Inserts for
Tax Laws Amendment (2013 Measures No. 1) Bill 2013: self managed superannuation funds and related parties

EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  			
2.  Schedule ??, Part 1	1 July 2013.	1 July 2013	
3.  Schedule ??, Part 2	The later of:
(a) immediately after the commencement of the provision(s) covered by table item 2; and
(b) immediately after the commencement of item 23 of Schedule 3 to the Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Act 2012.
However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur.		
Schedule ??—Self managed superannuation funds and related parties
Part 1—Main amendments
Superannuation Industry (Supervision) Act 1993
1  Subsection 10(1)
Insert:
business real property has the meaning given by section 21.
2  Subsection 10(1)
Insert:
primary production business has the same meaning as in the Income Tax Assessment Act 1997.
3  At the end of Division 2 of Part 1
Add:
21  Business real property
	(1)	Business real property, of an entity, is:
	(a)	any freehold or leasehold interest of the entity in real property; or
	(b)	any interest of the entity in Crown land, other than a leasehold interest, being an interest that is capable of assignment or transfer; or
	(c)	if another class of interest relating to real property is prescribed by regulations made for the purposes of this paragraph—any interest of that class held by the entity;
if the real property is used wholly and exclusively in one or more businesses (whether carried on by the entity or not).
	(2)	Business real property does not include any interest held in the capacity of beneficiary of a trust estate.
	(3)	For the purposes of subsection (1), real property used in one or more primary production businesses does not cease to be used wholly and exclusively in those businesses only because:
	(a)	an area of the real property, not exceeding 2 hectares, contains a dwelling used primarily for domestic or private purposes; and
	(b)	the area is also used primarily for domestic or private purposes;
provided that the use for domestic or private purposes referred to in paragraphs (a) and (b) is not the predominant use of the real property.
	(4)	In this section:
business includes any profession, trade, employment, vocation or calling carried on for the purposes of profit, including:
	(a)	the carrying on of primary production; and
	(b)	the provision of professional services;
but does not include occupation as an employee.
4  Transitional provision—in‑house assets
(1)	For an asset that was an asset of a superannuation fund during any part of the period:
	(a)	starting on 7 July 2010; and
	(b)	ending on the day before the commencement of this Part;
paragraph 71(1)(g) of the Superannuation Industry (Supervision) Act 1993 applies as if the expression business real property of the fund had the same meaning in that paragraph as it had in subsection 66(5) of that Act.
(2)	This item has effect despite item 9 of Schedule 1 to the Superannuation Industry (Supervision) Amendment Act 2010.
5  Section 62A
Before “The” (first occurring), insert “(1)”.
6  At the end of section 62A
Add:
	(2)	Subsection (1) has effect subject to sections 66A and 66B (about acquisitions and disposals of certain assets).
7  Subsection 66(1)
After “regulated superannuation fund”, insert “(other than a self managed superannuation fund)”.
8  Subparagraph 66(2A)(a)(iv)
Omit “(ba),”.
9  Subsection 66(5) (definition of business)
Repeal the definition.
10  Subsection 66(5) (definition of business real property)
Repeal the definition.
11  Subsection 66(5) (definition of primary production business)
Repeal the definition.
12  Subsection 66(6)
Repeal the subsection.
13  After section 66
Insert:
66A  Self managed superannuation funds—certain acquisitions
	(1)	This section applies in relation to self managed superannuation funds that are regulated superannuation funds.
Certain assets not to be acquired from related parties
	(2)	A trustee or an investment manager of a self managed superannuation fund must not acquire an asset from a related party of the fund.
Note:	This subsection is a civil penalty provision (see subsection (5)).
Exceptions
	(3)	Subsection (2) does not apply if:
	(a)	the asset is a listed security acquired in a way prescribed by regulations made for the purposes of this paragraph; or
	(b)	the asset is business real property of the related party, and the acquisition of the asset is at market value, as determined by a qualified independent valuer; or
	(c)	the asset is acquired:
	(i)	under a merger between regulated superannuation funds; and
	(ii)	at market value, as determined by a qualified independent valuer; or
	(d)	the acquisition of the asset:
	(i)	constitutes an investment covered by a subparagraph of paragraph 66(2A)(a); and
	(ii)	is at market value, as determined by a qualified independent valuer; and
	(iii)	would not result in the level of in‑house assets of the fund (within the meaning of Part 8) exceeding the level permitted by that Part; or
	(e)	the asset is money; or
	(f)	the asset is of a kind that the Regulator, by legislative instrument, determines may be acquired by self managed superannuation funds.
Note:	A determination under paragraph (f) may specify different kinds of assets for different classes of self managed superannuation funds (see subsection 33(3A) of the Acts Interpretation Act 1901).
	(4)	Subsections 66(2B) and (2C) apply in relation to subsection (2) of this section in a corresponding way to the way those subsections apply in relation to subsection 66(1).
Civil penalty provision
	(5)	Subsection (2) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.
66B  Self managed superannuation funds—certain disposals
	(1)	This section applies in relation to self managed superannuation funds that are regulated superannuation funds.
Certain assets not to be disposed of to related parties
	(2)	A trustee or an investment manager of a self managed superannuation fund must not dispose of an asset to a related party of the fund.
Note:	This subsection is a civil penalty provision (see subsection (5)).
Exceptions
	(3)	Subsection (2) does not apply if:
	(a)	the asset is a listed security disposed of in a way prescribed by regulations made for the purposes of this paragraph; or
	(b)	the asset is disposed of for market value, as determined by a qualified independent valuer; or
	(c)	the asset is of a kind covered by regulations in force for the purposes of section 62A (about collectables and personal use assets) immediately before 1 July 2013; or
	(d)	the asset is money; or
	(e)	the asset is of a kind that the Regulator, by legislative instrument, determines may be disposed of by self managed superannuation funds.
Note:	A determination under paragraph (e) may specify different kinds of assets for different classes of self managed superannuation funds (see subsection 33(3A) of the Acts Interpretation Act 1901).
	(4)	Subsections 66(2B) and (2C) apply in relation to subsection (2) of this section and a disposal in a corresponding way to the way those subsections apply in relation to subsection 66(1) and an acquisition.
Civil penalty provision
	(5)	Subsection (2) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.
66C  Self managed superannuation funds—avoidance schemes
	(1)	A person must not enter into, commence to carry out, or carry out a scheme (within the meaning of section 66) if:
	(a)	the scheme results, or is likely to result, in a trustee or an investment manager of a self managed superannuation fund:
	(i)	acquiring an asset from an entity; or
	(ii)	disposing of an asset to an entity; and
	(b)	the scheme avoids subsection 66A(2) from applying to the acquisition, or subsection 66B(2) from applying to the disposal, (as appropriate) because the entity is not a related party of the fund; and
	(c)	that subsection would so apply were the entity a related party of the fund; and
	(d)	the entity has a connection, directly or indirectly through one or more interposed entities, with a related party of the fund.
	(2)	Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.
14  After paragraph 193(b)
Insert:
	(ba)	subsection 66A(2);
	(bb)	subsection 66B(2);
	(bc)	subsection 66C(1);

Part 2—Administrative penalties
Superannuation Industry (Supervision) Act 1993
15  Subsection 66A(2) (note)
Omit “Note”, substitute “Note 1”.
16  At the end of subsection 66A(2)
Add:
Note 2:	Section 166 imposes an administrative penalty for a contravention of this subsection.
17  Subsection 66B(2) (note)
Omit “Note”, substitute “Note 1”.
18  At the end of subsection 66B(2)
Add:
Note 2:	Section 166 imposes an administrative penalty for a contravention of this subsection.
19  Subsection 166(1) (after table item 3)
Insert:
3A	Subsection 66A(2)	60 penalty units	
3B	Subsection 66B(2)	60 penalty units	
20  At the end of subsection 166(2) (before the note)
Add:
	; or (c)	for subsection 66A(2) or 66B(2)—a person covered by paragraph (a) or (b), or an investment manager of a self managed superannuation fund.
21  Application of amendments
The amendments made by this Part apply in relation to acquisitions, and disposals, happening on or after the commencement of this Part.