Commonwealth Numbered Regulations

1993 No. 149 OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT) - REG 3

3.1 After regulation 23P, insert:

"PART 3B-PRE-1 JULY 1988 FUNDING CREDITS AND DEBITS Interpretation

"23PA. In this Part, unless the contrary intention appears:
'PJFC', in relation to a superannuation fund, means an amount specified in a
notice given to the fund by the Commissioner under subsection 15D (2) of the
Act;
'pre-1 July 88 funding amount' has the meaning given by regulation 23PB;

"pre-1 July 88 funding credit balance' has the meaning given by subsection
275A (1) of the Tax Act;
'prescribed event' has the meaning given by regulation 23PJ;
'reviewable decision' means a decision of the Commissioner:

   (a)  not to approve an application under regulation 23PL or 23PM; or

   (b)  to revoke an approval under regulation 23PN; or

   (c)  after reconsideration under regulation 23PQ, to confirm or vary a
        decision referred to in paragraph (a) or (b) ;
'shortfall-in-assets amount' means an amount determined by an actuary in
accordance with regulation 23PC. Pre-1 July 88 funding amounts

"23PB. (1) In this regulation:
'late payment amount', in relation to a superannuation fund, means an amount
(other than an amount representing a contribution that was payable or not
payable at the discretion of an employer-contributor in respect of the fund)
representing contributions to the fund that were unpaid as at 30 June 1988,
being contributions that an employer-contributor in respect of the fund was
obliged as at 30 June 1988 to pay in accordance with:

   (a)  except if paragraph (b) applies, the governing rules of the fund then
        in force; or

   (b)  in the case of an amount representing contributions in respect of a
        member of a defined benefit superannuation fund who is an associate
        (within the meaning of Part IIIA of the Act) of an
        employer-contributor-the determination of an actuary; or

   (c)  a prescribed agreement or award.

"(2) Subject to subregulation (3), the following amounts are to be treated as
pre-1 July 88 funding amounts for the purposes of paragraph 15D (2) (a) of the
Act:

   (a)  a late payment amount;

   (b)  a shortfall-in-assets amount.

"(3) If the pre-1 July 88 funding amount of a defined benefit superannuation
fund:

   (a)  includes a late payment amount; and

   (b)  that late payment amount is sufficient to fund the liabilities of the
        fund in relation to accrued benefits of the members of the fund; the
        pre-1 July 88 funding amount must not include a shortfall-in-assets
        amount. Shortfall-in-assets amount-calculation

"23PC. (1) The shortfall-in-assets amount in respect of a superannuation fund
is the amount determined by an actuary as the lesser of the amounts calculated
in accordance with the following formulas:
net
                                actuarially            market value

           value A of           determined             of assets

  (a)  accrued benefits     -   value of       X       actuarially

                               fund assets             determined

value of
fund assets (Note: A shortfall-in-assets amount is the amount of any
deficiency in a superannuation fund as at 30 June 1988, other than a
deficiency that is the result of contributions that are due, but have not been
paid, to the fund.)

"(2) In subregulation (1) , in relation to a superannuation fund:
'actuarially determined value of fund assets' means the value of the assets of
the fund as at 30 June 1988, including any late payment amount, that is
determined by an actuary using a method that the actuary certifies:

   (a)  is consistent with the method used in the last actuarial investigation
        of the fund that was completed before 25 May 1988; and

   (b)  as determining a value that is comparable to the value of the assets
        determined in that actuarial investigation;
'net market value of fund assets' means the amount that, having regard to
matters specified in regulation 23PD, could reasonably be estimated to be
obtained from disposal of the assets of the fund, and includes any late
payment amount;
'value A of accrued benefits' has the meaning given by regulation 23PE;
'value B of accrued benefits' has the meaning given by regulation 23PF.

"(3) For the purposes of this regulation:

   (a)  an alteration made after 25 May 1988 to the governing rules of a
        superannuation fund that relates to benefits payable to members of the
        fund is to be disregarded unless the alteration is a prescribed event;
        and

   (b)  in the case of the calculation of a shortfall-in-assets amount in
        respect of a member of a superannuation fund who is an associate
        (within the meaning of Part IIIA of the Act) of an employer, any
        amount of benefits in respect of the member that is attributable to
        the exercise of discretion by, or on behalf of, the trustees of the
        fund is to be disregarded. Estimation of net market value of fund
        assets

"23PD. For the purposes of the definition of 'net market value of fund assets'
in subregulation 23PC (2), the following matters are specified:

   (a)  the assumptions that, when the assets are sold:

        (i)    the buyer and seller of the assets are willing, but not
               anxious, to buy and sell the assets; and

        (ii)   there is a period in which to negotiate the sale that is
               reasonable, having regard to the nature and situation of the
               assets and the state of the market for assets of the same kind;
               and

        (iii)  the assets will be reasonably exposed to the market; and

        (iv)   no account is taken of the value or other advantage or benefit,
               additional to market value, to the buyer incidental to
               ownership of the assets;

   (b)  the value of any estate in the property comprising the assets that is
        not held by the trustees in the capacity of trustees;

   (c)  deduction of the costs of disposing of the assets from the proceeds of
        the disposal. Value A of accrued benefits

"23PE. (1) Value A of accrued benefits in relation to a superannuation fund is
the total value of accrued benefits in respect of all members of the fund as
at 30 June 1988 that is calculated in accordance with regulation 23PG.

"(2) For the purposes of calculating value A of accrued benefits, the
following assumptions apply:

   (a)  that a member of the superannuation fund will not die or become
        disabled before his or her normal retirement from the workforce;

   (b)  that the governing rules of the fund providing for benefits and the
        amounts of the benefits vested in members of the fund are those rules
        and amounts as at 25 May 1988;

   (c)  that the value of the accrued benefits in the fund in respect of a
        member of the fund is not less than the amount of benefits vested in
        the member on 30 June 1988;

   (d)  if the governing rules of the fund provide for adjustment of pension
        benefits to compensate for changes in the cost of living at the
        discretion of the trustees of the fund, that the rules providing for
        adjustment are disregarded, unless:

        (i)    all pension benefits have been increased under that rule on at
               least 3 occasions before 30 June 1988; and

        (ii)   at least 1 of those increases occurred in the period from the
               beginning of 1 July 1985 to the end of 30 June 1988.

"(3) Subject to this regulation, the elements of the actuarial basis for the
calculation of value A of accrued benefits in respect of a superannuation fund
are taken to be those used in the last actuarial investigation of the fund
that was completed before 25 May 1988.

"(4) If an actuarial investigation of a superannuation fund was not completed
before 25 May 1988, an actuary must submit to the Commissioner in writing the
elements that the actuary proposes to use in respect of the fund:

   (a)  for the purposes of subregulation 23PG (2); and

   (b)  in substitution for the elements referred to in that subregulation.

"(5) The Commissioner must approve a proposed element of the actuarial basis
for the calculation of value A of accrued benefits in respect of a
superannuation fund if he or she is satisfied that the proposed element
corresponds reasonably closely to the element that would have been used if an
actuarial investigation had been made into the fund.

"(6) In special circumstances, the Commissioner may approve a proposed element
of the actuarial basis for the calculation of value A of accrued benefits in
respect of a superannuation fund if he or she is satisfied that application of
the proposed element is reasonable in those circumstances.

"(7) Liability to pay taxation on income of the fund is not a special
circumstance for the purposes of subregulation (6) if the liability results
directly from an amendment of the Tax Act made by the Taxation Laws Amendment 
(Superannuation) Act 1989 . Value B of accrued benefits

"23PF. (1) Value B of accrued benefits in relation to a superannuation fund is
the total value of accrued benefits in respect of all members of the fund as
at 30 June 1988 that is calculated in accordance with regulation 23PG.

"(2) For the purposes of calculating value B of accrued benefits, the
following assumptions apply:

   (a)  that a member of the superannuation fund will not:

        (i)    die, or become disabled, before his or her normal retirement
               from the workforce; or

        (ii)   withdraw from the fund, or retire from the workforce, before
               the age of his or her normal retirement;

   (b)  that the governing rules of the fund providing for benefits and the
        amounts of the benefits vested in the member are those rules and
        amounts as at 25 May 1988;

   (c)  that the value of the accrued benefits in the fund in respect of the
        member is not less than the amount of benefits vested in the member on
        30 June 1988;

   (d)  that the annual earning rate of the fund, net of administrative or
        other costs, is 10%;

   (e)  that if the governing rules of the fund provide for adjustment of
        pension benefits to compensate for changes in the cost of living at
        the discretion of the trustees of the fund-the adjustment factor is
        the lesser of:

        (i)    the average annual percentage increase in pension benefits (if
               any) in the period from the beginning of 1 July 1985 to the end
               of 30 June 1988; and

        (ii)   7% annually;

   (f)  if the governing rules of the fund provide for adjustment of benefits
        to compensate for changes in the cost of living, other than at the
        discretion of the trustees of the fund, that the adjustment factor is
        7% annually;

   (g)  if the governing rules of the fund provide for adjustment of benefits
        in accordance with the amount or rate of salary of members of the
        fund, that the amount or rate increases by 8.5% annually;

   (h)  that the probability of survival of the member after his or her
        retirement from the workforce is ascertained in accordance with the
        Australian Life Tables 1985-1987 prepared by the Australian Government
        Actuary.

"(3) Subject to this regulation, the elements of the actuarial basis for the
calculation of value B of accrued benefits in respect of a superannuation fund
are taken to be those used in the last actuarial investigation of the fund
that was completed before 25 May 1988.

"(4) In special circumstances, an actuary may submit to the Commissioner in
writing a proposal to substitute:

   (a)  an assumption stated in paragraph (2) (d), (e), (f), (g) or (h) in
        respect of a superannuation fund with another assumption; or

   (b)  an element referred to in subregulation (3) in respect of a
        superannuation fund with another element.

"(5) The Commissioner may approve a proposed assumption or element mentioned
in subregulation (4) if he or she is satisfied that application of that
assumption or element would be reasonable in the circumstances.

"(6) Liability to pay taxation on income of the fund is not a special
circumstance for the purposes of subregulation (4) if the liability results
directly from an amendment of the Tax Act made by the Taxation Laws Amendment 
(Superannuation) Act 1989 . Calculation of value A or B of accrued benefits

"23PG. (1) In this regulation, in relation to a period that exceeds a whole
number of financial years, a reference to a part of a year is a reference to a
part of the period that exceeds a whole financial year.

"(2) For the purposes of regulations 23PE and 23PF, the value of the benefits
payable to a member in respect of a period after 30 June 1988 is the total of
the amounts in respect of each financial year, or part of a financial year, in
the period that are determined by an actuary:

   (a)  in respect of each kind of benefit that the member is, or may be,
        entitled to receive from the superannuation fund; and

   (b)  by using the following formula:
P1 x Net present value x P2 where:
'P1' is the probability, determined by the actuary, of the member being paid a
benefit in each financial year, or part of a financial year; and
'Net present value' is the value of each benefit to which the member may
become entitled on exit from the fund, being an amount that is determined by
the actuary as at 30 June 1988:

        (i)    in the case of the calculation of value A of accrued
               benefits-using the earning rate of the fund used in the
               actuarial investigation of the fund mentioned in subregulation
               23PE (3); and

        (ii)   in the case of the calculation of value B of accrued
               benefits-using the earning rate of the fund referred to in
               paragraph 23PF (2) (d); and
'P2' is a proportion that is calculated:

        (i)    in the case of the calculation of value A of accrued
               benefits-using the method applied in the actuarial
               investigation of the fund mentioned in subregulation 23PE (3);
               and

        (ii)   in the case of the calculation of value B of accrued
               benefits-as follows:
completed period of fund membership
in relation to the member
at 30 June 1988
---------------------------------------
completed period of fund membership
in relation to the member at the member's
date of exit from the fund where a reference to 'completed period of fund
membership' in relation to the member at a particular time is a reference to
the period from the time at which the member joined, or last joined, the fund
to the particular time. Date before which applications must be made

"23PH. For the purposes of paragraph 15D (3) (b) of the Act, the prescribed
date is 30 June 1994. Application fees

"23PI. (1) For the purposes of sub-paragraph 15D (3) (d) (ii) of the Act, the
following application fees are prescribed:

   (a)  if the application is for a PJFC that consists of a late payment
        amount or is the aggregate of late payment amounts-$300;

   (b)  subject to subregulation (2), if the application is for a PJFC that
        consists of a shortfall-in-assets amount or is the aggregate of
        shortfall-in-assets amounts, an amount calculated using the formula:
0.002 x the amount of the PJFC;

   (c)  if an application is for a PJFC that includes:

        (i)    a late payment amount or the aggregate of late payment amounts;
               and

        (ii)   a shortfall-in-assets amount or the aggregate of
               shortfall-in-assets amounts; the fee prescribed in paragraph
               (b), as if the PJFC consisted of a shortfall-in-assets amount
               or the aggregate of shortfall-in-assets amounts.

"(2) A fee under paragraph (1) (b) must not be:

   (a)  less than $500; or

   (b)  more than $5,000. Prescribed events for the purposes of paragraph 15d
        (4) (a) of the Act

"23PJ. (1) For the purposes of paragraph 15d (4) (a) of the Act, a prescribed
event in relation to a superannuation fund is any alteration of the governing
rules of the fund having the effect that calculation of a pre-1 July 88
funding amount under the rules as so altered produces an amount that is less
than the amount calculated using the formula:
PJFC
       originally         any PJFCs                any PJFCs

       granted      +    transferred      -       transferred

       to the fund       to the fund              from the fund


"(2) A reference in subregulation (1) to a PJFC is a reference to the amount
of the PJFC multiplied by the indexation factor calculated in accordance with
subsection 159SG (2) of the Tax Act. Time and manner in which prescribed
events must be notified to the Commissioner

"23PK. (1) Subject to subregulation (3), if a prescribed event occurs in
relation to a superannuation fund, the trustees of the fund must give notice
in writing to the Commissioner of the event:

   (a)  within 3 months of the date of the occurrence; or

   (b)  on or before 30 June 1994; whichever date is the later.

"(2) The notice must have with it:

   (a)  a statement of an amount that is certified by an actuary as the amount
        by which the pre-1 July 88 funding credit balance of the fund is
        reduced as a result of the prescribed event; and

   (b)  a statement by the trustees of the fund that describes the prescribed
        event in sufficient detail to allow the statement to be properly
        considered.

"(3) The Commissioner may give notice in writing to the trustees of a
superannuation fund extending the time in which the trustees must give notice
to the Commissioner of a prescribed event. Transfer of PJFCs-trustees of
transferor funds

"23PL. (1) If the trustees of a defined benefit superannuation fund propose to
transfer a PJFC, or part of a PJFC, from the fund (in this regulation called
'the transferor fund') to another superannuation fund (in this regulation
called 'the transferee fund'), the trustees may apply in writing to the
Commissioner to approve the transfer.

"(2) The Commissioner may approve an application only if:

   (a)  the requirements specified in regulation 23PO are satisfied; or

   (b)  if a requirement of that kind is not satisfied-the Commissioner is
        satisfied that, because of special circumstances, the requirement does
        not need to be satisfied.

"(3) The amount of a PJFC to be transferred must not exceed the lesser of:

   (a)  the amount of the liability in respect of benefits to be transferred
        to the transferee fund, being benefits accrued before 1 July 1988; and

   (b)  the amount of any pre-1 July 88 funding credit balance in the
        transferor fund immediately before the transfer.

"(4) As soon as practicable after a decision is made by the Commissioner to
approve a transfer, he or she must give notice in writing of the approval to
the trustees of the transferor fund and of the transferee fund. Transfer of
PJFCs-trustees of transferee funds

"23PM. (1) The trustees of a superannuation fund (in this regulation called
'the transferee fund') may apply in writing to the Commissioner to approve the
transfer of a PJFC, or part of a PJFC, from a defined benefit superannuation
fund (in this regulation called 'the transferor fund'), if:

   (a)  the application arises as a direct result of the transfer of a member
        or members of the transferor fund, and the benefit entitlements of
        that member or those members, to 1 or more transferee funds following
        reconstitution of the transferor fund into the transferee fund or
        transferee funds; or

   (b)  the application arises as a direct result of the transfer of a member
        or members of a transferor fund, and the benefit entitlements of that
        member or those members, to the transferee fund following the merger
        of 2 or more transferor funds into the transferee fund; or

   (c)  the transferee fund:

        (i)    was constituted on or after 1 July 1988; and

        (ii)   assumed responsibility for the liabilities, but not all the
               assets, in respect of contributions for superannuation purposes
               relating to the employment of persons before that date, being
               contributions that were made to a transferor fund.

"(2) The Commissioner may approve an application only if:

   (a)  the requirements specified in regulation 23PO are satisfied; or

   (b)  if a requirement of that kind is not satisfied-the Commissioner is
        satisfied that, because of special circumstances, the requirement does
        not need to be satisfied.

"(3) The amount of a PJFC to be transferred must not exceed the lesser of:

   (a)  the amount of the liability in respect of benefits to be transferred
        to the transferee fund, being benefits accrued before 1 July 1988; and

   (b)  the amount of any pre-1 July 88 funding credit balance in the
        transferor fund immediately before the transfer.

"(4) As soon as practicable after a decision is made by the Commissioner to
approve a transfer, he or she must give notice in writing of the approval to
the trustees of the transferee fund and of the transferor fund. Transfer of
PJFCs-revocation of approval

"23PN. The Commissioner may revoke an approval given under regulation 23PL or
23PM only if:

   (a)  information about matters relating to the application for approval
        that was not available to the Commissioner when he or she made the
        decision to approve the application becomes available to the
        Commissioner; and

   (b)  after considering that information, the Commissioner is satisfied
        that:

        (i)    a requirement specified in regulation 23PO (other than a
               requirement that does not need to be satisfied under paragraph
               23PL (2) (b) or 23PM (2) (b) ) was not satisfied in relation to
               the transfer; or

        (ii)   in the case of a requirement that, under paragraph 23PL (2) (b)
               or 23PM (2) (b), does not need to be satisfied-there were no
               special circumstances to justify the application of that
               paragraph. Transfer of PJFCs-requirements to be satisfied

"23PO. The requirements referred to in paragraph 23PL (2) (a) and 23PM (2) (a)
are that:

   (a)  an actuary certifies that the amount of the PJFC to be transferred is
        reasonable having regard to:

        (i)    the amount of unfunded liability to be transferred from the
               transferor fund; and

        (ii)   the amount of the remaining unfunded liability of that fund; in
               relation to the amount of benefits that have accrued before 1
               July 1988; and

   (b)  the trustees of the transferor fund have been given notice by the
        Commissioner of the grant of the PJFC under subsection 15D (2) of the
        Act; and

   (c)  at the date of the transfer the amount of the PJFC to be transferred
        is equal to or less than the amount of the pre-1 July 88 funding
        credit balance of the transferor fund; and

   (d)  the transferee fund has received notice from the Commissioner in
        relation to the year of income in which the transfer is to take place:

        (i)    under subsection 12 (3) of the Act-that the Commissioner is
               satisfied that the fund satisfied the superannuation fund
               conditions in that year of income; or

        (ii)   under subsection 13 (1) of the Act-that the Commissioner is
               satisfied that the fund should be treated as if the fund had
               satisfied the superannuation fund conditions in that year of
               income; and

   (e)  an actuary certifies that sufficient information is available about
        the accrued entitlements of members of the transferor fund as at 30
        June 1988 to enable calculations to be made after that date to
        ascertain whether a prescribed event has occurred. Notice of
        reviewable decisions and reasons for those decisions

"23PP. (1) As soon as practicable after the Commissioner makes a reviewable
decision, he or she must give written notice of the decision to the person at
whose request the decision was made.

"(2) The notice must have with it a statement by the Commissioner of his or
her reasons for making the decision.

"(3) The notice must include a statement to the effect that the trustees may:

   (a)  in the case of notice of a decision made by the Commissioner under
        regulation 23PL, 23PM or 23PN-if dissatisfied with the decision,
        request reconsideration of the decision under regulation 23PQ; and

   (b)  in the case of notice of a decision made by the Commissioner under
        regulation 23PQ confirming or varying a decision to which paragraph
        (a) applies-if dissatisfied with the decision, apply to the
        Administrative Appeals Tribunal for review of the decision so
        confirmed or varied.

"(4) Failure to comply with subregulation (3) in relation to a decision does
not affect the validity of the decision. Reconsideration of certain decisions

"23PQ. (1) If the trustees of a superannuation fund are dissatisfied with a
decision made by the Commissioner under regulation 23PL, 23PM or 23PN, the
trustees may give notice in writing to the Commissioner within:

   (a)  the period of 21 days after the day on which the trustees first
        receive notice of the decision; or

   (b)  such further period as the Commissioner reasonably allows; requesting
        the Commissioner to reconsider the decision.

"(2) The trustees must set out in the notice the reasons for the request.

"(3) Subject to subregulation (4), the Commissioner must reconsider the
decision and may:

   (a)  confirm the decision; or

   (b)  vary or revoke the decision.

"(4) If the Commissioner does not confirm, vary or revoke the decision before
the end of the period of 21 days after the day on which he or she received the
request, the Commissioner is taken to have confirmed the decision under
subregulation (3) at the end of that period.

"(5) If the Commissioner varies or revokes a decision, he or she must give the
Commissioner of Taxation written notice of the variation or revocation. Review
by Tribunal of reconsidered decisions

"23PR. Application may be made to the Administrative Appeals Tribunal for
review of a decision of the Commissioner to confirm or vary a decision under
subregulation 23PQ (3), including a decision that is taken under subregulation
23PQ (4) to have been confirmed. Actuaries to certify in relation to
determinations

"23PS. An actuary who makes a determination under this Part must certify that
the determination:

   (a)  is consistent with this Part; and

   (b)  except to the extent (if any) that this Part otherwise requires, is
        made in accordance with a method that The Institute of Actuaries of
        Australia would accept as a proper actuarial practice. Substituted
        accounting periods

"23PT. The trustees of a superannuation fund for which the Commissioner of
Taxation has approved a 12 month period as a substituted accounting period for
the purposes of section 18 of the Tax Act may treat a reference in this Part:

   (a)  to 30 June 1988 as a reference to the last day of the substituted
        accounting period corresponding to the year of income that ended on 30
        June 1988; and

   (b)  to 1 July 1988 as a reference to the day after that day.".