment in, a person other than:

(i) an employer sponsor of the fund; or

(ii) an associate of an employer sponsor of the fund; and

(b) the person has a financial link with an employer sponsor of the fund or an associate of an employer sponsor of the fund; and

(c) subregulation (8) does not apply in relation to the asset;

the cost of the in-house assets of the fund is to be increased to an amount that the Commissioner is satisfied is a reasonable cost for the asset.

16A(10)   [ " Financial link with " ]  

For the purposes of subregulation (9) and this subregulation, a person has a financial link with a second person:

(a) if an asset of the first-mentioned person is a loan to, or an investment in, the second person; or

(b) if the first person has a financial link with a third person who has a financial link with the second person (including a financial link with the second person by another application or other applications of this paragraph).

16A(11)   [ Cost increased by mortgages, guarantees and share call payments ]  

For the purposes of this regulation and subject to subregulation (12), the cost of the in-house assets of a superannuation fund is taken to be increased by an amount equal to the sum of:

(a) the amount of any subsisting guarantee given by the trustee of the fund (whether jointly or otherwise) in relation to, or in relation to an associate of, an employer sponsor of the fund; and

(b) the amount of any subsisting mortgage given in respect of an asset of the fund for the benefit of, or for the benefit of an associate of, an employer sponsor of the fund (whether or not the mortgage was also given for the benefit of other persons); and

(c) the amount of payments by way of calls in respect of shares in, or in an associate of, an employer sponsor of the fund, that the trustee of the fund is, or could become, liable to pay (whether jointly or otherwise).

16A(12)   [ Cost of unpaid share calls ]  

For the purposes of paragraph (11)(c), where:

(a) the trustee of a superannuation fund could become liable (whether jointly or otherwise) to pay an amount by way of calls in respect of shares in, or in an associate of, an employer sponsor of the fund; and

(b) the Commissioner is satisfied that the assets of the employer sponsor or the associate of the employer sponsor, as the case may be, are sufficient to enable it to pay any debts that it has incurred, or is reasonably likely to incur, without requiring any of those calls to be paid;

the Commissioner may determine that the amount referred to in paragraph (a) must be disregarded.

16A(13)   [ Loans to employees owning shares in employer company ]  

For the purposes of this regulation, where:

(a) an employer of a member is a company; and

(b) the member has, or dependants of the member have, a right to receive benefits from a superannuation fund; and

(c) the member, or a dependant of the member, is a beneficial owner of shares in the employer; and

(d) an asset of the fund is a loan to the member, or the dependant, referred to in paragraph (c); and

(e) but for this subregulation, the asset would be taken to be an in-house asset of the fund;

the asset is not taken as an in-house asset of the fund if the Commissioner, having regard to:

(f) the amount of the loan; and

(g) the value of the shares; and

(h) any other matters that the Commissioner considers relevant;

is satisfied that it would be reasonable to treat the asset as not being an in-house asset.

16A(14)   [ Cost of in-house assets ]  

For the purposes of sub-subparagraph (17)(b)(i)(A), where as at 11 March 1985 the total cost of the in-house assets of a superannuation fund other than a public sector fund exceeded 70 % of the cost of all the assets of the fund, the cost of the in-house assets of the fund as at 11 March 1985 is taken to be equal to 70 % of the cost of all the assets of the fund as at 11 March 1985.

16A(15)   [ Acts contravening other provisions ]  

Nothing in this regulation permits the doing of an act or thing by, or in relation to, a superannuation fund that could not be so done without contravening another provision of these Regulations that applies to the fund.

16A(16)   [ Fund in existence during part year ]  

Where a superannuation fund is in existence during part only of a year of income, this regulation has effect as if a reference to a time during the year of income were a reference to a time during the part of that year of income in which the superannuation fund was in existence.

16A(17)   [ Prescribed investment standards ]  

For the purposes of subsection 7(1) of the Act, the following standards are prescribed in relation to the investment of the assets of superannuation funds other than public sector funds:

(a) the cost of the in-house assets of a fund established after 11 March 1985 is not to exceed at any time during a year of income 10 % of the cost of all the assets of the fund;

(b) the cost of the in-house assets of a fund established before 12 March 1985 is not to exceed at any time during a year of income:

(i) in a year of income commencing on 1 July 1990, 1991, 1992, 1993 or 1994:

(A) the cost of the in-house assets of the fund as at 11 March 1985; or

(B) 10 % of the cost of all the assets of the fund;

whichever is the greater; and

(ii) in any other later year of income - 10 % of the cost of all the assets of the fund.

16A(18)   [ Prescribed investment standards - public sector funds ]  

For the purposes of subsection 7(1) of the Act, the following standards are prescribed in relation to the investment of the assets of public sector funds:

(a) the cost of the in-house assets of a fund established on or after 1 July 1990 is not to exceed at any time during a year of income 10 % of the cost of all the assets of the fund;

(b) the cost of the in-house assets of a public sector fund established before 1 July 1990 is not to exceed at any time during a year of income:

(i) in a year of income commencing on 1 July 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998 or 1999:

(A) the cost of the in-house assets of the fund as at 1 July 1990; or

(B) 10 % of the cost of all the assets of the fund;

whichever is the greater; and

(ii) in any other later year of income - 10 % of the cost of all the assets of the fund.