Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TREASURY LAWS AMENDMENT (IMPROVING ACCOUNTABILITY AND
MEMBER OUTCOMES IN SUPERANNUATION MEASURES NO. 1) BILL 2017
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by authority of the
Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)
Table of contents
Glossary ................................................................................................. 1
General outline and financial impact....................................................... 3
Chapter 1 Amendments to portfolio holdings disclosure ................ 5
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
AASB Australian Accounting Standard Board
Bill Treasury Laws Amendment (Improving
Accountability and Member Outcomes in
Superannuation Measures No. 1) Bill 2017
Corporations Act Corporations Act 2001
PST Pooled superannuation trust
RSE Registrable superannuation entity
1
General outline and financial impact
Amendments to portfolio holdings disclosure
The amendments to Schedule 6 to the Bill:
• require RSE licensees to look through PSTs to meet their
obligation to make information about their portfolio holdings
publically available; and
• clarify that the obligation on RSE licensees applies equally in
respect of all choice products and all MySuper products.
Date of effect: 31 December 2018.
Proposal announced: Not previously announced.
Financial impact: Nil.
Compliance cost impact: Nil.
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Chapter 1
Amendments to portfolio holdings
disclosure
Outline of chapter
1.1 The amendments to Schedule 6 to the Bill:
• require RSE licensees to look through PSTs to meet their
obligation to make information about their portfolio holdings
publically available; and
• clarify that the obligation on RSE licensees applies equally in
respect of all choice products and all MySuper products.
1.2 All legislative references in this Chapter are to the Corporations
Act unless otherwise indicated.
Detailed explanation of new law
Amendment 1
1.3 This amendment requires an RSE licensee to look through PSTs
in the course of meeting its obligation under section 1017BB to make the
details of its portfolio holdings publically available, regardless of whether
the PST is an associated or a non-associated entity of the RSE.
1.4 That is, in respect of each investment option, the RSE must
disclose information about investment items held by itself, its associates
or PSTs.
1.5 However, if the investment item is an investment in an
associated entity of the RSE or a PST, then the investment item does not
need to be disclosed. This ensures that the look through treatment for
PSTs mirrors that for associated entities.
5
Treasury Laws Amendment (Improving Accountability and Member Outcomes in
Superannuation Measures No. 1) Bill 2017
Diagram 1.1 - PHD regime requirements for Top Super's High Growth Fund
Top Super directs $100 million of its member contributions into its
High Growth Fund investment option.
High Growth Fund subsequently directs the $100 million as follows:
• $50 million into Eagle Six Corporation (an associated managed
investment scheme); and
• $10 million into shares in WYE;
• $20 million into Oniv Trust (a PST);
• $20 million into Nestar Holdings (a non-associated managed
investment scheme).
Subsequently:
• Eagle Six Corporation directed $20 million (of the $50 million)
into Atar Limited (an associated entity) and $30 million into
Prodime Corporation (a non-associated entity);
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Amendments to portfolio holdings disclosure
• Oniv Trust directs $5 million (of $20 million) into government
bonds, $15 million into Flint Corporation (a non-associated entity).
• Nestar Holdings directed $20 million into shares in KPF.
Finally:
• Atar Limited directed $20 million into shares in WJL; and
• Prodime Corporation directed $30 million into the Westbank Estate
commercial property.
PHD regime requirements
The table below sets out the disclosure requirements for the investment
items that Top Super has allocated to High Growth Fund.
Investment item Disclosable Reason
item
Eagle Six Corp No Eagle Six Corp is an
$50 million associated entity of Top Super
Atar Ltd No Atar Ltd is an associated entity
$20 million (of the of Top Super
$50 million invested in
Eagle Corp MIS)
Shares in WJL Yes WJL shares are held by Atar
$20 million (of the Ltd, which is an associated
$20 million invested in entity of Top Super
Atar Ltd)
Prodime Corp Yes Eagle Six Corp (an associated
$30 million (of the entity of Top Super) invests in
$50 million invested in Prodime Corp, which is not an
Eagle Six Corp MIS) associated entity of Top Super
Westbank Estate No Prodime Corp (non-associated
$30 million (of the entity of Top Super) invests in
$30 million invested in Westbank Estate
Prodime Corp)
Shares in WYE Yes WYE shares are held directly
$10 million by Top Super
Oniv Trust No Oniv Trust is a PST in which
$20 million Top Super invests
Government Bonds Yes Government bonds are held
$5 million (of the $20 directly by Oniv Trust, a PST
million invested in in which Top Super invests
Oniv Trust)
7
Treasury Laws Amendment (Improving Accountability and Member Outcomes in
Superannuation Measures No. 1) Bill 2017
Investment item Disclosable Reason
item
Flint Corp Yes Oniv Trust (a PST) invests in
$15 million (of the $20 Flint Corp (non-associated
million invested in entity of Top Super)
Oniv Trust)
Nestar Holdings Yes Top Super invests directly in
$20 million Nestar Holdings, which is not
an associated entity of Top
Super
Shares in KPF No KPF shares are held by Nestar
$20 million (of the Holdings (non-associated
$20 million invested in entity of Top Super)
Nestar Holdings).
1.6 Whether an entity is an associated entity of the RSE is
determined in accordance with section 50AAA. The provision provides
various circumstances that an entity is an associated entity of an RSE,
including where the entity is a related body corporate or is controlled by
the RSE.
1.7 The provision also provides that an entity is an associated entity
of an RSE if:
• the RSE invests in the entity or has beneficial ownership in
an investment asset of the entity which the RSE controls;
• the RSE has significant influence over the entity; and
• the interest in the entity or the beneficial ownership in the
investment asset of the entity which the RSE controls is
material to the RSE.
1.8 Significant influence and materiality is assessed on a
case-by-case basis. Various factors need to be taken into consideration
when making an assessment of whether an RSE has significant influence
over an entity, including guidance and factors provided in the AASB
accounting standards. Ultimately, whether an RSE has significant
influence over a particular entity turns on the facts of each case.
1.9 The Accounting Standard AASB 128 Investments in Associates
and Joint Ventures (AASB 128) defines significant influence as 'the
power to participate in the financial and operating policy decisions of the
investee but ... not control or joint control of those policies.'
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Amendments to portfolio holdings disclosure
1.10 The AASB 128 also provides some indicators in determining
whether an entity has a significant influence on another entity:
If an entity holds, directly or indirectly (eg through subsidiaries), 20 per cent or more
of the voting power of the investee, it is presumed that the entity has significant
influence, unless it can be clearly demonstrated that this is not the case. Conversely, if
the entity holds, directly or indirectly (eg through subsidiaries), less than 20 per cent of
the voting power of the investee, it is presumed that the entity does not have
significant influence, unless such influence can be clearly demonstrated. A substantial
or majority ownership by another investor does not necessarily preclude an entity from
having significant influence.
The existence of significant influence by an entity is usually evidenced in one or more
of the following ways:
(a) representation on the board of directors or equivalent governing body of the
investee;
(b) participation in policy-making processes, including participation in decisions about
dividends or other distributions;
(c) material transactions between the entity and its investee;
(d) interchange of managerial personnel; or
(e) provision of essential technical information.
Amendment 2
1.11 This amendment clarifies that for purposes of section 1017BB,
an investment option means:
• an investment option within a choice product;
• a choice product that does not have multiple investment
options;
• an investment option within a MySuper product; or
• a MySuper product that does not have multiple investment
options.
1.12 This change makes it clear that the obligation on RSE licensees
to disclose their portfolio holdings applies equally in respect of all choice
products and all MySuper products.
Amendment 3
1.13 This amendment ensures that the term MySuper product used in
the definition of investment option in subsection 1017BB(6) continues to
have the same meaning of the term in the Superannuation Industry
(Supervision) Act 1993.
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