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On 6 December 2007, Raelene Vivian, Deputy Commissioner of Taxation, made Superannuation Industry (Supervision) approval of provision of benefits (No 1) 2007 determination under s 62(1)(b)(v) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) and under s 33(3) of the Acts Interpretation Act 1901. It was registered on the Federal Register of Legislative Instruments on 12 December 2007 as Legislative Instrument - F2007L04697.

The determination enacts an approval of ancillary purposes for funds under the ATO jurisdiction. This approval applies only to the trustees of self managed superannuation funds (SMSFs) regulated by the ATO. The determination approves the provision of benefits for, or in respect of, each member of a fund which Part 6 of the Superannuation Industry (Supervision) Regulations 1994 (the SISR) permits or requires to be paid when, to the extent that, and to the persons to whom, the fund is permitted or required under Part 6 of the SISR to pay them.

The effect of this instrument will ensure that the trustees of a SMSF do not face civil or criminal consequences and that the funds status as a complying fund is not at risk where payments are made in circumstances, and to persons, permitted by Part 6 of the SISR.

The ancillary purpose approval relating to the provision of benefits under Part 6 of the SISR addresses tensions which might otherwise arise between the sole purpose test of s 62 and the payment standards of Part 6. For example:

- the sole purpose provisions allow for payment of benefits only to members, dependants or the legal personal representative of the member, whereas regulation 6.22 authorises payment of benefits in certain, very limited, circumstances to any individual;

- the sole purpose test may prohibit payment of benefits that had become unrestricted non-preserved benefits because of termination of employment, but that had been rolled over to a second fund. The benefits would not then be payable from the second fund owing to the terms of paragraph 62(1)(b)(i), which apply only to benefits to which the relevant employer had contributed; and

- the sole purpose test may prohibit payment of a benefit under $200 to a lost member who is found. The benefit may be paid under item 111 of the Conditions of release under Schedule 1 of the SISR.

However, the ancillary purpose approval ensures these benefits remain payable at any time.

For a copy of the determination, go here

For a copy of the Explanatory Statement, click on ES/Supp Material

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