Welcome to the latest issue of the KHQ Super Alert. This week, the Federal Government announced that it intends to amend the non-arm’s length income provisions to ensure that they operate appropriately, and ASIC has commenced surveillance on managed funds’ performance and risk marketing. An international guidance paper has also been released in relation to developing pension projections.
Legislation – Delay to ATO reporting for DASP payments
On 24 March 2022, the Taxation Administration – Payment Summary Deferral: Employment Termination and Departing Australia Superannuation Payments Deferral 2022 was registered on the Federal Register of Legislation. The instrument defers the due date for providing the ATO ‘with copies of payment summaries in respect of…departing Australia superannuation payments to 14 August after the end of a financial year for any payment made. These copies would otherwise have to be provided to the [ATO] 14 days after the date of making the payment’.
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ASIC – Marketing of managed funds’ performance and risks scrutinised
On 23 March 2022, ASIC issued a media release in relation to its surveillance of managed funds that may be employing ‘misleading performance and risk representations in promotional material’. According to ASIC, it ‘is concerned that, in the current highly volatile and low-yield environment, consumers seeking reliable or high returns are being misled about the performance and risks of the funds that they are investing in’.
In response, ‘ASIC is scrutinising traditional and digital media marketing of funds, including search engine advertising, targeting retail investors and potentially unsophisticated wholesale investors, such as some retirees’.
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Government – Amendments to non-arm’s length income provisions anticipated
On 22 March 2022, Senator Jane Hume issued a media release in relation to the Federal Government’s position on the ATO’s Law Companion Ruling 2021/2 on 28 July 2021 (LCR 2021/2) regarding non-arm’s length income (NALI).
Under section 295-550 of the Income Tax Assessment Act 1997 (Cth), NALI of a superannuation fund is taxed at the highest marginal rate rather than at the concessional rate of 15%. However, LCR 2021/2 suggests that the ATO’s view is that all of a superannuation fund’s income could potentially be considered NALI in a given period if certain fund expenses are less than might otherwise have been expected as a result of non-arm’s length dealings between the trustee and related parties.
Senator Hume’s media release acknowledges the need to ensure ‘the appropriate operation of the non-arm’s length income and expense provisions’, indicating that amendments will be forthcoming ‘to make sure [the law] operates as intended’. Any such amendments are set to apply from 1 July 2022.
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International – Pension projection design guidance
On 22 March 2022, the International Organisation of Pension Supervisors (IOPS) released a report titled ‘Good Practices for designing, presenting and supervising pension projections’. APRA Deputy Chair Helen Rowell is the president of IOPS and notes that the ‘steady development of pensions…highlights the increasing role and importance of pension projection tools to communicate with, educate and help pension fund members in making their retirement decisions’. According to Ms Rowell, IOPS has ‘gathered the experience from [its] large and diverse membership…[to ensure] these Practices will be useful, not only for pension supervisors, but also for policy makers and other stakeholders, including financial educators’.
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ASIC – Alleged anti-hawking offences following alleged superannuation sales cold calls
On 21 March 2022, ASIC issued a media release in relation to recent alleged breaches of anti-hawking provisions by an entity. It is alleged that ‘unsolicited calls [were made] to 11 consumers and encouraged them to roll over their superannuation into different superannuation products’.
The charges have been ‘brought under the previous anti-hawking provisions because they relate to conduct that allegedly took place prior to 5 October 2021′. According to the media release, ‘[t]he matter has been listed for a mention hearing on 16 May 2022’.
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