Treasury Laws Amendment (Your Future, Your Super) Bill 2021 – Government drops its own measure to allow the Treasurer to ban certain fund payments or investments

The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 was passed by the House of Reps on 3 June 2021 with one Government amendment, which was significant. It was to remove one of the most contentious elements – and amendment that would give the Treasurer the power to prohibit certain types of payments by, or investments of, super funds. Each side of politics had its reasons for this.

See below for details.

[Tax Month – June 2021]

Broadly, Sch 3 of the Bill proposes to amend the SIS Act to require each trustee of a registrable superannuation entity and each trustee of a SMSF to perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of the beneficiaries (and require each director of the corporate trustee of a registrable superannuation entity to perform the director’s duties and exercise the director’s powers in the best financial interests of the beneficiaries).

As originally introduced, Sch 3 would also have amended the SIS Act to allow regulations to be made to specify that certain payments or investments made by trustees of registrable superannuation entities were prohibited, or prohibited unless certain conditions were met: proposed s 117A of the SIS Act. It has now been amended by the Government to remove the measure.

The Bill will now proceed to the Senate, which is next due to sit on 15 June 2021 (which is the next sitting day of the House as well).

[LTN 106, 4/6/21]

Summary – the Bill proposes to amend

1. Superannuation Guarantee (Administration) Act 1992 to:
   1. provide that if a new employee has an existing ‘stapled’ superannuation fund and does not choose a fund to receive contributions, their employer is required to make contributions on behalf of the employee into the stapled fund; and
   2. ensure that employers are not in breach of various rules, or are not liable for superannuation guarantee charge, in certain circumstances;
2. Superannuation Act 1990 and Superannuation Act 2005 to make consequential amendments;
3. Superannuation Industry (Supervision) Act 1993 to:
   1. require the Australian Prudential Regulation Authority to conduct an annual performance test for MySuper products and other products to be specified in regulations;
   2. make amendments contingent on the commencement of:
      1. the Treasury Laws Amendment (Self Managed Superannuation Funds) Act 2021, when enacted, and
      2. Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020, when enacted;
   3. require trustees of registrable superannuation entities, and self managed superannuation funds, and directors of the corporate trustee of a registrable superannuation entity – to perform their duties and exercise their powers in the best financial interests of the beneficiaries;
   4. reverse the evidential burden of proof for the best financial interests duty, so that the onus is on the trustee of a registrable superannuation entity;
   5. allow regulations to be made to
      1. prohibit certain payments, made by trustees of registrable superannuation entities, and
      2. prescribe additional requirements on trustees, and directors of trustee companies of registrable superannuation entities; and
   6. allow contraventions of record-keeping obligations specified in regulations to be subject to a strict liability offence; and
4. Corporations Act 2001 to remove an exemption from disclosing information about certain investments under the portfolio holdings disclosure rules.

[APH Website: Bills Digest, Bill (1st reading), Exp Memo, Govt Amend’t, Explan Memo (Amend); LTN 106, 4/6/21]

The Politics

There is much that has been politically controversial about this Bill, but what is significant, here, is that the Government has relinquished one of its own proposals, in the Lower House, to get is passed, and test its numbers in the Senate, where it depends on ‘cross benchers’.

The changes are those that would allow the Treasurer to make regulations prohibiting certain payments and investments. The Labor side of politics is concerned that it could prohibit payments benefit unions, but conspicuous Nationals MP: Barnaby Joyce was concerned it could be used by a Labor government, to ban investments in fossil fuels, for instance.

See related TT article about the politics.