Explanatory Statement

Issued by authority of the Assistant Treasurer

Treasury Laws Amendment (2016 Measures No. 1) Regulation 2016

Australian Securities and Investments Commission Act 2001

Competition and Consumer Act 2010

Corporations Act 2001

Income Tax Assessment Act 1997

Retirement Savings Accounts Act 1997

Superannuation Industry (Supervision) Act 1993

Subsection 251(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act), section 172 of the Competition and Consumer Act 2010 (CCA), subsection 1364(1) of the Corporations Act 2001 (Corporations Act), subsection 909 1(1) of the Income Tax Assessment Act 1997 (ITAA 1997), section 200 of the Retirement Savings Accounts Act 1997 and section 353 of the Superannuation Industry (Supervision) Act 1993 (Authorising Acts) each provide that the Governor-General may make regulations prescribing matters required or permitted by each of the Authorising Acts to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to each of the Authorising Acts.

The Treasury Laws Amendment (2016 Measures No. 1) Regulation 2016 (Regulation) amends various regulations as detailed below.

Schedule 1 to the Regulation repeals provisions in the Income Tax Assessment Regulations 1997 relating to the 'cents per kilometre' method used for calculating a deduction for car expenses for an income year.

Motor vehicle expenses incurred in the course of deriving assessable income or carrying on a business are tax deductible under the ITAA 1997. Division 28 of the ITAA 1997 outlines the rules for calculating deductions for car expenses.

On 30 November 2015 the Governor-General provided Royal Assent to Tax and Superannuation Laws (2015 Measures No. 5) Bill 2015 which reformed the cents per kilometre deduction rules in the ITAA 1997. Under the new law, the Commissioner of Taxation will now set the rate of cents per kilometre deductions for the purposes of Division 28 of the ITAA 1997.

No consultation was undertaken on Schedule 1 as the amendments are minor and technical in nature.

Schedule 2 to the Regulation makes various amendments to the Corporations Regulations 2001, the Competition and Consumer Regulations 2010 and the Australian Securities and Investments Commission Regulations 2001 principally to prescribe new professional standards schemes at the Commonwealth level and amend names and dates of existing schemes.

Professional Standards legislation in each state and territory operates, where applicable, to limit the civil liability of professionals and others while still maintaining appropriate protection for consumers of professional services through such measures as compulsory insurance cover and complaints procedures.

Provision is made in the ASIC Act, the Corporations Act, and the CCA for the prescription of State and Territory schemes. The effect of prescription is to limit occupational liability under certain federal legislation in the same way it is limited under relevant state legislation.

The Regulation amends the Competition and Consumer Regulations 2010, to prescribe the following professional standards schemes:

the Australian Computer Society (ACS) Professional Standards Scheme; and
the Royal Institution of Chartered Surveyors (RICS) Valuers Ltd Scheme.

In addition, the Regulation reflects the update to the name of the Institute of Chartered Accountants in Australia Professional Standards Scheme to the newly named Chartered Accountants Australia and New Zealand Professional Standards Scheme. It also clarifies the prescription date of the CPA Australia Limited Professional Standards Scheme and the NSW Bar Association Scheme in the ASIC and Corporations Regulations.

The prescription of the schemes has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 18 of the Australian Consumer Law (Schedule 2 to the CCA) in the same way as occupational liability is limited under State and Territory laws.

Section 18 of the Australian Consumer Law (Schedule 2 to the CCA) prohibits misleading and deceptive conduct by persons in trade or commerce.

The Regulation limits the occupational liability of members of the ACS scheme and the RICS Valuers Ltd Scheme in relation to the CCA only. The additional proposed amendments are minor changes to reflect new names and dates of existing schemes already prescribed in the Corporations Act, the CCA and the ASIC Act.

The Commonwealth has not consulted on this measure. The Professional Standards Council seeks the opinion of independent actuarial consultants and calls for public comment on professional standards schemes via public notification in major newspapers circulating throughout the relevant jurisdictions prior to approving schemes. Further consultation was not considered necessary.

Schedule 3 to the Regulation amends the Retirement Savings Accounts Regulations 1997 (RSAR) and the Superannuation Industry (Supervision) Regulations 1994 (SISR) to recognise online and electronic interactions between superannuation providers and retirement savings account (RSA) holders or fund members for the purposes of identifying lost RSA holders and lost members.

The RSAR and the SISR set out the circumstances when an RSA holder or a member of a superannuation fund is taken to be a 'lost RSA holder' or 'lost member'. These circumstances include when an RSA holder or fund member is uncontactable.

The Regulation amends the meaning of 'lost RSA holder' and 'lost member' in the RSAR and the SISR to recognise online and electronic interactions between superannuation providers and RSA holders or fund members.

Public consultation on a draft of Schedule 3 was undertaken between 29 September and 20 October 2015. Twelve submissions were received.

Most submissions supported the measure included in this Regulation. Minor concerns raised in relation to this measure have been addressed in this Regulation.

The Government has decided not to proceed at this time with two other measures originally in the draft of Schedule 3, including because of concerns raised during consultation.

Details of the Regulation, including a Statement of Compatibility with Human Rights, are set out in the Attachment.

The Authorising Acts do not specify any conditions that need to be met before the power to make the Regulation can be exercised.

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

The Regulation commences on the day after registration.

ATTACHMENT

Details of the Treasury Laws Amendment (2016 Measures No. 1) Regulation 2016

Section 1 - Name of Regulation

This section provides that the title of the Regulation is the Treasury Laws Amendment (2016 Measures No. 1) Regulation 2016 (Regulation).

Section 2 - Commencement

This section provides that the Regulation commences the day after it is registered.

Section 3 - Authority

This section provides that the Regulation is made under the Australian Securities and Investments Commission Act 2001 (ASIC Act), the Competition and Consumer Act 2010 (CCA), the Corporations Act 2001 (Corporations Act), the Income Tax Assessment Act 1997 (ITAA 1997), the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 (Authorising Acts)

Section 4 - Schedule

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

Schedule 1 - Car expense deductions

Schedule 1 to the Regulation repeals provisions in the Income Tax Assessment Regulations 1997 relating to the 'cents per kilometre' method used for calculating a deduction for car expenses for an income year.

Motor vehicle expenses incurred in the course of deriving assessable income or carrying on a business are tax deductible under the ITAA 1997. Division 28 of the ITAA 1997 outlines the rules for calculating deductions for car expenses.

On 30 November 2015 the Governor-General provided Royal Assent to Tax and Superannuation Laws (2015 Measures No. 5) Bill 2015 which reformed the cents per kilometre deduction rules in the ITAA 1997. Under the new law, the Commissioner of Taxation will now set the rate of cents per kilometre deductions for the purposes of Division 28 of the ITAA 1997.

Schedule 2 - Profession standards schemes

The overarching aim of professional standards schemes and liability caps is to maintain affordable levels of professional indemnity insurance, as well as to improve professional standards and consumer protection.

Professionals who are members of approved schemes are provided with an incentive (capped liability) to lift their standards and better manage their risks through a requirement to hold adequate levels of insurance and undertake risk management practices and professional development. Consumers are intended to benefit from schemes because they put downward pressure on insurance premiums, by limiting the liability of professionals and their insurers and, in the event of a claim, the prospects of recovery may be enhanced because the professional is required to hold insurance at levels that they otherwise may not have taken out in the absence of a scheme.

Generally, civil liability claims against professionals are governed by State and Territory law. All States and Territories have specific legislation which governs the prescription of professional standards schemes.

Each State and Territory has established a council to assess and approve State and Territory scheme applications. Each council has common membership and sits simultaneously; subsequently the councils are identified as one entity, the 'Professional Standards Council' (the Council). Occupational associations, for example barristers, make an application to the Council for approval of schemes. Once approved by the Council the schemes are published by the relevant State in their Government Gazette.

The Regulation amends the Competition and Consumer Regulations 2010, to amend the following professional standards schemes:

Adding the Royal Institution of Chartered Surveyors Valuers Ltd Scheme;
Adding the new Australian Computer Society Scheme;
Changing the name from the Institute of Chartered Accountants in Australia to the Chartered Accountants Australia and New Zealand; and
Clarifying the prescription date of the NSW Bar Association Scheme.

The Regulation has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 18 of the Australian Consumer Law (schedule 2 to the CCA).

Section 18 of the Australian Consumer Law (Schedule 2 to the CCA) prohibits misleading and deceptive conduct by persons in trade or commerce.

The Regulation also amends the Australian Securities and Investments Commission Regulations 2001 and Corporations Regulations 2001 to reflect updates to the dates and names of existing schemes:

The change of name from the Institute of Chartered Accountants in Australia to the Chartered Accountants Australia and New Zealand; and
Clarifying the prescription date of the CPA Australia Limited Professional Standards Scheme and the NSW Bar Association Scheme.

The Regulation has the effect of limiting the occupational liability of members of the schemes relating to an action for contravention of section 12DA of the ASIC Act which deals with misleading or deceptive conduct in relation to financial services and section 1041H of the Corporations Act which deals with market misconduct and other misconduct relating to financial products and financial services.

Schedule 3 - Lost members

Schedule 3 to the Regulation amends the Retirement Savings Accounts Regulations 1997 (RSAR) and the Superannuation Industry (Supervision) Regulations 1994 (SISR) to amend the definitions of 'lost RSA holder' and 'lost member' respectively to recognise online and electronic interactions between superannuation providers and retirement savings account (RSA) holders or fund members.

Regulation 1.06 of the RSAR and regulation 1.03A of the SISR set out the meanings of 'lost RSA holder' and 'lost member'. Both terms have similar meanings and set out the circumstances when an RSA holder or a member of a superannuation fund is taken to be lost. These circumstances include when an RSA holder or fund member is 'uncontactable'.

An RSA holder or fund member is 'uncontactable' if:

the RSA provider or superannuation fund has never had an address for the RSA holder or fund member; or
a written communication has been sent by RSA provider or superannuation fund to the RSA holder or fund member's last known address and returned unclaimed; and
the RSA provider or superannuation fund has not received a contribution or rollover in respect of the RSA holder or member within the last 12 months.

Items 1 to 4 and 6 to 9 of the Regulation amend the circumstances when an RSA holder or fund member is 'uncontactable', and therefore a lost RSA holder or lost member.

Items 1 and 6 of the Regulation amend sub-subparagraph 1.06(1)(a)(i)(A) of the RSAR and sub-subparagraph 1.03A(1)(a)(i)(A) of the SISR so that where an RSA provider or superannuation fund has never had an address for an RSA holder or fund member this specifically includes an electronic address (being an email address).

Items 2 and 7 of the Regulation amend sub-subparagraph 1.06(1)(a)(i)(B) of the RSAR and sub-subparagraph 1.03A(1)(a)(i)(B) of the SISR so that an RSA holder or fund member is uncontactable if the RSA provider or superannuation fund has sent one or more written communications to the holder or member's last known address (or addresses) and the provider or fund reasonably believes that the holder or member cannot be contacted at that address (or addresses). For example, where a fund sends an email to a member that is subsequently returned as undeliverable because the member's inbox is temporarily full, the fund could not justify the reasonable belief test without a further attempt to contact the member via their email address or another known address at a later date.

Items 3 and 8 of the Regulation expand subparagraph 1.06(1)(a) of the RSAR and subparagraph 1.03A(1)(a) of the SISR to recognise online and electronic interactions between superannuation providers and RSA holders or fund members. The expanded criteria for an 'uncontactable' lost RSA holder or fund member include that the RSA holder or fund member has not contacted the RSA provider or superannuation fund by written communication or otherwise, and the holder or member has not accessed details of their account from any electronic facility provided by the provider or fund, within the last 12 months. For example, a member is not uncontactable if they have used their fund's website to access their account or update their contact details within the last 12 months of their membership of the fund.

Items 4 and 9 of the Regulation clarify that, for the purposes of regulation 1.06 of the RSAR and regulation 1.03A of the SISR, written communication includes a written communication by either non-electronic or electronic means. This makes clear it could include a written communication sent by the provider or fund to an electronic address (being an email address) for the RSA holder or fund member for the purposes of determining whether a holder or member is 'uncontactable'.

The Regulation commences on the day after registration.

Items 5 and 10 of the Regulation are the application provisions.

Items 1 to 4 and 6 to 9 apply on and after 1 July 2016. Account balances of lost RSA holders or lost members meeting the new definition on subsequent unclaimed money days will need to be reported, and in the case of small lost accounts or unidentifiable lost accounts also paid, to the Commissioner of Taxation (unless the lost RSA holder or lost member is found). From the 2016-17 financial year information for the purposes of the lost members register will be collected under section 390-5 of the Taxation Administration Act 1953.

Statement of Compatibility with Human Rights

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

Treasury Laws Amendment (2016 Measures No. 1) Regulation 2016

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 Regulation is to:

repeals provisions in the Income Tax Assessment Regulations 1997 relating to the 'cents per kilometre' method used for calculating a deduction for car expenses for an income year;
prescribe new professional standards schemes at the Commonwealth level and amend the dates and names of existing schemes; and
amend the definitions of 'lost RSA holder' and 'lost member' respectively to recognise online and electronic interactions between superannuation providers and retirement savings account (RSA) holders or fund members.

Human rights implications

The measures in this Legislative Instrument do not engage any of the applicable human rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights because, to the extent that it may limit those rights, it does so where justified by legitimate reasons and only to the extent required by those reasons as well as subject to a range of appropriate protections.