The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 (Bill) was introduced in the House of Representatives on 24 May 2018 proposing various changes to the superannuation system including to:
- ensure compliance with the payment of mandatory employee entitlements
- prevent inadvertent breaches of the concessional contributions cap and
- clarify the rules around the valuation of super fund balances and non-arm’s length income.
Under the Bill (and as indicated by the Explanatory Memorandum):
- Schedule 1 provides for a one-off 12-month amnesty to encourage employers to self-correct historical superannuation guarantee non-compliance.
- Schedule 2 amends the Superannuation Guarantee (Administration) Act 1992 (Cth) to allow individuals to avoid unintentionally breaching their concessional contributions cap when they receive superannuation contributions from multiple employers. Under this measure, an employee may apply to the Commissioner for an employer shortfall exemption certificate which prevents the employer from having a superannuation guarantee shortfall if they do not make superannuation guarantee contributions for a period. This effectively allows the employee to opt out of the superannuation guarantee regime in respect of an employer, and negotiate with the employer to receive additional cash or non-cash remuneration.
- Schedule 3 clarifies the non-arm’s length income rules for superannuation entities to ensure that they apply in situations where a superannuation fund enters into schemes involving non-arm’s length expenditure incurred in gaining or producing income. The result of such a scheme would be to inflate the superannuation fund’s earnings, which is the type of arrangement that the rules are designed to target.
- Schedule 4 amends the total superannuation balance rules to ensure that, in certain circumstances involving limited recourse borrowing arrangements, the total value of a superannuation fund’s assets is taken into account in working out individual members’ total superannuation balances. As a result of the change, an individual member’s total superannuation balance may be increased by the share of the outstanding balance of a limited recourse borrowing arrangement, commenced after 1 July 2018, related to the assets that support their superannuation interests. However, this only applies to members who have satisfied a condition of release with a nil cashing restriction, or those whose interests are supported by assets that are subject to a limited recourse borrowing arrangement between the superannuation fund and its associate.