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2004-2005-2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SUPERANNUATION LEGISLATION AMENDMENT (TRUSTEE
BOARD AND OTHER MEASURES) BILL 2006
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Finance and Administration,
Senator the Hon Nick Minchin)
1
GENERAL OUTLINE
SUPERANNUATION LEGISLATION AMENDMENT (TRUSTEE BOARD AND
OTHER MEASURES) BILL 2006
OUTLINE
The Superannuation Legislation Amendment (Trustee Board and Other Measures) Bill
2006 (the Bill) includes amendments to four Acts. The amendments largely consolidate
and enhance the governance arrangements for the main superannuation schemes for
Australian Government employees, consistent with the governance principles of the
Review of Corporate Governance of Statutory Authorities and Office Holders (the Uhrig
Report).
The affected superannuation schemes are the Commonwealth Superannuation Scheme
(CSS), the Public Sector Superannuation Scheme (PSS) and the Public Sector
Superannuation Accumulation Plan (PSSAP). The CSS Board is currently the trustee of
the CSS Fund and is responsible for the administration of the CSS. The PSS Board is the
trustee of both the PSS Fund and the PSSAP Fund and is responsible for the
administration of the PSS and the PSSAP.
This Bill will amend the:
· Superannuation Act 1976 (the 1976 Act);
· Superannuation Act 1990 (the 1990 Act);
· Superannuation Act 2005 (the 2005 Act); and the
· Superannuation Legislation Amendment (Superannuation Safety and Other
Measures) Act 2006 (the Safety Act) (a Bill for this Act was before the Senate at the
time of writing this Explanatory Memorandum).
The first three Acts provide for the CSS, the PSS and the PSSAP respectively. The
Safety Act will cover matters relating to the operation of the CSS Board and the PSS
Board that are mainly a consequence of the Government's Safety of Superannuation
reforms.
The Bill provides that from 1 July 2006 a single entity will administer the CSS, the PSS
and the PSSAP. All the functions of the CSS Board will be transferred to the PSS Board,
which will be renamed the Australian Reward Investment Alliance (the single Board).
The single Board will have 7 members, giving it the same membership as the CSS Board
and two more than the current PSS Board. The CSS Board will be abolished.
The amendments providing for the single Board will ensure that there is no merger of the
legal and equitable interests in trust property currently held by the CSS and PSS Boards
in trust for the members of those schemes.
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Transitional provisions in the Bill will facilitate the transfer of the assets and liabilities of
the CSS Board to the single Board. These provisions will also ensure that any references
to the CSS Board and the PSS Board in any legislation or relevant documents (for
example any contracts) will be read as references to the single Board.
The Bill will enable the single Board to transfer the assets of the CSS Fund to the
existing PSS Investments Trust (PIT) without creating a situation in which capital gains
tax (CGT) would otherwise be payable. The PIT is a pooled superannuation trust, which
holds the assets of the PSS Fund and the PSSAP Fund.
The Safety Act and this Bill both amend certain provisions of the 1976 and 1990 Acts.
Amendments to the Safety Act are included in the event that the Safety Act comes into
operation after the commencement of the Bill.
The Bill makes minor technical amendments to the 1976 Act to correct a number of
misdirected amendments made to that Act by the Superannuation Legislation
(Commonwealth Employment) Repeal and Amendment Act (No. 1) 2003.
Financial Implications
The Bill has no financial implications.
3
TERMS USED IN THE NOTES ON CLAUSES
"1976 Act" means the Superannuation Act 1976.
"1990 Act" means the Superannuation Act 1990.
"2005 Act" means the Superannuation Act 2005.
"Bill" means the Superannuation Legislation Amendment (Trustee Board and Other
Measures) Bill 2006.
"CSS" means the Commonwealth Superannuation Scheme.
"PSS" means the Public Sector Superannuation Scheme.
"PSSAP" means the Public Sector Superannuation Accumulation Plan.
"PSS Trust Deed" means the Trust Deed established under section 4 of the 1990 Act.
"PSSAP Trust Deed" means the Trust Deed established under section 10 of the
2005 Act.
"Repeal and Amendment Act" means the Superannuation Legislation (Commonwealth
Employment) Repeal and Amendment Act (No. 1) 2003
"Safety Act" means the Superannuation Legislation Amendment (Superannuation Safety
and Other Measures) Act 2006.
"single Board" means the Australian Reward Investment Alliance.
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NOTES ON CLAUSES
Clause 1: Short title
Clause 1 provides for the short title of the Act to be the Superannuation Legislation
Amendment (Trustee Board and Other Measures) Act 2006.
Clause 2: Commencement
2. Clause 2 is the commencement provision for the Bill. The commencement dates for
specific provisions are included in the table in subclause 2(1).
3. Item 1 of the table provides that the Act, except for the Schedules, commences on
the day on which it receives Royal Assent.
4. Items 2 and 4 of the table provide that Parts 1 and 3 of Schedule 1, which contain
the main amendments to consolidate the governance arrangements for the CSS, the PSS
and the PSSAP, and the transitional provisions relating to the single Board, commence on
1 July 2006 to align the introduction of the changes to the CSS and PSS Boards with the
commencement of the next financial year.
5. Item 3 of the table provides that Part 2 of Schedule 1 commences immediately
before the commencement of Schedule 1 to the Safety Act. This item only commences if
Schedule 1 to the Safety Act commences on or after 1 July 2006. See items 64 and 65 of
Schedule 1 to the Bill.
6. Item 5 of the table provides that Schedule 2, which contains minor technical
amendments to the 1976 Act, commences immediately after the commencement of
Parts 1 and 3 of Schedule 1 to the Repeal and Amendment Act. Those provisions
commenced on 1 July 2003.
Clause 3: Schedule(s)
7. Clause 3 provides that each Act that is specified in a Schedule to the Act is amended
or repealed as set out in the applicable items in the Schedule concerned, and any other
item in a Schedule to the Act has effect according to its terms.
SCHEDULE 1 - MAIN AMENDMENTS
Part 1 - Main amendments
8. Part 1 of Schedule 1 includes the amendments to the 1976 Act, the 1990 Act and the
2005 Act to consolidate the governance arrangements for the CSS, the PSS and the
PSSAP.
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Superannuation Act 1976
Items 1 to 6 - Definitions
9. Item 1 of Schedule 1 amends the definition of "Board" in subsection 3(1) of the
1976 Act to refer to the enlarged and renamed PSS Board to be known as the Australian
Reward Investment Alliance. The PSS Board was established under section 20 of the
1990 Act.
10. Item 2 of Schedule 1 amends subsection 3(1) of the 1976 Act to insert a definition
of "CSS" as a consequence of the transfer of the functions of the CSS Board to the single
Board.
11. Item 3 of Schedule 1 amends subsection 3(1) of the 1976 Act to repeal the definition
of "PSS Board" as a consequence of renaming that Board the Australian Reward
Investment Alliance.
12. Item 4 of Schedule 1 amends subsection 3(1) of the 1976 Act to insert a definition
of "PSS Fund" as a consequence of the transfer of the functions of the CSS Board to the
single Board. This is being done for the purposes of consequential amendments required
to sections 248 and 249 of the 1976 Act (see items 34 to 36 of Schedule 1). These
sections provide for the transfer of assets and liabilities from the CSS Board to the
PSS Board on transfer of CSS members to the PSS.
13. Item 5 of Schedule 1 amends subsection 3(1) of the 1976 Act to insert a definition
of "Trustee" to maintain a consistent definition of trustee as a consequence of the transfer
of the functions of the CSS Board to the single Board.
14. Item 6 of Schedule 1 amends section 4B of the 1976 Act to replace the words "the
scheme established under this Act" with "the CSS" as a consequence of the transfer of
the functions of the CSS Board to the single Board.
Item 7 - Administration services
15. Item 7 of Schedule 1 amends section 17 of the 1976 Act to ensure that the
responsibility of the Commissioner for Superannuation to provide administrative services
to the single Board under that Act are limited to providing those services only in respect
of the CSS.
Items 8, 9 and 14 - Headings
16. Item 8 of Schedule 1 amends the heading to Part IIA of the 1976 Act to reference
the single Board, rather than the CSS Board, as consequence of the transfer of the
functions of the CSS Board to the single Board.
17. Item 9 of Schedule 1 repeals the heading to Division 1 of Part IIA of the 1976 Act
as consequence of the transfer of the functions of the CSS Board to the single Board.
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18. Item 14 of Schedule 1 repeals the heading to Division 2 of Part IIA as consequence
of the transfer of the functions of the CSS Board to the single Board.
Items 10 to 13 and 15 to 21 - Transfer of functions and powers of the CSS Board to
the single Board
19. Item 10 of Schedule 1 repeals sections 27A and 27B of the 1976 Act, which provide
for the establishment and incorporation of the CSS Board, as a consequence of the
transfer of the functions of the CSS Board to the single Board.
20. Item 11 of Schedule 1 amends subsection 27C(1) of the 1976 Act to ensure that the
functions of the single Board under that Act are limited to the CSS.
21. Item 12 of Schedule 1 amends subsection 27C(3) of the 1976 Act to ensure that the
investment strategies of the single Board under that Act relate only to the CSS Fund.
22. Item 13 of Schedule 1 amends section 27D of the 1976 Act to limit the general
powers of the single Board under that Act to do all things necessary or convenient to be
done in the performance of its functions to those functions specified under the 1976 Act.
23. Items 15 and 21 of Schedule 1 repeal sections 27E to 27P and 27S to 27T of the
1976 Act as a consequence of the transfer of the functions of the CSS Board to the single
Board. The provisions of those sections, which include trustee appointments,
remuneration of trustees and meetings of trustees, as they relate to the single Board, will
be dealt with under the 1990 Act.
24. Items 16, 18 and 19 of Schedule 1 amend sections 27Q and 27R of the 1976 Act to
omit the words "member of the Board", wherever occurring, and substitute "Trustee" to
use the same terminology as in the 1990 Act, as a consequence of the transfer of the
functions of the CSS Board to the single Board.
25. Item 17 of Schedule 1 amends subsection 27Q(2) of the 1976 Act to limit the power
of the single Board to delegate its power to reconsider decisions to a Reconsideration
Advisory Committee under that Act, to decisions made under the 1976 Act in relation to
the CSS.
26. Item 20 of Schedule 1 amends subsection 27R(3) of the 1976 Act to limit the
indemnification of the Board under that Act to the performance of its functions in relation
to the CSS or the CSS Fund.
Item 22 - Technical Amendment
27. Item 22 of Schedule 1 amends section 40 of the 1976 Act to omit "(1)", which
became unnecessary when the former subsection (2) was repealed.
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Items 23 to 36 - Amendments consequential on the transfer of functions and powers
of the CSS Board to the single Board
28. Items 23 and 24 of Schedule 1 amend section 42 of the 1976 Act to ensure that the
provisions in that section relating to the investment of funds by the single Board relate
only to the investment of the CSS Fund.
29. Item 25 of Schedule 1 amends section 44 of the 1976 Act to omit the words
"member of the Board" and substitute "Trustee" to use the same terminology as in the
1990 Act.
30. Item 26 of Schedule 1 amends subsection 53(3) of the 1976 Act to ensure that the
single Board is only required to pay member contributions received under that Act to the
CSS Fund.
31. Item 27 of Schedule 1 repeals paragraph 54K(a) of the 1976 Act as a consequence
of the repeal of section 27A of that Act (see item 10 above).
32. Items 28 and 29 of Schedule 1 amend sections 125 and 126A to remove references
in those sections to "the superannuation scheme constituted by this Act" and replace
them with a reference to "the CSS".
33. Item 30 of Schedule 1 amends subsection 153AA(1) of the 1976 Act to clarify that
the review of decisions by the single Board under Part XA of that Act covers only
decisions of the single Board made under the 1976 Act or the regulations under that Act
in relation to the CSS.
34. Item 31 of Schedule 1 amends section 161 of the 1976 Act to limit the scope of the
annual report required of the single Board under that section to a report on the
performance of its functions in relation to the CSS and the CSS Fund.
35. Item 32 of Schedule 1 amends section 165 of the 1976 Act to omit the words
"member of the Board" and substitute "Trustee" to use the same terminology as in the
1990 Act.
36. Item 33 of Schedule 1 amends subsection 168(17A) of the 1976 Act to limit the
ability of the single Board to treat an amendment to remedy an incorrect, inadequate or
ineffective provision of the regulations under the 1976 Act as having being made to an
amendment relating to the CSS.
37. Items 34 to 36 of Schedule 1 amend section 248 and replace section 249 of the 1976
Act to recognise that the single Board has responsibility for both the CSS Fund and the
PSS Fund. These sections provide for the transfer of assets and liabilities from the CSS
Board to the PSS Board on transfer of CSS members to the PSS. The amendments will
have the effect of providing for the transfer of the respective assets and liabilities from
the CSS Fund to the PSS Fund.
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Superannuation Act 1990
Items 37 to 43 - Definitions
38. Item 37 of Schedule 1 amends the definition of "Board" in section 3 of the 1990 Act
to provide for the renaming of the PSS Board as the Australian Reward Investment
Alliance.
39. Item 38 of Schedule 1 inserts a definition of "CSS" in section 3 of the 1990 Act to
recognise that the single Board will also be responsible for that Scheme.
40. Item 39 of Schedule 1 repeals the definition of "CSS Board" in section 3 of the
1990 Act to recognise the abolition of the CSS Board.
41. Item 40 of Schedule 1 inserts a definition of "CSS Fund" in section 3 of the
1990 Act to recognise that the single Board will also be responsible for that Fund.
42. Item 41 of Schedule 1 inserts a definition of "PSSAP" in section 3 of the 1990 Act
to recognise that the renamed PSS Board will also be responsible for that Scheme. (The
PSS Board is already responsible for the PSSAP - see the definition of "Board" in
section 4 of the 2005 Act.)
43. Item 42 of Schedule 1 inserts a definition of "PSSAP Fund" in section 3 of the 1990
Act to recognise that the renamed PSS Board will also be responsible for that Fund. (The
PSS Board is already responsible for the PSSAP - see the definition of "Board" in
section 4 of the 2005 Act.)
44. Item 43 of Schedule 1 amends the definition of "PSS Fund" in section 3 of the 1990
Act to recognise the renaming of the PSS Board as the Australian Reward Investment
Alliance.
Item 44 - Amendment of Trust Deed
45. Item 44 of Schedule 1 inserts a new subsection 5(1AA) in the 1990 Act to put
beyond doubt that the Minister will have the power to amend the PSS Trust Deed under
that Act to include provisions relating to the functions and powers of the single Board in
relation to the CSS, the PSS and the PSSAP and those Schemes' respective Funds.
Item 45 - Election to transfer from PSS to CSS
46. Item 45 of Schedule 1 amends subsection 6A(4) of the 1990 Act to recognise the
abolition of the CSS Board in relation to the transfer of a PSS member's accumulated
funded contributions to the CSS Fund on election, under section 6A, to transfer from the
PSS to the CSS.
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Items 46 to 53 - Reconstitution of the PSS Board as the single Board
47. Item 46 of Schedule 1 amends the heading to Part 6 of the 1990 Act to recognise the
renaming of the PSS Board as the Australian Reward Investment Alliance by item 47.
48. Item 47 of Schedule 1 amends section 20 of the 1990 Act to provide for the
renaming of the PSS Board as the Australian Reward Investment Alliance.
49. Item 48 of Schedule 1 adds a note to section 20 of the 1990 Act to notify readers
that the appointment provisions for trustees are provided in the PSS Trust Deed in
accordance with section 23 of that Act.
50. Item 49 of Schedule 1 expands the note to section 22 of the 1990 Act in recognition
of the single Board's responsibilities in relation to the CSS and the CSS Fund. This item
notifies readers that the single Board has functions and powers in relation to the CSS and
the CSS Fund, as found in section 27C of the 1976 Act, in addition to its functions and
powers under the 1990 and 2005 Acts.
51. Item 50 of Schedule 1 amends section 23 of the 1990 Act to provide that the single
Board will consist of seven trustees, including the Chairperson. The PSS Board
consisted of five trustees and the CSS Board consisted of seven trustees, five of whom
were members of the PSS Board. The number of trustees included in the single Board
reflects the Board's responsibilities for three schemes, including the CSS and the CSS
Fund. (See item 74 of Schedule 1 for the transitional provisions for continuing the
current terms of appointment for members of the CSS Board that are not on the PSS
Board.)
52. Items 51 to 53 of Schedule 1 amend sections 27A and 28A of the 1990 Act to omit
the incorrect references to "member of the Board" and substitutes "trustee" in keeping
with the terminology used in other provisions in the 1990 Act.
Items 54 to 59 - Amendments consequential on the reconstitution of the PSS Board
as the single Board
53. Item 54 of Schedule 1 inserts section 33H to the 1990 Act to ensure that as a result
of consolidating the governance arrangements of the CSS, the PSS and the PSSAP into a
single board there is no merger of the legal and equitable interests in trust property held
by the Board in trust for the members of these schemes.
54. Item 55 of Schedule 1 amends subsection 34(1) of the 1990 Act to clarify that the
provision made in that section in relation to the cost of administration of that Act, and the
PSS Trust Deed made under that Act, by the single Board relates only to the PSS and the
PSS Fund.
55. Items 56 to 59 of Schedule 1 amend section 43 of the 1990 Act to limit the
indemnification of a trustee of the single Board, a delegate of the single Board or a
10
member of a Reconsideration Advisory Committee established under the PSS Trust Deed
to the performance of his or her functions in relation to the PSS or the PSS Fund.
Superannuation Act 2005
Items 60 to 63 - Amendments consequential on the reconstitution of the PSS Board
as the single Board
56. Item 60 of Schedule 1 amends the simplified outline of the 2005 Act in section 3 of
that Act to recognise the renaming of the PSS Board as the Australian Reward
Investment Alliance.
57. Item 61 of Schedule 1 expands the note to section 20 of the 2005 Act in recognition
of the single Board's responsibilities in relation to the CSS and the CSS Fund. This item
notifies readers that the Board has functions and powers in relation to the CSS and the
CSS Fund, as found in section 27C of the 1976 Act, in addition to its functions and
powers under the 1990 and 2005 Acts.
58. Item 62 of Schedule 1 amends subsection 37(1) of the 2005 Act to clarify that the
fees that may be charged by the single Board under that provision relate only to fees in
respect of the reconsideration of decisions made under that Act, the regulations under that
Act or the PSSAP Trust Deed in relation to the PSSAP and the PSSAP Fund.
59. Item 63 of Schedule 1 replaces subsection 41(2) of the 2005 Act to clarify that its
provision that a tribunal or other authority reviewing or varying a decision of the single
Board is not bound by the Board's capacity to rely on certain information (see
subsection 41(1)) relates only to a decision made under that Act, the regulations under
that Act or the PSSAP Trust Deed in relation to the PSSAP and the PSSAP Fund.
Part 2 - Amendment of the Superannuation Legislation Amendment
(Superannuation Safety and Other Measures) Act 2006
60. The Safety Act and the Bill both amend certain provisions of the 1976 and
1990 Acts. Part 2 of Schedule 1 amends the Safety Act in the event that the Safety Act
comes into operation after the commencement of the Bill.
Items 64 and 65 - Repeal of Safety Act items
61. Items 1 to 14 of Schedule 1 to the Safety Act amend sections 27E, 27F, 27H, 27M,
27N and 27P of the 1976 Act, all of which are to be repealed by the Bill. Item 64 of
Schedule 1 repeals items 1 to 14 of Schedule 1 to the Safety Act. In accordance with
clause 2 of the Bill (item 3 of the table in subclause 2(1)), item 64 will only have effect if
the Safety Act comes into operation after the commencement of the Bill.
62. Item 65 of Schedule 1 repeals item 25 of Schedule 1 to the Safety Act. Item 25 of
Schedule 1 to the Safety Act amends paragraph 43(1)(d) of the 1990 Act. Item 57 of
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Schedule 1 to the Bill repeals paragraph 43(1)(d) of the 1990 Act and substitutes a new
provision. In accordance with clause 2 of the Bill (item 3 of the table in subclause 2(1)),
item 65 will only have effect if the Safety Act comes into operation after the
commencement of the Bill.
Part 3 - Transitional Provisions
63. The transitional provisions in Part 3 of Schedule 1 to the Bill will facilitate the
transfer of the assets and liabilities of the CSS Board to the single Board (the enlarged
and renamed PSS Board). These provisions will also ensure that any references to the
CSS Board and the PSS Board in any legislation or relevant documents (for example any
contracts) will be read as references to the single Board.
Item 66 - Definitions
64. Subitem 66(1) of Schedule 1 provides definitions of certain terms that are used for
the purposes of Part 3 of Schedule 1 to the Bill.
65. Subitem 66(2) of Schedule 1 provides that expressions used in Part 3 of Schedule 1
to the Bill that are also used in the 1976 Act, the 1990 Act, or the 2005 Act, have the
same meaning as in those Acts (except those expressions defined in
subitem 66(1)).
Items 67 to 70 - Vesting of assets and liabilities
66. Item 67 of Schedule 1 provides that the assets of the CSS Board immediately before
1 July 2006 are to be vested in the single Board from 1 July 2006, without any
conveyance, transfer or assignment. The single Board also becomes the successor in law
in relation to these assets.
67. Item 68 of Schedule 1 provides that the liabilities of the CSS Board immediately
before 1 July 2006 are to be vested in the single Board from 1 July 2006, without any
conveyance, transfer or assignment. The single Board also becomes the successor in law
in relation to these liabilities.
68. The purpose of item 69 of Schedule 1 is to enable transfers of land that is vested in
the single Board under Part 3 of Schedule 1 to be registered and otherwise dealt with in
the way that those matters would ordinarily be dealt with.
69. Subitem 69(1) of Schedule 1 provides for item 69 to apply where land vests in the
single Board under Part 3 of Schedule 1 and there is lodged with a land registration
official a certificate signed by the Chairperson of the single Board identifying the land
and stating the land has become vested in the single Board.
70. Subitem 69(2) of Schedule 1 allows a land registration official to register the land in
the way that transfers are normally registered.
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71. The purpose of item 70 of Schedule 1 is to enable the transfer of assets (other than
land) vested in the single Board under Part 3 of Schedule 1 to be registered and otherwise
dealt with in the way that transfers of assets of those kinds would ordinarily be dealt
with.
72. Subitem 70(1) of Schedule 1 provides for item 70 to apply where an asset other than
land vests in the single Board under Part 3 of Schedule 1 and there is lodged with an
official responsible for keeping an assets register (assets official) a certificate signed by
the Chairperson of the single Board identifying the asset and stating that the asset has
become vested in the single Board.
73. Subitem 70(2) of Schedule 1 allows an assets official to deal with and give effect to
the certificate as if it were a proper instrument of transactions in relation to assets of that
kind and make such entries as are necessary in the assets register relating to assets of that
kind.
Items 71 - Legal proceedings
74. Item 71 of Schedule 1 provides that in all proceedings to which the CSS Board was
a party, which are still pending in any court or tribunal immediately before 1 July 2006,
the single Board is substituted for the CSS Board as the party to those proceedings from 1
July 2006. This item is intended to ensure that all pending proceedings to which the CSS
Board is a party continue, under the name of the single Board, on the abolition of the
CSS Board.
Item 72 - Transfer of CSS Board records to the single Board
75. Item 72 of Schedule 1 provides that the records and documents in the custody of the
CSS Board are to be transferred into the custody of the single Board from 1 July 2006.
This item is intended to ensure that the single Board has the records and documents
necessary in performing its functions in relation to the CSS and the CSS Fund.
Item 73 - Continuity of the single Board
76. Item 73 of Schedule 1 is intended to ensure that the amendments made by Part 1 of
Schedule 1 do not constitute a break in the continued existence of the body that is
renamed by those amendments as the Australian Reward Investment Alliance, including
the continued validity of the appointment of the PSS Board trustees.
Item 74 - Board membership
77. The purpose of item 74 of Schedule 1 is to allow the two members of the CSS Board
that are not trustees on the PSS Board to become part of the renamed and enlarged PSS
Board (the single Board). This item is intended to ensure that a full board of seven
trustees is able to take responsibility of the CSS, the PSS and the PSSAP when the
CSS Board is abolished on 1 July 2006.
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78. Subitem 74(1) of Schedule 1 continues the appointment of the employer
representative to the CSS Board, referred to in subsection 27F(2) of the 1976 Act (prior
to the repeal of that subsection by the Bill), so that the person is taken to be duly
appointed to the single Board for the remainder of their term of appointment under the
same terms and conditions as applied to them as a member of the CSS Board.
79. Subitem 74(2) of Schedule 1 continues the appointment of the employee
representative to the CSS Board, referred to in subsection 27F(3) of the 1976 Act (prior
to the repeal of that subsection by the Bill), so that the person is taken to be duly
appointed to the single Board for the remainder of their term of appointment under the
same terms and conditions as applied to them as a member of the CSS Board.
80. Subitems 74(3) and 74(4) of Schedule 1 clarify that the terms and conditions of the
appointments under subitems 74(1) and 74(2) may be varied after the commencement of
Part 3 of Schedule 1 on 1 July 2006.
Items 75 to 78 - References to the CSS Board
81. Item 75 of Schedule 1 provides for references to the CSS Board in Acts or
instruments that are in force prior to 1 July 2006 to have effect as if the reference were to
the single Board. This item is intended to ensure that all relevant legislation and
instruments continue to operate appropriately upon the transfer of responsibilities and
functions of the CSS Board to the single Board on 1 July 2006.
82. Subitem 76(1) of Schedule 1 provides that, for the purposes of the operation of any
law of the Commonwealth after 1 July 2006, any thing done by, or in relation to, the
CSS Board before that date is taken to be done by, or in relation to, the single Board.
This item is intended to ensure that any thing done by, or in relation to, the CSS Board
does not lapse after the transfer of the CSS Board's responsibilities and functions to the
single Board on 1 July 2006.
83. Subitem 76(2) of Schedule 1 provides that things taken to be done by the single
Board under subitem 76(1), that are done under a provision that is amended by the Bill,
continue in effect from 1 July 2006 without altering the time when the thing was done.
84. Subitem 76(3) of Schedule 1 clarifies that, for the purposes of this item, doing a
thing includes making an instrument.
85. Item 77 of Schedule 1 continues in force any delegations made by the CSS Board,
the PSS Board or the Minister under the 1976 or 1990 Acts that are in force immediately
before 1 July 2006. This item is intended to ensure that the abolition of the CSS Board,
the renaming of the PSS Board and amendments to the 1976 Act and 1990 Act do not
affect the operation of delegations made under the relevant provisions.
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86. The purpose of item 78 of Schedule 1 is to ensure that any reports (whether financial
statements or otherwise) that were required of the CSS Board prior to its abolition will
still be provided by the single Board.
87. Subitem 78(1) of Schedule 1 provides that if, immediately before 1 July 2006, a law
required the CSS Board to provide a report (including an annual report) for a period, and
the period ends after 1 July 2006, then the single Board must provide the report for the
period prior to 1 July 2006.
88. Subitem 78(2) of Schedule 1 provides that if the single Board is required to provide
a report for a part of a period, under subitem 78(1), and the single Board is also required
to provide a similar report for the remainder of the period, then it may meet the
requirements in a single report for the whole period.
89. Subitem 78(3) of Schedule 1 provides that if a law required the CSS Board to
provide a report for a period that ended before 1 July 2006, and the report was not
provided by 1 July 2006, then the single Board must provide the required report.
Item 79 - Capital Gains Tax roll-over
90. Item 79 of Schedule 1 provides a capital gains tax (CGT) roll-over (i.e. effective
deferral of any CGT liability) for the transfer of CSS Fund assets by the single Board to
the trustee of a pooled superannuation trust known as the PSS Investments Trust. The
roll-over applies automatically rather than by election.
91. The provision of the CGT roll-over reflects the essentially involuntary nature of the
transaction.
92. Item 79 modifies the application of the Income Tax Assessment Act 1997 (ITAA
1997) but without changing the text of that Act.
93. Section 27C of the 1976 Act provides for the functions and powers of the single
Board in relation to the CSS and includes the power to operate a pooled superannuation
trust for the purposes of managing the assets of the CSS Fund.
94. Subitem 79(1) of Schedule 1 provides that the object of this item is that the CGT
roll-over facilitates the single Board operating a pooled superannuation trust, known as
the PSS Investments Trust, that is used for investing the assets of the CSS Fund.
15
95. Subitem 79(2) of Schedule 1 provides that the roll-over applies if all of the
following conditions are met.
· One or more CGT events (i.e. CGT taxing-points) happen because the single Board as
trustee of the CSS Fund ceases to hold all CGT assets of that fund.
· Because of the cessation, CGT assets that, together, are identical to all of the CGT
assets of the CSS Fund just before the CGT events happen start to be held by the
trustee of the PSS Investments Trust.
· The cessation is part of a scheme under which CGT assets of the CSS Fund are
replaced with units in the PSS Investments Trust.
2. Bracketed words in paragraph 79(2)(b) ensure that the identical assets need not have
been assets of the CSS Fund just before the CGT event. An example of where the
bracketed words would be relevant is where the transferor entity owns units in a unit trust
as investments and has them cancelled at its request followed by the issue of identical
units to the transferee entity.
3. A statutory note at the foot of subitem 79(2) explains that the transferee trustee may
be the single Board and refers to subsection 960-100(3) of the ITAA 1997. Subsection
960-100(3) provides that a legal person can have a number of different capacities in
which the person does things and that, in each of those capacities, the person is taken to
be a different entity for the purposes of the ITAA 1997.
4. Subitem 79(3) of Schedule 1 provides that the effect of the CGT roll-over is that the
capital gain or capital loss that would otherwise be recognised when the transfer of assets
by the single Board as trustee of the CSS Fund occurs is disregarded. The effect of this
provision is that the recognition of the accrued capital gain or capital loss is deferred until
later disposal (or other CGT event) of the assets by the trustee of the PSS Investments
Trust.
5. Subitem 79(4) of Schedule 1 provides that, for the transferee trustee, the first
element (i.e. acquisition cost) of the CGT cost base of each of the identical assets the
transferee trustee holds is the cost base of the corresponding asset for the single Board as
trustee of the CSS Fund at the time of the relevant CGT event. Cost base is relevant for
calculating a capital gain.
6. Subitem 79(5) of Schedule 1 provides that, for the transferee trustee, the first
element (i.e. acquisition cost) of the CGT reduced cost base of each of the identical assets
the transferee trustee holds is the reduced cost base of the corresponding asset for the
single Board as trustee of the CSS Fund at the time of the relevant CGT event. Reduced
cost base is relevant for calculating a capital loss.
7. The roll-over does not have a provision relating to keeping pre-CGT status of CGT
assets. An asset has pre-CGT status if acquired before 20 September 1985. There is no
16
need for such a provision as section 306 of the Income Tax Assessment Act 1936 treats
the trustee of a complying superannuation entity as having acquired on 30 June 1988 any
assets it already owned on that day.
8. Subitem 79(6) of Schedule 1 provides that, for the purposes of the ITAA 1997, a
roll-over that item 79 covers is treated as a same-asset roll-over. The significance of this
is that subsection 115-30(1), table item 1 of the ITAA 1997 ensures that, for the purpose
of determining whether the transferee pooled superannuation trust has owned the CGT
assets for at least 12 months to be eligible for the one-third CGT discount available to
complying superannuation entities (including pooled superannuation trusts), the period
the former CSS Board as trustee of the CSS Fund owned the asset counts towards the
12 months. Put more simply, the CGT discount 12-months clock is not reset.
9. For other purposes, the transferee pooled superannuation trust is still treated as
acquiring the asset on the date of transfer. This is consistent with the approach taken in
other CGT roll-overs. For example, the transferee pooled superannuation trust is not
eligible to claim CGT indexation to 30 September 1999 instead of the one-third CGT
discount. This is because the transferee pooled superannuation trust did not acquire the
assets at or before 11.45 am, 21 September 1999.
10. Subitem 79(7) of Schedule 1 provides that an expression used both in item 79 and in
the ITAA 1997 has the same meaning as in that Act. Examples of these expressions are
CGT event, CGT asset, pooled superannuation trust and same-asset roll-over.
11. The amendments do not provide a roll-over for exchange of members' interests
because it is already provided for in existing CGT provisions. Section 118-305 of the
ITAA 1997 provides an exemption for certain capital gains or capital losses in relation to
members' interests in a superannuation fund.
Items 80 and 81 - References to the PSS Board and the CSS Board
12. Item 80 of Schedule 1 provides for references to the PSS Board in Acts or
instruments that are in force before 1 July 2006 to have effect as if the reference were to
the single Board. This item is intended to ensure that all relevant legislation and
instruments continue to operate appropriately upon the renaming of the PSS Board as the
Australian Reward Investment Alliance.
13. Item 81 of Schedule 1 allows provisions in instruments that amend a reference to
the PSS Board or CSS Board in any other instrument, if they are made within 12 months
from 1 July 2006, to have effect from 1 July 2006 or a later date that is prior to the
making of the instrument. This item is intended to provide for the updating of provisions
in instruments that refer to the abolished CSS Board and renamed PSS Board. The
retrospective application of instruments made in accordance with the authority included
in this item will not disadvantage the rights of any person or impose any liabilities on any
person.
17
Item 82 - Constitutional safety net in relation to acquisition of property
14. The purpose of item 82 of Schedule 1 is to ensure that there is no acquisition of
property by the Commonwealth other than on just terms, as required by section 51(xxxi)
of the Constitution.
15. Subitem 82(1) of Schedule 1 provides for compensation to be paid to a person if the
operation of Part 3 of Schedule 1 would result in the acquisition of property from a
person otherwise than on just terms.
16. Subitem 82(2) of Schedule 1 provides that a person may institute proceedings in a
court of competent jurisdiction where that person and the Commonwealth disagree on the
amount of compensation payable for the purposes of subitem 82(1).
Item 83 - Authenticity of certificates
17. Item 83 of Schedule 1 provides for a document that appears to be a certificate made
or issued under Part 3 of Schedule 1 (see items 69 and 70 above) to be taken to be such a
certificate and properly given, unless the contrary is established.
Item 84 - Regulations
18. Item 84 of Schedule 1 allows the Governor-General to make regulations for the
purposes of Part 3 of Schedule 1. This item is intended to ensure that any matters
required to be prescribed for the appropriate operation of the provisions of Part 3 of
Schedule 1 may be prescribed in regulations. These regulations can be made with
retrospective effect in accordance with item 81 above.
SCHEDULE 2 - TECHNICAL AMENDMENTS
Superannuation Act 1976
19. The Superannuation Legislation (Commonwealth Employment) Repeal and
Amendment Act (No. 1) 2003 made extensive changes to the 1976 Act. The purpose of
Schedule 2 is to make technical amendments to the 1976 Act to correct a number of
misdirected amendments that were made in the context of those extensive changes.
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