The Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO) today confirmed that the investment of superannuation fund monies in particular schemes is inconsistent with the `sole purpose test' for regulated funds. The particular schemes that fail the test offer non-superannuation shareholder benefits and the cost of the scheme is borne by the fund.

APRA and the ATO contend that the provision of benefits (eg, shareholder discount cards) to members, if some or all of the cost (eg, membership fees or service charges) is met, directly or indirectly, out of the income of the fund is not consistent with the 'sole purpose test' provisions of s.62 of the SIS Act.

The object of the sole purpose test is to ensure that regulated superannuation funds are maintained for the purpose of providing benefits to persons upon their retirement, or their dependants in the case of a persons death before retirement. The trustee of a regulated superannuation fund must comply with the sole purpose test to attract the taxation concessions available to a complying superannuation fund.

A person who contravenes the test is guilty of an offence and significant penalties may apply. Remedies available to the regulator include directing a trustee to cease accepting employer contributions. APRA also may seek and if necessary enforce written undertakings.

Failure to comply with the `sole purpose test exposes the fund to the risk of becoming non-complying for taxation and Superannuation Guarantee purposes.

Further information of APRA and the ATOs interpretation of the `sole purpose test is available on the APRA Website at www.apra.gov.au or by contacting the APRA or the ATO directly.

For further information:	Media Enquiries only:
APRA Call Centre	David Van
1300 131 060	APRA - Public Affairs
	02 9210 3143
	0418 649 474