Explanatory Memorandum(Circulated by authority of the Assistant Treasurer, Senator the Hon Rod Kemp)
This Bill gives effect to changes to the investment rules for superannuation funds announced in the 1998-99 Budget and to subsequent announcements by the Government on this issue.
The Bill contains one schedule containing amendments to the Superannuation Industry (Supervision) Act 1993. The amendments relate to Part 8 of the Act, which limits the extent to which a superannuation fund can invest in in-house assets, and section 66, which prohibits the acquisition of assets from members of a fund and their relatives.
The changes made by this Bill include:
- Providing a definition of a related party of a superannuation fund, which includes a member of a fund, a Part 8 associate of a member of a fund, a standard employer-sponsor of a fund, and a Part 8 associate of a standard employer-sponsor of a fund.
- Providing definitions of a Part 8 associate and of a related trust.
- Amending the coverage of the in-house asset rules so that they include investments in, loans to, and leases and lease arrangements with, a related party of the fund. In-house investments will also include investments in a related trust.
- Providing that the in-house asset rules do not cover business real property leased by a superannuation fund with less than 5 members, or investments in widely held unit trusts.
- Providing transitional arrangements for the changes to the in-house asset provisions.
- Strengthening the provision that applies where an investment is not an in-house asset, but has the effect of achieving an investment in an in-house asset.
- Amending section 66, which prohibits the acquisition of assets from members and relatives, so that it applies to acquisitions from all related parties, with specified exceptions.
- Allowing superannuation funds with fewer than 5 members to use up to 100percent of their assets to purchase business real property.
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