Explanatory Statement

Issued by the authority of the Minister for Financial Services and Superannuation

Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 5)

Subject - Superannuation Industry (Supervision) Act 1993

Subsection 34K(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) provides that the Governor-General may prescribe regulations that make provision for and in relation to superannuation data and payment matters.

Subsection 34Z(1) of the SIS Act provides that the Governor-General may prescribe regulations that set out information that must be provided to the Commissioner of Taxation for the purposes of maintaining a database of information about superannuation entities and RSA providers who are subject to the superannuation data and payment regulations and standards.

The Regulation prescribes:

•

additional detail for services necessary to facilitate the transmission of information and payments electronically to superannuation entities and RSA providers; and

•

superannuation transactions that will be subject to the superannuation data and payment regulations and standards, including what information is required to accompany a request for a rollover or transfer, a member registration and a contribution, and when that information must be validated.

The Regulation also introduces performance standards for the processing of rollovers and contributions that occur in accordance with the superannuation data and payment standards.

The Regulation specifies that the funds have a transitional period for acceptance of contributions that are sent by employers in accordance with the data and payment standard before 1 July 2014. This transitional period provides an opportunity for funds to refine any system issues and on-board employers on a voluntary basis prior to the commencement of mandatory requirements from 1 July 2014.

Details of the Regulation are provided in the Attachment.

The SIS Act specifies no conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Section 1 to 4 and Schedule 1 to the Regulation commence on the commencement of Division 1 of Part 1 of Schedule 4 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 and Schedule 2 to the Regulation commences on 1 July 2013.

Extensive consultation has been undertaken on the introduction of superannuation data and payment standards. As part of Stronger Super, the Government established the SuperStream working group operating, comprising of representatives from the super industry and employers to provide advice on the design and implementation of the SuperStream reforms.

Public consultation on an exposure draft of the Regulation was undertaken between 31 September and 16 October 2012. Twenty One submissions were received in response to this consultation. Public submissions are available on the Treasury website.

Authority: Subsections 34K(1) and 34Z(1) of the Superannuation Industry (Supervision) Act 1993

ATTACHMENT

Details of the Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 5)

Section 1 - Name of Regulation

This section specifies that the name of the Regulation is the Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 5).

Section 2 - Commencement

This section provides that the Regulation commences as follows:

(a)

on the commencement of Division 1 of Part 1 of Schedule 4 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 - sections 1 to 4 and Schedule 1;

(b)

on 1 July 2013 - Schedule 2

Section 3 - Amendment of Superannuation Industry (Supervision) Regulations 1994

This section provides that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).

Section 4 - Amendment of Superannuation Industry (Supervision) Regulations 1994

This section provides that Schedule 2 amends the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).

Schedule 1 - Amendment commencing on Division 1 of Part 1 of Schedule 4 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012

Item [1] - Regulation 3B.01

Definition

1. Definitions have been introduced for prescribed eligible entity and unique superannuation identifier.

Item [1] - Regulation 3B.02

Prescribed eligible superannuation entity for register

2. To ensure effective electronic business to business exchange of data and electronic funds transfer in superannuation, the Commissioner of Taxation (the Commissioner) will keep a central register containing information about prescribed eligible superannuation entities.

3. Entities that are prescribed eligible superannuation entities for the purpose of the register are regulated funds (other than self-managed superannuation funds) and approved deposit funds.

4. The information to be held on the register for each prescribed entity includes a unique superannuation identifier, bank details, and an internet protocol address. This will allow other superannuation entities and employers to send superannuation payments and information associated with those payments to the correct destination with a high degree of accuracy ensuring an efficient system.

Item [1] - Regulation 3B.03

Information to be given for the register

5. The trustee of a prescribed eligible superannuation entity must give to the Commissioner at least one unique superannuation identifier for the entity. This unique superannuation identifier will dictate the end destination point of the information being sent about a contribution or a rollover.

6. A unique superannuation identifier may be either an entity's Australian Business Number (ABN) followed by a three digit number prescribed by the entity who must ensure it is unique, or another kind of unique identifier approved by the Commissioner. The Commissioner can approve the use of an identifier on a global basis. It is not intended that the Commissioner can approve individual entity identifiers. It is intended that the Commissioner will approve a unique identifier allocated by a commercial provider.

7. For each unique superannuation identifier, a trustee must provide bank details and a digital address. This will ensure that the central register is complete.

8. The trustee must provide bank details that are sufficient to enable an electronic payment to be made. This may include BPay or direct credit details.

9. The trustee must provide an Internet Protocol (IP) address, or another digital address approved by the Commissioner. Allowing the Commissioner to approve other digital addresses allows for flexibility to cater for future services to be included without the need for regulatory change.

10. A superannuation entity may choose to have one or more unique superannuation identifiers. For example, one entity may choose to have a unique superannuation identifier for each superannuation product they have. Another entity may choose to have one unique superannuation identifier for all superannuation products they have. Other entities may choose to have one unique superannuation identifier for rollovers and another for contributions.

11. This is entirely a matter for the superannuation entity to resolve, and what administrative structure will result in the most efficient operation for their business.

12. The trustee must tell the Commissioner when the information is to be operative for the entity. This will allow users of the service (including other superannuation entities, Retirement Savings Account providers and employers) to be aware of when the information becomes effective, as the information is being provided to the Commissioner prior to the information being operational.

13. Users of the service are outlined in Section 34Y of the Superannuation Laws Amendment (Capital Gains Relief and Other Efficiency Measures) Act 2012.

14. The operative date must be the later of 1 July 2013 or the date on which the entity first receives a contribution or a rollover. This is intended to ensure that existing entities will have an operative date of 1 July 2013 coinciding with the commencement of Schedule 2 to these regulations, and entities that come into existence in the future will have an operative date of when they will first receive contributions or rollovers. It is important for all users of the service to be aware of when the information becomes effective.

15. If an entity is receiving contributions or rollovers on the commencement of this Part and the entity expects to continue to receive contributions and rollovers on or after 1 July 2013, the trustee must give the information to the Commissioner by the later of 1 April 2013 and 20 business days after the commencement of this Part. This means that entities in operation on the commencement of this Part, but will merge, close or wind-up prior to 1 July 2013 are not required to provide this information to the Commissioner.

16. If the entity is not receiving contributions or rollovers on the commencement of this Part, the trustee must give the information to the Commissioner by the later of 1 April 2013, and 10 business days before the day on which the entity first receives a contribution or rollover superannuation benefit.

17. When making any changes to the information on the register, the trustee must make the changes no later than 10 business days before the new information becomes operative. This is important to give users of the service a chance to change their information technology systems. This is intended to include removing information as a result of a wind-up or merger.

Schedule 2 - Amendments commencing on 1 July 2013

Item [1] - Regulation 6.32

Superannuation data and payment matters

18. Regulations for rollovers will now be made from the regulation making power in subsection 34K(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

19. This results in the penalty framework also stemming from Part 3B of the SIS Act.

20. The regulations have the following broad structure:

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Rollover : initiate, conduct checks, complete, allocate

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Contribution: send, receive, allocate

Item [1] - Regulation 6.33

Request for rollover or transfer of withdrawal benefit

21. A member may make a request, in writing, to transfer or rollover a whole or part of their withdrawal benefit. 'In writing' can include a letter, an email, a paper form or an online web form provided by the fund or the Commissioner.

22. For a rollover or transfer that is not to an SMSF, a member may initiate the rollover or transfer by sending the request to the transferring fund (the fund that it is being asked to rollover or transfer a member's withdrawal benefit) or the receiving fund (the fund who will receive the rollover or transfer).

23. The member can use the Schedule 2A form which has been modified to reflect the streamlined proof of identity process for a member who is rolling over their whole withdrawal benefit between entities regulated by the Australian Prudential Regulatory Authority (APRA).

24. For a rollover or transfer to an SMSF, a member can only initiate the rollover or transfer by sending the request to the transferring fund.

25. The member can use the Schedule 2B form to request a rollover or transfer of the whole of their withdrawal benefit to an SMSF. This form has been developed specifically to cater for rollovers to SMSFs and does require proof of identity information.

26. It is recommended that members complete the Schedule 2A or 2B form to allow trustees to roll over or transfer their whole withdrawal benefit as efficiently as possible. Members should note that the Commissioner provides an online service for members to initiate a whole of balance transfer with the transferring fund which significantly simplifies the rollover process.

27. For a rollover or transfer of part of a member's withdrawal benefit, the member should contact the transferring fund to find out what additional information is required and provide this information when initiating a rollover.

Item [1] - Regulation 6.33A

Action by receiving fund on receipt of request

28. If a member initiates a roll over or transfer of superannuation benefit by sending a request to their receiving fund, and the trustee of the receiving fund has been given by the member, or has been able to source themselves, all of the mandatory information listed in subregulation (2), the receiving fund must send the rollover request electronically to the transferring fund in accordance with any applicable superannuation data and payment standards made under subsection 34K(3) of the Act.

29. If the trustee does not have all of the information listed in subregulation (2), the trustee should request this from the member, or they may be able to source the information themselves and choose to do this. The trustee should not send the rollover request without the mandatory information.

30. The trustee of the receiving fund must tell the transferring fund about the request and give the following details to the transferring fund:

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the member's full name

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the member's date of birth

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the member's sex

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the member's residential address

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member's membership number, or account number with the transferring fund

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the receiving fund's name and ABN

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the receiving fund's unique superannuation identifier for the rollover or transfer

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the transferring fund's name and ABN

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the transferring fund's unique superannuation identifier for the rollover or transfer

31. A person's full name will generally be their family name (surname) and given names, whether that be one or many.

32. The trustee of the receiving fund must also tell the transferring fund whether the request is for a whole or a part of the member's withdrawal benefit, and if it is a partial rollover or transfer of a member's withdrawal benefit, the amount to be rolled over or transferred.

33. The trustee of the receiving fund must also pass on the member's tax file number to the transferring fund where it has been given to them, unless the member has given the trustee a written statement requesting the trustee not to inform any RSA provider or any other trustee of the member's tax file number.

34. It is intended that existing Regulation 6.50 will not apply to the disclosure of TFN under subregulation 6.33A(5). Regulation 6.50 sets out the ways in which a fund must determine whether amounts are held for the member in other funds. In the context of regulation 6.33A, the receiving fund already knows that amounts are held for the member in the transferring fund, whereas, regulation 6.50 applies where the fund wishes to determine if there are other amounts held elsewhere for the member.

35. Prior to initiating a rollover to the transferring fund, the receiving fund must be satisfied that the member is aware that they may ask the trustee of the transferring fund for information about fees and charges that may apply to the rollover and other information about the effect of the rollover or transfer on any benefit entitlements and either that they have obtained this information or do not require such information. .

36. The receiving fund can satisfy itself of this by asking the member to declare this as part of initiating a rollover. This is contained in the Schedule 2A form.

37. Standards made under section 34K(3) of the Act set out how the information set out in subregulations (2) and (4) is to be given and also set out additional information that must be given.

Item [1] - Regulation 6.33B

Transferring fund must electronically receive request

38. A transferring fund must be able to electronically receive a request for a rollover or transfer sent by a receiving fund, RSA provider, member, or the Commissioner on behalf of a member where that request is made in accordance with any applicable superannuation data and payment standards made under subsection 34K (3) of the SIS Act or subsection 45B (3) of the RSA Act.

39. This gives flexibility to a member in terms of how they initiate a rollover or transfer to the transferring fund.

40. A transferring fund must be able to receive an "electronic portability form" when a member initiates the rollover process through an online service provided by the Commissioner of Taxation.

Item [1] - Regulation 6.33C

Trustee may request mandatory information if not provided

41. Upon receipt of a request to roll over or transfer a member's withdrawal benefit, the trustee of a transferring fund may ask for additional information or documentation only in very limited circumstances.

42. For a whole of balance rollover or transfer to a SMSF, a trustee may only ask for information that is mandatory in the Schedule 2B form. For all other whole of balance rollovers or transfers, a trustee may only ask for information that is mandatory in the Schedule 2A form - this includes proof of identity documentation.

43. The trustee must ask the member for any missing mandatory information within 5 business days of receiving the request.

44. If the trustee does not receive the information within 10 business days of making the request for information, the trustee must make reasonable further inquiries of the member to obtain the information. For example, a follow-up phone call.

45. For a rollover of only part of a member's withdrawal benefit, a trustee may ask the member for information, in addition to the mandatory information, that is necessary to process the request. For example, the amount to be transferred.

46. The trustee must ask the member for the information within 5 business days of receiving the request.

47. If the trustee does not receive the information within 10 business days of making the request for information, the trustee must make reasonable further inquiries of the member to obtain the information. For example, a follow-up phone call.

The trustee of the transferring fund may roll over or transfer the amount without all of the information mandated in the relevant form.

Item [1] - Regulation 6.33D

Validation of member's details by transferring fund

48. For rollovers and transfers within the APRA regulated environment or to exempt public sector superannuation schemes, the proof of identity process has been streamlined. The Commissioner is providing a tax file number validation service for trustees to use to validate information about a member including their tax file number, name, date of birth and address with records held by the Commissioner.

49. When a trustee of a transferring fund receives a request to roll over whole or part of a member's account, and the trustee has the member's tax file number, the transferring fund must ask the Commissioner for a notice of validation under section 299TD (2) of the Act unless :

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the request is to rollover or transfer the benefit to a SMSF; or

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the request was given to the trustee by the Commissioner

50. Rollovers or transfers to a SMSF have proof of identity requirements contained within the Schedule 2B form.

51. A request given to the trustee by the Commissioner will contain information already validated by the Commissioner so it is not necessary for the trustee to undertake the validation process.

52. If the Commissioner has previously given the trustee a notice of validation, the trustee is not required to ask the Commissioner again.

53. If the Commissioner gives the trustee a notice that the Commissioner is not able to validate the information, or if the trustee does not have the member's tax file number, the trustee may ask the member for any mandatory information on the Schedule 2B form (used for requests to rollover or transfer a benefit to a SMSF) that the trustee reasonably requires to process the request. Mandatory information in Schedule 2B includes a requirement to provide proof of identification documentation to the trustee.

54. The trustee must ask for the information within 5 business days of receiving the notice from the Commissioner. If the trustee does not receive the information requested from the member within 10 business days of making the request, the trustee must make reasonable further inquiries of the member to obtain the information.

55. The trustee will determine activities and processes that support reasonable further inquiries to obtain the requested information and the point at which these activities and processes are to cease.

56. Reasonable further inquiries may include accessing other sources of information when the information requested may reasonably found elsewhere (for example, member information held by the receiving fund) . Trustees will be responsible for specifying the process that will be undertaken in the event that the member has not provided requested information. Reasonable further inquiries

Item [1] - Regulation 6.33E

Verification of self managed superannuation fund and member's details

57. This regulation applies to a trustee of a transferring fund if the transferring fund receives a request to rollover whole or part of a member's withdrawal benefit to an SMSF.

58. If, as part of the request, the information provided to the transferring fund includes an ABN for the SMSF, the trustee of a transferring fund must use an electronic service provided by the Australian Government to verify the ABN and name of the SMSF and that the SMSF is a regulated superannuation fund.

59. The trustee of a transferring fund must also validate and that the member requesting the transfer is a member of the SMSF nominated to receive the transfer.

60. If the trustee is unable to verify the SMSF and/or member information, the trustee must ask the member for written evidence to verify the name of the SMSF, that the SMSF is a regulated superannuation fund and that the member is a member of the SMSF.

61. The trustee must ask that evidence be provided by the SMSF member no later than 5 business days after attempting to verify the SMSF information or validate the member information .

62. If the trustee has not received the evidence as requested within 10 business days of making the request, the trustee must make reasonable further inquiries of the member to obtain the information.

Item [1] - Regulation 6.34

Rollover or transfer of withdrawal benefit

63. The trustee of the transferring fund must rollover or transfer the amount in accordance with the request to rollover or transfer subject to regulations 6.35 - 6.38 if:

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the trustee receives a request to rollover or transfer the whole or part of a member's withdrawal benefit, noting that a request could come from the member, the receiving fund or the Commissioner of Taxation; and

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for a rollover or transfer of the whole of a member's withdrawal benefit

:

where the receiving fund is an SMSF, the trustee receives all mandatory information in Schedule 2B;

:

where the receiving fund is not an SMSF, the trustee receives all mandatory information in Schedule 2A;

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for a rollover or transfer of part of a member's withdrawal benefit, the trustee receives the information required by the form in Schedule 2A or 2B and any other information that is reasonably required to process the request;

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for a rollovers or transfers where the receiving fund is not an SMSF and the trustee received a notice from the Commissioner that the Commissioner is unable to validate the information about the member or if the trustee did not have the member's tax file number, the trustee has received sufficient information to reasonably enable the roll-over or transfer.

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for a rollover or transfer where the receiving fund is an SMSF and the trustee was unable to electronically verify the details required under 6.33E, the trustee has received sufficient information to reasonably enable the roll-over or transfer.

64. The trustee may roll over or transfer the amount if the trustee has received sufficient information to give effect to the rollover or transfer.

65. When actioning the roll over or transfer, the trustee must assign a unique payment reference number to the roll over or transfer (or a grouping of rollover or transfers sent on the same day) information message and include the same unique payment reference number in the rollover or transfer payment.

66. The unique payment reference number will be specified within Schedule 3 (Superannuation data and payment standards payment methods) of the Superannuation data and payment standard as made by the Commissioner of Taxation.

67. The transferring fund must roll over or transfer whole or part of the member's withdrawal benefit in accordance with the any applicable superannuation data and payment standards made under subsection 34K(3) of the Act.

68. Prior to the rollover or transfer, the trustee of a transferring fund must be satisfied that the member is aware that they may ask for information about fees and charges that may apply to the rollover or transfer and other information about the effect of the rollover or transfer on any benefit entitlements and either that they have obtained this information or that they do not require such information. This consent is provided by the member to the trustee by signing the rollover request form (schedule 2A or 2B).

69. However, this requirement does not apply to a rollover or transfer that is initiated through a receiving fund of the Commissioner under Part 6A, as the trustee of the receiving fund will be required to perform this check under regulation 6.33A when initiating the rollover request through a receiving fund. The member's consent will also be required when initiating a rollover through the Commissioner of Taxation.

Item [1] - Regulation 6.34A

Timeframes for rollovers and transfers

70. A trustee must rollover or transfer an amount to a receiving fund as soon as practicable, but in any case not later than 3 business days after:

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the trustee received the rollover or transfer request.

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the trustee received any further information sought under regulation 6.33C or subregulation 6.33D (4).

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if there is a suspension or variation under regulation 6.36 or 6.37 - the end of the period of the suspension or variation.

71. It is recognised that there are set periods within the year when trustees will be unable to adhere to a 3 business day performance standard for actioning a rollover or transfer - for example, end of financial year processing shut down.

72. To ensure such processing periods are transparent to both APRA and members, trustees should document any known periods that the 3 day performance period will not be able to be met, the estimated timeframe for actioning a rollover request and incorporate this within the funds risk management framework.

73. If on or after 1 July 2007, a member has made an investment choice under regulation 4.02, the trustee is required to take steps to redeem the investment within 3 business days (for example, submit a redemption request) and rollover or transfer the amount within 3 business days that the trustee has received the redemption.

74. However, the trustee must rollover or transfer an amount as soon as practicable, but in any case not later than 30 business days after:

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the trustee received the rollover or transfer request.

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the trustee received any further information sought under regulation 6.33C or subregulation 6.33D (4).

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if there is a suspension or variation under regulation 6.36 or 6.37 - the end of the period of the suspension or variation.

75. For an investment made before 1 July 2007, the existing illiquid investment provisions have been maintained.

76. For an investment choice made before 1 July 2013, but after 1 July 2007, where the investment strategy chosen is an illiquid investment, the trustee is not required to make the rollover within 30 business days if before the member makes the investment choice the trustee has:

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informed the member of the requirement to make a transfer within 30 days for an investment choice; and

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the trustee has informed the member the reasons why the investment is illiquid; and

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the trustee has obtained written consent that the member accepts that a period longer than 30 days is required because of the illiquid nature of the investment.

77. For an investment choice made on or after 1 July 2013, where the investment strategy chosen is an illiquid investment, the trustee is not required to make the rollover within 30 business days if before the member makes the investment choice the trustee has:

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informed the member of the requirement to make a transfer within 30 days for an investment choice; and

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the trustee has informed the member of the reasons why the investment is illiquid; and

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the trustee has obtained written consent that the member accepts that a period longer than 30 days is required because of the illiquid nature of the investment.

78. It is considered best practice to conduct the rollover or transfer in more than one transaction to ensure that only the illiquid investment is rolled over or transferred outside the 30 day period.

Item [1] - Regulation 6.34B

Member details for rollover or transfer

79. When transferring the member's withdrawal benefit, the trustee of the transferring fund must give to the receiving fund, the member's full name, date of birth, gender and residential address. The trustee of the transferring fund must also include a unique payment reference number which is also included in the payment.

80. Section 299M of the SIS Act requires a trustee to provide a tax file number unless the member has written to the trustee requesting their tax file number not be provided.

81. The trustee of the transferring fund is not required to provide this information if the member has not given them this information.

82. The trustee must give the information to the trustee of the receiving fund on the same day as the trustee makes the roll over or transfer. It is intended that the trustee send the information and the payment on the same day.

83. When actioning the rollover or transfer, the trustee of the transferring fund must action the rollover or transfer in accordance with any applicable superannuation data and payment standards made by the Commissioner of Taxation under subsection 34K(3) of the Act.

84. The standards set out how the information is to be given to the receiving fund and require additional information to be given.

Item [1] - Regulation 6.34C

Receiving fund must electronically receive information and payment

85. A trustee must be able to electronically receive, information and payments in relation to a rollover or transfer made in accordance with the standards made under subsection 34K(3) of the Act.

86. The trustee must receive the rollover or transfer in accordance with any applicable superannuation data and payment standards made by the Commissioner of Taxation under subsection 34K(3) of the Act.

Item [1] - Regulation 6.34D

Receiving fund must allocate amount to member

87. If the trustee of a receiving fund receives a rollover or transfer from a regulated superannuation fund, an approved deposit fund or an RSA provider and:

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the rollover or transfer was accompanied by the required information; and

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the rollover or transfer was provided in accordance with the applicable standards made under section 34K(3) of the SIS Act

then the roll over must be allocated to the member as soon as possible, but in any case no longer than the 3 business days after the receiving fund has received both the payment and the information.

88. The electronic portability form regulations outlined in Part 6A currently stipulate that the Commissioner may decline to give a request that cannot be received electronically by the trustee. Now that all rollovers will be conducted electronically, trustees must be able to receive this.

Item [2] - Regulation - Part 6A - minor amendment

89. Paragraph 6A.03(2)(b) is being removed. Trustees will now have to be able to receive the electronic portability form.

Item [3] - Regulation - Part 6A - minor amendment

90. Paragraph 6A0.3(2)(c) will be renumbered to 6A.03(2)(b) as a result of item [2].

Item [4] - Division 7.2 - minor amendment

91. The heading in Division 2is being amended to reflect its broader coverage. This Division is no longer limited to accumulation interests, as existing Regulation 7.06 is not being replicated.

Subdivision 7.2.1 Superannuation data and payment matters

Item [5] - Regulation 7.07

Superannuation data and payment matters

92. Section 34K(1) of SISA provides the power for regulations to be made relating to the superannuation data and payment matters. These regulations apply to trustees of superannuation entities and employers in their dealings with superannuation entities.

Item [5] - Regulation 7.07AA

Application

93. The Governor General has the authority to make this regulation as outlined by subsection 20(6) of the Superannuation Legislation Amendment (Stronger Super) Act 2012.

94. The regulations contained within this subdivision will apply to large and medium employers from 1 July 2014 and to small employers from 1 July 2015.

Item [5] - Regulation 7.07A

Initial registration of employee

95. Regulation 7.07A sets out the employee information that is required to be provided by the employer to a superannuation fund (other than a self-managed superannuation fund or a fund chosen by the employee) to facilitate the establishment of the member's account by the fund.

96. It is intended that a fund chosen by an employee is one where the employee already has an existing membership and has provided this information to the employer to make superannuation contributions.

97. For these employees, it is not necessary to provide the additional information necessary to facilitate the establishment of a member's account by the fund, it is only necessary to provide the information necessary as part of an ongoing contribution outlined in regulation 7.07E.

98. The accuracy of employee information provided by the employer is critical to the quality of data relating to an employee/member that is entered into the superannuation system. Higher quality employee information will lead to faster allocation of contributions to the member's account, reduce re-work between funds and employers and significantly reduce the occurrence of lost members.

99. Upon the initial registration or at the time of the first contribution (whichever event occurs first), the employer must provide to the superannuation fund employee information including - employee's full name, employee's date of birth, employee's tax file number, employee's sex and employee's residential address.

100. The employer will not be required to provide the employee information to the fund if this information has not been provided by the employee and the employer has made reasonable efforts to obtain the information.

101. The employer is not required to provide this information to a self-managed superannuation fund or if the employee chooses their own fund. This is because in both these instances, the employee will be required to provide the employer with the necessary information confirming that they are members of the nominated superannuation fund.

102. The employer will be required to provide the required employee information and additional information required in accordance with any applicable superannuation data and payment standards made under subsection 34K(3) of the Act.

Item [5] - Regulation 7.07B

Validation of initial registration information

103. Regulation 7.07B requires trustees of funds (other than self-managed superannuation funds) to validate an employee's registration information when the information is sent to the trustee in accordance with the standards made under section 34(K)(3) within 3 days of receiving it. The information will be validated through a service provided by the Commissioner of Taxation

104. A trustee of a regulated superannuation fund (other than a self-managed superannuation fund) is required to validate the full name, tax file number and date of birth when this information is provided by the employer. This is the minimum set of information this is required to enable validation to occur successfully.

105. If the information has been provided by the employer to the superannuation fund in accordance with the superannuation data and payment standards, the fund must validate the information provided through an electronic service provided by the Commissioner of Taxation within 3 business days of receiving the information.

106. However, a trustee is not required to validate the member information if the Commissioner of Taxation has previously provided the trustee with a notice under section 299TD of the SIS Act stating that the member information given by the trustee was able to be validated.

107. Section 299TD of the SIS Act enables the Commissioner to issue a notice to the trustee that states whether the employee details have been able to be validated.

Item [5] - Regulation 7.07C

Trustee may give membership or account number to Commissioner of Taxation

108. The trustee may give the Commissioner of Taxation the membership number, or account number, for a member of the fund.

109. This will allow the Commissioner to be informed as new member accounts are created. The information will be displayed through a new online service that will identify all member superannuation accounts. It will also enable any government held superannuation to be directed to the newly established account rather than having to wait for this information to be reported as part of the annual membership reporting process for superannuation funds.

Item [5] - Regulation 7.07D

Invalid initial registration information

110. Regulation 7.07C sets out the process that will be followed by trustees if the employee information provided by the employer at the time of the initial registration cannot be validated by the Commissioner of Taxation as well as for employers who receive a request from a trustee to provide complete or correct employee information to the trustee.

111. In the event that a trustee of regulated superannuation fund (other than a self-managed superannuation fund) receives a notice from the Commissioner issued under section 299TD of SIS Act stating that the information for the member has not been able to be validated, the trustee must within 5 business days of receiving the Commissioner's notice contact the employer requesting that the employee information provided upon initial registration be confirmed.

112. Within 10 business days of receiving the request from a trustee, an employer must make all reasonable efforts to provide the trustee with complete or corrected employee information for the following - full name, tax file number, date of birth and residential address. The addition of the employee's residential address increases the likelihood that of successful validation by the trustee.

113. Some types of employers, for example those with a fly-in, fly-out or itinerant workforce, may be unable to provide a trustee with the required information within 10 business days. In these circumstances, the employer should within 10 business days, advise the superannuation fund when the required information can be provided.

114. If at the time of the initial registration, the trustee received a contribution payment from the employer but does not receive additional employee information from the employer to enable validation to occur - the trustee will follow the steps outlined in regulation 7.07G (Incomplete contribution information).

Item [5] - Regulation 7.07E

Employee details for contribution

115. Regulation 7.07D outlines the information that an employer must give to a fund that relates to a contribution. The information provided by the employer includes employee information to enable the fund to identify the member the contribution has been made for, as well as a payment reference number to link the contribution payment to the contribution information

116. When an employer makes a contribution for an employee to a fund, the employer must provide information to the fund that identifies the employee the contribution relates to (employee's full name, employee's residential address, employee's tax file number, employee's telephone number). The information is to be given to the fund on the same day the employer makes the contribution payment to the fund.

117. The employer is not required to provide this information to the fund if this information has not been provided by the employee or the fund is a self-managed superannuation fund and the employer is a related party of the fund.

118. The employer must assign and include a unique payment reference number to the contribution (or a number of contributions made together on the same day) and include a unique payment reference number in the information provided to the fund. The unique payment reference number is used to link the contribution payment to the contribution information and is essential in driving efficiency.

119. The unique payment reference number will be specified within Schedule 3 (Superannuation data and payment standards payment methods) of the Superannuation data and payment standard as made by the Commissioner of Taxation.

120. The employer will be required to provide the required information in accordance with any applicable superannuation data and payment standards made under subsection 34K(3) of the Act.

Item [5] - Regulation 7.07F

Superannuation fund must electronically receive contributions and information

121. Regulation 7.07E states that from 1 July 2014, a trustee of a superannuation fund must be able to receive a contribution and information related to a contribution that is sent by an employer in accordance with the applicable superannuation data and payment standards made under subsection 34K(3) of the Act.

122. The fund must be able to receive information and payment related to the contribution electronically.

123. Funds are encouraged to commence a 6 month transition period from 1 January 2014. This transition period will enable funds to enter into voluntary arrangements with employers for the receipt of contributions electronically and in accordance with the standards. This process will provide an opportunity to test fund readiness prior to the commencement of mandatory requirements to receive contributions in accordance with the standards from 1 July 2014..

124. This regulation does not apply if the fund is a self managed superannuation fund and the employer is a related party of the fund.

Item [5] - Regulation 7.07G

Incomplete contribution information

125. Regulation 7.07G sets out the process that a trustee follows if they receive a contribution from an employer for a member of the fund but there is no employee information or missing employee information provided with the contribution. This regulation also sets out the process to be followed if the employee information relating to a contribution is not complete and includes a requirement to refund a contribution to the employer if, despite the trustee's best efforts, the contribution cannot be allocated to a member.

126. If the trustee receives a contribution from an employer, the contribution is not being made to a defined benefit interest and one or both of the following applies:

-

the contribution is the first contribution received by the fund for the member from the employer and the employer has not provided any employee information necessary (employee's full name, employee's date of birth, employee's tax file number, employee's sex, employee's residential address).

-

the contribution is not accompanied by all of the employee information (employee's full name, employee's residential address, employee's tax file number and the employee's telephone number)

the trustee must ask not later than 5 business days after receiving the information for the employer to provide the trustee with the correct and complete information.

127. An employer that receives a request from the trustee to correct or complete employee information relating to a contribution, must make all reasonable efforts to give this information to the trustee within 10 business days of receiving the request.

128. If the trustee has not received correct and complete employee information from the employer and is unable to allocate the contribution to a member, the trustee must refund the contribution to the employer within 20 days of receiving the contribution.

129. The requirement to refund the contribution payment within 20 business days of receipt of the contribution provides a sufficient period of time for the receipt of employee information related to the contribution that has been delayed in transmission as well as providing an opportunity for employers to resubmit the employee information related to the contribution.

130. In the event that a contribution is refunded to the employer, as the trustee is unable to allocate the payment to a member, the contribution is taken to have not been made to the fund by the employer. The employer's superannuation guarantee obligations will not have been met in this circumstance.

Example - Refund of contribution (full name of employee is not provided )

Zweirs Pty Ltd sends a contribution payment of $300 for their employee (Gary Senior) to Decision Fund electronically but fails to correctly complete the employee information relating to the contribution by not including the full name of the employee and other required information.

Without the inclusion of the employee's full name in the employee information sent with the contribution, Decision Fund is unable to identify who the contribution payment has been made for and allocate the payment to a member account.

Within 5 business days of receiving the contribution, Decision Fund must request the employer provide complete and correct employee information that is associated with the contribution payment.

If after 10 days the employer has not provided Decision Fund with the required employee information (including the employee's full name) related to the contribution, Decision Fund will be required to refund the contribution.

Within 20 days after receiving the contribution Decision Fund must refund the payment of $300 to Zweirs Pty Ltd bank account.

The refund of the $300 contribution payment to Zweirs Pty Ltd means that no superannuation entitlements have been paid for Gary Senior and may result in a superannuation guarantee breach for the employer.

Item [5] - Regulation 7.07H

Contributions to be allocated to member (information complete and received in accordance with the superannuation data and payment standards)

131. Regulation 7.07H outlines that a trustee (other than a self-managed superannuation fund) must allocate a contribution to the member account within 3 business days, after receiving the later of the contribution payment and the employee information associated with the contribution, if the following applies:

-

the contribution is received from an employer for a member of the fund;

-

the contribution payment is received in accordance with the superannuation data and payment standards; and

-

all required employee information related to the contribution is received in accordance with the superannuation data and payment standards.

132. If the trustee receives a contribution for a member from the Commissioner of Taxation that has been made in accordance with the standards, the contribution must be allocated to the member account within 3 business days after receiving the later of the contribution payment and the employee information associated with the contribution.

133. Contributions that are required to be allocated in accordance with regulation 292-170.03 of the Income Tax Assessment Regulations 1997 (notional contributions) are not required to be allocated in accordance with this standard.

Subdivision 7.2.2 Operating standards

Item [5] - Regulation 7.07J

Application

134. Regulation 7.07 'Superannuation data and payment matters' and regulation 7.08 'Contributions to be allocated to members' will apply to trustees of superannuation funds from 1 July 2013.

135. Regulation 7.07 'Superannuation data and payment matters' and regulation 7.08 'Contributions to be allocated to members' will apply to large and medium employers from 1 July 2014.

136. Regulation 7.07 'Superannuation data and payment matters' and regulation 7.08 'Contributions to be allocated to members' will apply to small employers from 1 July 2015.

Item [5] - Regulation 7.08

Contributions to be allocated to members (information not complete or received in accordance with the superannuation data and payment standards)

137. Regulation 7.08 applies to trustees that receive a contribution from an employer that is not in accordance with the standard or does not include complete employee information.

138. If a trustee receives an employer contribution that is not in accordance with the superannuation data and payment standards or does not include complete employee information, the trustee must allocate a contribution to the member account within 28 days of the end of the month the contribution is received, or a reasonable period beyond this date.

139. Unless the trustee receives complete employee information relating to the contribution and this information and the contribution payment is received in accordance with the superannuation data and payment standards, it is not practical to have trustees allocate the contribution to the member account within 3 business days.

Item [6] - Regulation - Schedule 2A

Request form for transfer of whole balance of superannuation benefits to fund other than self managed superannuation fund

140. A new schedule 2A has been inserted reflecting a new streamlined process for rollovers between APRA-regulated funds and exempt public sector superannuation schemes. This form should only be used for rollovers between APRA regulated funds. There has been a significant streamlining in the proof of identity process which will now be conducted through a validation service provided by the Commissioner of Taxation except in specific circumstances.

Item [6] - Regulation - Schedule 2B

Request form for transfer of whole balance of superannuation benefits to self managed superannuation fund

141. A new schedule 2B has been inserted for rollovers from APRA regulated funds to self managed superannuation funds. This form contains manual proof of identity documentation requirements. The proof of identity requirements have been aligned to the identification documents specified in the Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) Act 2006.

142. Schedule 2B also incorporates fields where a SMSF trustee can include their bank details to facilitate payments occurring electronically through the banking system.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Superannuation Industry (Supervision) Amendment Regulation 2012 (No. 5)

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Legislative Instrument is to prescribe the detailed requirements to support the operation of the superannuation data and payment regulations. These regulations introduce mandatory electronic data and payment standards and requirements for superannuation funds and employers to comply with when undertaking superannuation transactions (primarily rollovers and contributions).

The instrument will enable the Commissioner of Taxation to obtain and publish an online register containing fund information that enables electronic transactions to occur.

The instrument also outline the process for a requesting, actioning and receiving a rollover or transfer and for actioning and receiving a contribution and the use of validation services to confirm employee/member information prior to receiving a rollover/transfer or contribution.

The instrument also introduces performance standards for the allocation of superannuation payments (received in accordance with the data and payment standards) to the member account.

Individuals will retain their right not to provide their tax file number for superannuation purposes by informing their employer or superannuation fund.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

William Richard Shorten

Minister for Financial Services and Superannuation