Superannuation (Financial Assistance Funding) Levy Act 1993

The Act defines a “fund” as a regulated superannuation fund or an approved deposit fund, but expressly excludes a self managed superannuation fund (section 5). This means SMSFs are never required to pay a levy under this Act. A “levy” is a levy imposed by regulations made under section 6 of the Act (section 5). The levy rate is expressed as a decimal fraction and is prescribed in the regulations, but must not exceed 0.0005 (section 8(2)). The amount payable by each fund is calculated by multiplying the applicable rate by the value of the fund’s assets at the end of its last financial year before the day the levy regulation took effect (section 8(1)). However, if the regulations prescribe a maximum amount of levy and the formula yields a figure above that maximum, the levy is capped at the maximum; conversely, if a minimum amount is prescribed and the formula yields a figure below that minimum, the levy is raised to the minimum (section 8(1A)). The value of a fund’s assets is determined at the fund’s own financial year end, not a common date, which may create timing differences. The concept of “financial assistance” is not defined in this Act; it is the assistance granted under Part 23 of the SIS Act for losses from fraudulent conduct or theft. The Act also introduces the notion of “classes of funds”: regulations may set different rates for different classes, but must not discriminate between States or parts of States (section 9). A class may be defined by the regulations, but the definition cannot produce inter-State discrimination. The overarching concept is that the levy is a collective funding mechanism: the entire regulated superannuation industry (excluding SMSFs and the assisted fund) bears the cost of compensating a victim fund, but only up to the statutory caps.

The primary entities affected are regulated superannuation funds and approved deposit funds (ADFs) within the meaning of the SIS Act. Self managed superannuation funds are excluded from the definition of “fund” in section 5 and therefore never pay the levy. The fund that receives financial assistance under Part 23 of the SIS Act is also exempt from the levy imposed in respect of that particular determination (section 6(1)(a)). Similarly, if multiple funds receive assistance in the same financial year, each of those funds is exempt from the levy that recovers the assistance granted to the others (section 6(1)(b) and 6(1A)). The levy is triggered by a ministerial determination under Part 23 of the SIS Act; therefore the Minister (and the Commonwealth) is directly involved as the decision-maker and the recipient of the levy revenue. The Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office may have roles in collecting or enforcing the levy, but the Act itself does not designate specific collectors. Trustees of superannuation funds and ADFs are the entities responsible for paying the levy; they must ensure that the levy is calculated correctly and remitted in accordance with the regulations. Because the levy is imposed by legislative instrument (regulations), funds must monitor the Federal Register of Legislation for new levy regulations that may follow a financial assistance determination. The Act also affects the broader superannuation industry indirectly: the 0.05 per cent aggregate cap in section 7(2) limits the total industry exposure in any financial year, providing predictability. Additionally, the class-based rate structure in section 9 may produce differential impacts on different types of funds (for example, corporate funds versus industry funds versus retail funds), depending on how the regulations define classes.

The central duty imposed by the Act is the obligation of each fund (as defined) to pay the levy when regulations are made under section 6. The amount is determined by the formula in section 8(1): Applicable rate multiplied by Value of assets, subject to any maximum or minimum amounts prescribed in the regulations (section 8(1A)). The applicable rate is set by the regulations but must not exceed 0.0005 (section 8(2)). Funds have the right to have the levy calculated only on the basis of the value of their assets at the end of their last completed financial year before the regulation took effect (section 8(1)). This provides a degree of certainty because the asset value is a known historical figure. Funds also have the right to rely on the statutory caps: the aggregate industry cap of 0.05 per cent of total fund assets (section 7(2)) and the per-fund rate cap of 0.0005 (section 8(2)). While section 7(3) states that the validity of a regulation is not affected merely because it fixes a rate in excess of the maximum required by subsections 7(1) and 7(2), that provision does not protect a regulation that exceeds the 0.0005 per-fund rate cap in section 8(2), because that cap is an absolute statutory limit on the rate itself, not merely a guideline for the amount of revenue to be raised. Funds have the right to be treated without discrimination as between States or parts of States (section 9(2)). However, the regulations may discriminate between classes of funds (section 9(1)(a)), so a fund’s duty to pay may vary depending on its classification. There is no right to an exemption or reduction beyond the statutory exceptions. The Act does not confer a right to be heard or to challenge the ministerial determination under Part 23 of the SIS Act; that determination is a precondition for the levy, but the levy itself is imposed by regulation subject to parliamentary and judicial review mechanisms in the usual way. The Act does not specify the timing of payment; that is left to the regulations.

The Superannuation (Financial Assistance Funding) Levy Act 1993 itself does not create any penalty provisions for non-payment of the levy or for failure to comply with the regulations. Enforcement is achieved through the operation of section 4, which applies section 9 and Division 2 of Part 1 of the SIS Act to this Act in a corresponding way. Section 9 of the SIS Act defines terms used in that Act; Division 2 of Part 1 of the SIS Act contains provisions about the application of the Act, including the power to make regulations and the effect of non-compliance. The most important consequence for a fund that fails to pay the levy is likely to be recovery as a debt due to the Commonwealth. Under the SIS Act, unpaid amounts can be recovered by civil action, and the fund’s trustee may also face regulatory consequences such as directions from APRA. The Act does not provide for criminal penalties or infringement notices. Because this Act is tied to the SIS Act for interpretation and application, any offence provisions in the SIS Act that relate to the provision of false information or obstruction of officials could be triggered if a fund misrepresents its asset value to avoid or reduce the levy. However, the source text does not provide the specific SIS Act penalties. Practitioners should note that the validity of a regulation imposing a levy is not affected merely because the rate exceeds the maximum required by section 7(1) and (2) (section 7(3)). This means a fund cannot challenge the regulation on the ground that the levy revenue exceeds the amount of financial assistance or exceeds the 0.05 per cent aggregate cap, though a challenge might be possible on other grounds such as procedural failure or ultra vires. The Act therefore creates an enforceable obligation to pay, backed by the general enforcement mechanisms of the SIS Act, but does not introduce new penalties.

The Act is inextricably linked to the Superannuation Industry (Supervision) Act 1993. Section 4 of the Levy Act states that section 9 (definitions) and Division 2 of Part 1 (application provisions) of the SIS Act apply in relation to the Levy Act in a corresponding way. This means that the interpretation framework, including definitions of “regulated superannuation fund”, “approved deposit fund”, and “self managed superannuation fund”, is imported from the SIS Act. The levy is only triggered when the Minister makes a determination under Part 23 of the SIS Act to grant financial assistance to a fund that has suffered loss from fraudulent conduct or theft. The Levy Act does not operate independently; it is a funding companion to that Part. The regulations made under the Levy Act (section 6) are disallowable instruments subject to parliamentary scrutiny under the Legislation Act 2003. The Act also interacts with the Superannuation (Financial Assistance Funding) Levy Collection Act 1993, which was presumably enacted concurrently to provide for the collection and recovery of the levy. (The provided text does not include that Collection Act, but it is a related statute.) The Levy Act does not contain transitional provisions nor savings provisions; any such matters would be addressed in the SIS Act or in the regulations. There is no explicit interaction with tax legislation; the levy is not a tax under the Income Tax Assessment Act, although it may be an allowable deduction for the fund. The Act’s cap of 0.05 per cent of total industry assets (section 7(2)) and the per-fund rate cap of 0.0005 (section 8(2)) interact with the constitutional limitation on the imposition of taxes that discriminate between States or parts of States (section 9(2)). The Act also interacts with the general law of delegated legislation: regulations made under section 6 are subject to the usual requirements of the Legislation Act 2003 for tabling, disallowance, and sunsetting.

The text provided contains a note at the heading of sections 1 and 2 indicating “[see Note 1]”, which suggests that the Act has been amended and that a notes document exists showing the amendment history. However, the user has provided only the sections of the Act without any notes or amendment details. Section 2 states that the Act commences on the same day as Part 23 of the Superannuation Industry (Supervision) Act 1993. The SIS Act received Royal Assent on 2 December 1993, and Part 23 commenced on 1 July 1994. Therefore, the Levy Act commenced on 1 July 1994. Because the source text does not reproduce any amendment Acts, it is not possible to trace changes to sections 6 (which originally referred to a single determination) or the insertion of subsections (1A) and (1B) dealing with multiple determinations in a financial year. Similarly, the maximum rate of 0.0005 in section 8(2) may have been amended from an earlier figure. Practitioners should consult the official compilation of the Act on the Federal Register of Legislation to obtain the complete amendment history. The Act as originally enacted may have differed in its caps and in the classes of funds covered. Without access to the amendment notes, this deep dive must rely solely on the text as provided, which may represent the current version or a prior version. Users are cautioned to verify the applicable version for the relevant levy period.

The source text of the Act does not contain any references to litigation, nor does it name any cases. The Act itself is a short machinery Act with limited scope for interpretive disputes. However, litigation could theoretically arise over the validity of regulations imposing a levy, particularly regarding the operation of the caps in sections 7 and 8. For example, a fund might challenge a regulation on the ground that it discriminates between States in contravention of section 9(2), or that the applicable rate exceeds 0.0005 in breach of section 8(2). Section 7(3) expressly protects the validity of a regulation from challenge solely on the ground that the rate exceeds what is necessary under subsections 7(1) and 7(2), but it does not protect against a breach of the rate cap. There may also be litigation concerning the asset valuation methodology or the definition of “value of assets” in section 8, although the Act does not specify a valuation standard. The parent Act (SIS Act Part 23) has been the subject of judicial consideration, but that is outside the scope of this document. Because the Levy Act is invoked only when financial assistance is granted, the number of levy impositions is small, which may account for a lack of reported decisions. Researchers seeking litigation history should search for cases involving the Superannuation (Financial Assistance Funding) Levy Act 1993 specifically, using legal databases. Without further source material, no specific cases can be referenced in this deep dive.

Several provisions in this Act contain traps for the unwary. First, the definition of “fund” in section 5 excludes self managed superannuation funds, but it includes approved deposit funds. Practitioners handling ADFs must ensure they are not overlooked when a levy is imposed. Second, the levy is imposed by regulations, not by the Act itself. A fund may not be aware that a levy regulation has been made unless it monitors the Federal Register of Legislation. The regulation takes effect from the day specified in the regulation, which could be retrospective (limited by the Legislation Act 2003). Third, the formula for the amount of levy (section 8(1)) uses the value of the fund’s assets “at the end of the last financial year of the fund before the day on which the regulation imposing the levy took effect.” This is not a universal date; a fund with a 30 June year end may be using a valuation that is up to 11 months old, while a fund with a 31 December year end may use a valuation that is up to 5 months old. Funds must therefore maintain accurate asset valuations as at their own balance date. Fourth, the regulations may prescribe a minimum amount of levy (section 8(1A)(b)). Small funds that would otherwise pay a trivial amount may be caught by the minimum. Fifth, the regulations may also prescribe a maximum amount, but the cap in section 8(2) (0.0005 of asset value) is a separate statutory limit. If the regulation purports to set a rate above 0.0005, it is ultra vires, but if it sets a maximum above that figure, it is the statutory cap that prevails. Sixth, if the Minister makes multiple determinations in a financial year, the regulations must specify all the assisted funds and the proportion of the levy attributable to each (section 6(1B)). If the regulations omit this information, they may be invalid for non-compliance. Seventh, section 9 allows different rates for different classes of funds. A fund may be surprised to find itself in a class with a higher rate. Eighth, the object in section 3 refers to funding assistance to funds that have suffered loss from “fraudulent conduct or theft”. If the loss was from negligence or market downturn, no assistance can be granted, and no levy can be imposed.

To comply with the Superannuation (Financial Assistance Funding) Levy Act 1993, a regulated superannuation fund (including an approved deposit fund, but excluding a self managed superannuation fund) must take the following steps. First, monitor the Federal Register of Legislation for any regulation made under section 6 of the Act. Such a regulation will be identified by a unique number (section 6(2)) and will state the applicable rate, any maximum or minimum amounts, and the class or classes to which it applies. Second, determine whether the fund is exempt from the particular levy: the fund itself is not the fund that received the financial assistance determination (section 6(1)(a)), nor is it another fund that received a determination in the same financial year (section 6(1)(b)). If the fund is not exempt, it is liable. Third, calculate the levy amount using the formula in section 8(1) , multiply the applicable rate (a decimal fraction, not exceeding 0.0005) by the value of the fund’s assets at the end of its last financial year before the regulation took effect. If the regulation prescribes a maximum or minimum levy, apply those caps after calculating the formula amount (section 8(1A)). Fourth, pay the levy in accordance with the regulations. The Act does not specify timing or method; these will be set out in the levy regulation itself (likely requiring payment within a stated period to the Commissioner of Taxation or to APRA). Fifth, maintain records of the asset valuation used, the calculation, and proof of payment. Because the levy is determined on the basis of asset values as at a specific date, the fund should have audited financial statements or trustee-certified reports for that date. Sixth, if the fund is part of a class that attracts a higher rate, the trustee should verify that the class definition does not discriminate between States (section 9(2)). Seventh, if the fund believes that a regulation exceeds the 0.0005 rate cap or otherwise contravenes the Act, it should seek legal advice promptly because payment deadlines will apply and a challenge after payment may be more difficult. Eighth, trustees should be aware that section 4 applies Division 2 of Part 1 of the SIS Act, which may impose obligations to provide information or assist in the collection of the levy. Failure to comply could lead to enforcement under the SIS Act.