Welcome to the latest issue of the KHQ Super Alert. In a busy week, seven key Bills were passed by Parliament including privacy and cyber security-related Bills, and the Superannuation Objective Bill. APRA and ASIC provided some additional guidance (in the form of lessons from the banking industry) in relation to the implementation of the FAR regime. APRA also published the superannuation statistics for the September quarter.
Parliament – AML/CTF Bill passes Parliament
On 29 November 2024, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) was passed by both Houses of Parliament. As referred to in our Super Alert of 22 November 2024, the Bill makes various amendments to the AML/CTF Act such as changes to:
- ‘reframe and clarify the AML/CTF program and customer due diligence obligations’;
- ‘enable the Australian Transaction Reports and Analysis Centre to require the disclosure of information and conduct examinations’ and
- ‘update the AML/CTF regime to reflect changing business structures, technologies and illicit financing methodologies’.
Click here for details.
Parliament – Privacy reforms pass Parliament
On 29 November 2024, the Privacy and Other Legislation Amendment Bill 2024 (Cth) was passed by both Houses of Parliament. As referred to in our Super Alert of 20 September 2024, this Bill makes various changes to the Privacy Act 1988 (Cth) such as increasing civil penalties and introducing a statutory tort for serious invasions of privacy.
Click here for details.
Parliament – Family law reforms pass Parliament
On 29 November 2024, the Family Law Amendment Bill 2024 (Cth) was passed by both Houses of Parliament. As referred to in our Super Alert of 30 August 2024, the superannuation-related changes in the Bill include:
- inserting ‘a new provision providing a power to make regulations requiring superannuation trustees to review the actuarial formulas used to value superannuation interests for family law property matters to ensure courts have access to accurate and reasonable valuations of superannuation interests when determining a just and equitable property division for separating parties’;
- introducing ‘a duty of disclosure that applies to separating de facto couples in Western Australia who are allocating their superannuation interests’; and
- requiring ‘each party in [a family law] proceeding [to] give all relevant information and documents to the family law courts and each other party in a timely manner’ – this extends to third parties such as superannuation trustees that may be joined to proceedings.
Click here for details.
Parliament – Objective Bill passes Parliament
On 28 November 2024, the Superannuation (Objective) Bill 2023 (Cth) was passed by both Houses of Parliament. As referred to in our Super Alert of 17 November 2023, the Bill creates a new standalone Act which states that ‘[t]he objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’.
As outlined in the Explanatory Memorandum, the Bill will require ‘policy makers to assess future changes to superannuation legislation for compatibility with this objective’ and is not intended to:
- ‘change the operation or interpretation of existing superannuation law, prudential standards or governing rules of superannuation entities’;
- ‘impact regulatory supervision activities’; or
- ‘guide the regulation of trustees’ conduct or change existing trustee obligations’.
Click here for details.
APRA – Implementation of the Financial Accountability Regime
On 27 November 2024, APRA issued a joint media release with ASIC announcing that they ‘have published a letter containing observations on registration and notification lodgements made since the Financial Accountability Regime (FAR) commenced for the banking industry’. The letter ‘reiterates and highlights for banking, insurance and superannuation entities specific aspects consistent with previously released FAR guidance’.
It also states that ‘[a]ccountable entities should have robust frameworks in place to ensure that registration and notification submissions are complete and comply with applicable obligations under the FAR’ and encourages accountable entities ‘to review the observations and areas for further consideration provided in the appendix’ to the letter.
Click here for details.
APRA – Superannuation statistics for September 2024
On 27 November 2024, APRA ‘released its Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report for the September 2024 quarter’. The key statistics contained in the release highlight the following:
- total superannuation assets are now over $4 trillion;
- there was an increase in ‘total contributions’ ‘by 13.1 per cent’ compared to this same time last year; and
- an increase in ‘benefit payments’ ‘by 11.4 per cent’ compared to this same time last year.
Click here for details.
ATO – Consultation on NALE/NALI arrangements
On 27 November 2024, the ATO launched a ‘consultation on draft guidance to clarify how NALE [non-arm’s length expenditure] and super contributions impact SMSFs and small APRA-regulated funds’. (It does not relate to APRA regulated funds.) The ATO is seeking feedback on its proposed guidance in relation to ‘[r]ecent amendments to section 295 -550 of the Income Tax Assessment Act 1997’, which were ‘part of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024’.
The points noted by the ATO in its announcement include the following:
- ‘Where a fund trustee fails to deal at arm’s length in respect of a particular asset and fails to pay an arm’s length price for anything related to that asset, all income in respect of that asset (which may include any capital gain on its disposal) will be NALI. This income will be subject to the highest marginal rates of tax’.
- ‘When a person provides services to a fund in their capacity as trustee of the fund, the NALI provisions do not apply, even if no amount is charged to the fund’.
- ‘Fund trustees should keep records of all dealings to demonstrate the arm’s length nature of the dealing (including the price paid)’.
The consultation period will close on 24 January 2025.
Click here for details.
ATO – Unclaimed money with New Zealand-sourced amounts
On 27 November 2024, the ATO issued a media release in relation to unclaimed superannuation money that is paid to the ATO which contains New Zealand-sourced amounts. The ATO has advised that ‘any accounts with NZ-sourced amounts must be reported separately’ and not through the standard unclaimed money or trustee voluntary payment process.
A paper form has been provided by the ATO for these amounts. The ATO has also requested trustees to contact it if this process has not been followed previously for New Zealand-sourced amounts so that the ATO ‘can assist you in rectification action’.
Click here for details.
Parliament – Various cyber security Bills passed by Parliament
On 25 November 2024, the Security of Critical Infrastructure and Other Legislation Amendment (Enhanced Response and Prevention) Bill 2024, Cyber Security Bill 2024 and Intelligence Services and Other Legislation Amendment (Cyber Security) Bill 2024 passed both Houses of Parliament. As referred to in our previous Super Alerts, these Bills are part of a package of reforms which propose to introduce ‘a mandatory reporting obligation for entities who are affected by a cyber security incident, receive a ransomware demand and elect to make a payment or give benefits in connection with that cyber security incident’.
Some amendments were made to the legislation before it was passed. The amendments include the introduction of specific notification requirements of certain security assessments under the Security of Critical Infrastructure and Other Legislation Amendment (Enhanced Response and Prevention) Bill 2024 and the introduction of an option for the Parliamentary Joint Committee on Intelligence and Security to review the Cyber Security Bill 2024 ‘as soon as practicable after 1 December 2027’.
Click here, here and here for details.
ASIC – Updates proposed in relation to some regulatory guides
On 25 November 2024, ASIC announced that is ‘is updating its regulatory guides (RGs) to ensure they remain simple to follow, effective, current, and appropriate.’ ASIC anticipates that ‘[i]n 2025, ASIC will consult with stakeholders to update some key RGs’, including:
Regulatory Guide 53: The use of past performance in promotional material
Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations)
Regulatory Guide 181: Licensing: Managing conflicts of interest
Regulatory Guide 183: Approval of financial services codes of conduct, and
Regulatory Guide 234: Advertising financial products and services (including credit): Good practice guidance.
ASIC has included a link to its ‘Regulatory developments timetable’ so the public can track its ‘proposed timeframes for ASIC regulatory work’.
Click here for details.
APRA – Chair’s Opening Statement to Senate Economics Legislation Committee
On 22 November 2024, APRA’s Chair, John Lonsdale, addressed the Senate Economics Legislation Committee ‘to provide the Committee with an update on APRA’s initiatives to uphold safety, stability and resilience in Australia’s financial system…’. In his speech, Mr Lonsdale stated that ‘the [superannuation] industry is strong and robust, yet APRA’s clear focus remains on driving trustees to improve the outcomes for fund members’.
He also explained that ‘[f]ollowing the introduction of the best financial interests duty (BFID), APRA intensified supervision and focus on trustee expenditure and began gathering information from trustees’ because ‘APRA seeks to ensure expenditure is in members’ best financial interests through transparency and intensive supervisory focus, especially where the benefit to members is not immediately evident or may not be reasonably justified’.
Click here for details.
ASIC – New and updated guidance in response to Quality of Advice reforms
On 21 November 2024, ASIC released new guidance materials and some updated guidance materials in response to the first tranche of Quality of Advice review reforms in the Treasury Laws Amendments (Delivering Better Financial Outcomes and Other Measures) Act 2024. Updates have been made to Regulatory Guide 246: Conflicted and other banned remuneration and Regulatory Guide 175: AFS Licensing: Financial product advisers–Conduct and disclosure, while the following information sheets are new:
- Information Sheet 286 FAQs: Ongoing fee arrangements and consents, ‘which answers frequently asked questions (FAQs) for financial advisers who must get a client’s written consent to enter into or renew an ongoing fee arrangement’;
- Information Sheet 287 FAQs: Non-ongoing fee requests or consents, ‘which answers FAQs for financial advisers who must get a client’s written request or consent to charge non-ongoing fees to client superannuation accounts’;
- INFO 291 FAQs: FSGs and website disclosure information, ‘which answers FAQs about obligations relating to Financial Services Guides (FSGs) and website disclosure information’; and
- INFO 292 FAQs: Informed consents for insurance commissions, ‘which answers FAQs about the obligation to obtain informed consent before receiving certain insurance commissions to avoid them being conflicted remuneration’.
Some minor, consequential amendments have also been made to Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees, Regulatory Guide 138 Foreign passport funds and Information Sheets 141, 228, 266, 267 and 274.
Click here for details.
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