Explanatory Statement

Issued by authority of the Minister for Revenue and Financial Services

Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018

Retirement Savings Accounts Act 1997

Superannuation Industry (Supervision) Act 1993

The Retirement Savings Accounts Act 1997 (the RSA Act) provides for retirement savings accounts, the approval of entities that can offer such accounts, and the supervision of those entities.

The Superannuation Industry (Supervision) Act 1993 (the SIS Act) provides for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts, and for their supervision by the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission and the Commissioner of Taxation (the Commissioner).

Section 200 of the RSA Act and section 353 of the SIS Act provide that the Governor-General may make regulations prescribing matters required or permitted by those Acts to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

The Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018 (the Amending Regulations) amends the Retirement Savings Accounts Regulations 1997 (the RSA Regulations) and the Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations) to improve the integrity of the processes under which benefits are released on compassionate grounds by superannuation entities or retirement savings account (RSA) providers, to their members. The amendments complement the changes made by the Treasury Laws Amendment (2018 Measures No. 1) Act 2018 to transfer the administrative responsibility for the early release of benefits on compassionate grounds from the Chief Executive Medicare to the Commissioner.

The process for a member to seek early release of their benefits on compassionate grounds previously involved:

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the member applying to the Regulator for a determination that the member qualifies for early release; and

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if the Regulator was satisfied that the member qualifies, the Regulator making a written determination to that effect.

It was common practice for only the member to receive the written determination from the Regulator. There was previously no obligation for the Regulator to provide a copy of the determination to the trustee of the superannuation entity or RSA provider. This procedure meant that some trustees and RSA providers adopted an administrative process of verifying determinations, which resulted in increased compliance costs and delays.

Schedule 1 to the Amending Regulations streamlines and improves the integrity of the release process by providing that the Regulator (the Commissioner as a result of the amendments made by the Treasury Laws Amendment (2018 Measures No. 1) Act 2018) must give a copy of its written determination to both the member who applied, and the trustee of the superannuation entity or RSA provider.

Public consultation was undertaken on the Amending Regulations from 21 February 2018 to 23 March 2018. Stakeholders generally supported the amendments and did not raise any substantial issues.

Details of the Amending Regulations are set out in the Attachment.

The Acts specify no conditions that needed to be satisfied before the power to make the Regulations is exercised.

The amendments made by Schedule 1 to the Amending Regulations apply in relation to applications for the early release of benefits on compassionate grounds made after the commencement of Schedule 1.

Sections 1 to 4 of the Amending Regulations commence on the day after the Amending Regulations are registered. Schedule 1 to the Amending Regulations commence on the later of the day after it is registered and the same time as the commencement of Schedule 1 to the Treasury Laws Amendment (2018 Measures No. 1) Act 2018.

Statement of Compatibility with Human Rights

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

Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018

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 Legislative Instrument improves the integrity of the processes under which benefits are released on compassionate grounds by superannuation entities or retirement savings account providers, to their members. This outcome is achieved by requiring the Regulator who makes a determination that a member meets the conditions for release on compassionate grounds to provide a copy of the determination to the superannuation entity or retirement savings account provider.

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.

ATTACHMENT

Details of the Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018

Section 1 - Name of Regulations

This section provides that the title of the Amending Regulations is the Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018.

Section 2 - Commencement

This section provides that sections 1 to 4 of the Regulations commence the day after the instrument is registered. The section also provides that Schedule 1 to the Regulations commences on the later of the day after it is registered and the same time as Schedule 4 to the Treasury Laws Amendment (2018 Measures No. 1) Act 2018. However, Schedule 1 does not commence at all if that Act does not commence.

The Act is to commence on a date fixed by proclamation, or from 6 months after it received the Royal Assent if no proclamation is made before that time.

Section 3 - Authority

This section provides that the Amending Regulations are made under the RSA Act and SIS Act.

Section 4 - Schedule

This section provides that each instrument that is specified in the Schedule to the instrument is amended or repealed as set out in the applicable in the Schedule, and any other item in the Schedule has effect according to its terms.

1 and 5 of Schedule 1

1 and 5 amend subregulation 4.22A(1) of the RSA Regulations and subregulation 6.19A(1) of the SIS Regulations to clarify that a person may apply to the Regulator for a determination for the early release of that person's superannuation or retirement savings account (RSA) benefits in respect of a specified superannuation entity or RSA provider.

2 and 6 of Schedule 1

Item 2 inserts new subregulations 4.22A(6A) and 4.22A(6B) into the RSA Regulations and item 6 inserts new subregulations 6.19A(6A) and 6.19A(6B) into the SIS Regulations.

Subregulation 4.22A(6A) and subregulation 6.19A(6A) provide that a determination made by a Regulator under regulation 4.22A of the RSA Regulations or regulation 6.19A of the SIS Regulations, respectively, to allow the early release of benefits on compassionate grounds must specify the RSA provider or superannuation entity which can release benefits to the member, and the maximum amount of benefits that may be released.

Subregulation 4.22A(6B) and subregulation 6.19A(6B) provide that a copy of the determination the Regulator makes must be given to the member, and trustee of the superannuation entity or RSA provider.

These provisions require the Commissioner to disclose information that falls within the definition of protected information in section 355-30 of Schedule 1 to the Taxation Administration Act 1953 (the TAA 1953) to trustees of superannuation entities and RSA providers. The general rule in section 355-25 of Schedule 1 to the TAA 1953 makes it an offence for a taxation officer to disclose protected information of an individual. However, such disclosures are permitted when they are done for the purpose of carrying out functions under a taxation law (see section 355-50 of Schedule 1 to the TAA 1953).

Item 4 of Schedule 1

Item 4 amends table item 109 in Schedule 2 to the RSA Regulations, changing the condition of release from 'on a compassionate ground' to 'the Regulator has determined under regulation 6.19A that the amount of benefits in the RSA may be released on a compassionate ground'. This change clarifies the requirements that need to be satisfied for the early release of benefits on a compassionate ground, and reflects the new administrative approach provided by the amendments in item 2 of Schedule 1 to the Amending Regulations that it is the Regulator who makes a determination, and what that determination must specify. Item 4 also amends column 3 in table item 109 to clarify that it is the Regulator, not APRA, that may approve the cashing of benefits on compassionate grounds in respect of approved deposit funds.

Item 8 of Schedule 1

Item 8 amends column 2 of table item 107 in Part 1 of Schedule 1 to the SIS Regulations, changing the condition of release from 'on a compassionate ground' to 'the Regulator has determined under regulation 6.19A that a specified amount of benefits in the regulated superannuation fund may be released on a compassionate ground'. This change clarifies the requirements that need to be satisfied for the early release of benefits on a compassionate ground, and reflects the new administrative approach provided by the amendments in item 6 of Schedule 1 to the Amending Regulations that it is the Regulator who makes a determination, and what that determination must specify.

Item 9 of Schedule 1

Item 9 amends table item 207 in Part 2 of Schedule 1 to the SIS Regulations, changing the condition of release from 'on a compassionate ground' to 'the Regulator has determined under regulation 6.19A that a specified amount of benefits in the approved deposited fund may be released on a compassionate ground'. This change clarifies the requirements that need to be satisfied for the early release of benefits on a compassionate ground in respect of approved deposit funds, and reflects the new administrative approach provided by the amendments in item 6 of Schedule 1 to the Amending Regulations that it is the Regulator who makes a determination, and what that determination must specify. Item 9 also amends column 3 of table item 207 to clarify that it is the Regulator (now the Commissioner of Taxation as a result of the amendments made by the Treasury Laws Amendment (2018 Measures No. 1) Act 2018), not the Australian Prudential Regulatory Authority (APRA), that may approve the cashing of benefits on compassionate grounds in respect of approved deposit funds.

3 and 7 of Schedule 1

3 and 7 provide that the amendments made by Schedule 1 to the Amending Regulations apply in relation to applications for the early release of benefits on compassionate grounds made after the commencement of the Schedule. As noted above, the commencement of Schedule 1 to the Amending Regulations is linked to the commencement of the amendments made by the Treasury Laws Amendment (2018 Measures No. 1) Act 2018.