Amendments to the Superannuation Industry (Supervision) Act 1993 (SIS) transfer the regulation of self-managed superannuation funds (SMSFs) with fewer than five members from the Australian Prudential Regulation Authority (APRA) to the Australian Taxation Office (ATO).
The primary effect of the new legislation is that SMSFs will not be subject to any prudential regulation since all members are fund trustees and able to protect their own interests.
To qualify as SMSFs, these funds, previously known as excluded funds, must have fewer than five members, all of whom must be trustees or directors of a body corporate trustee. No member may be an employee of another member unless related. Special rules apply for single-member funds.
Superannuation funds with fewer than five members that do not meet these criteria must appoint a approved trustee under SIS. These small funds will be known as small APRA funds (SAFs) and will continue to be regulated by APRA.
Funds have a transition period in which to consider their structure and make necessary changes to qualify as SMSFs or SAFs. All changes must be in place by 31 March 2000. Where trustees are in any doubt about the appropriate structure, they should consult their financial adviser.
At the end of the transition period, APRA will send a notice to all funds with fewer than five members to ask how the fund has been structured. Trustees will be required to respond to the notice within 21 days. On the basis of the information supplied, APRA will then transfer the records of identified SMSFs to the ATO.
According to APRA Chief Executive Officer Graeme Thompson, "APRA and ATO have been working together closely to ensure that the transfer of responsibilities takes place as smoothly as possible. We urge fund trustees to make a prompt decision on the future status of their fund so the necessary arrangements can be made before the end of March 2000."
More information on SMSFs and SAFs can be found on the APRA web site (www.apra.gov.au) or ATOs superannuation web site (www.ato.gov.au/super).
For further information contact:
Gloria Peterson
02 9210 3385
