AUSTRALIA - The Australian superannuation legislation will be changed to allow funds to continue to invest in 'instalment warrants' although the instrument is currently disallowed by the Superannuation Industry Supervision Act 1993.
Minister for revenue and assistant treasurer Peter Dutton announced the government would move to legislate to make warrants an investment superannuation funds can move into.
The government made the move because superannuation fund investment in instalment warrants was a long standing administrative practice and comprised a large portion of the instalment warrant market.
Such investments were disallowed under the SIS Act after the commissioner of taxation and the Australian prudential regulation authority decided the products entail a borrowing for the purposes of a section of the law.
This therefore made instalment warrants a disallowed investment for superannuation funds since there was a borrowing prohibition put in place in the 1980s to limit risk in the investments made.
To avoid any disruption to markets, regulators said that, pending the law change, superannuation funds investing in traditional instalment warrants would not be considered to be non-complying under the SIS Act merely because of their investment in those products.
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