Welcome to the latest issue of the KHQ Super Alert. Several superannuation Bills have been passed this week including the significant Your Future, Your Super reforms. Parliament has also amended the ‘bring forward’ rules for non-concessional contributions, set the new interest rate for family law splits and made changes to the AML/CTF Rules.
Parliament – Your Future, Your Super reforms passed
On 17 June 2021, the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 was passed by both Houses of Parliament. See our Super Alert of 19 February 2021 for a summary of the regulatory changes proposed by the Bill.
The Senate had earlier in the day made amendments to the Bill, which were accepted by the House of Representatives. These amendments were to:
- defer the commencement date of the ‘stapling’ measure to 1 November 2021 (instead of 1 July 2021); and
- make other technical changes to the underperformance test and best financial interests changes.
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Parliament – Bill for extension of bring forward rules passed
On 17 June 2021, the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 was passed by both Houses of Parliament. This Bill seeks to amend the Income Tax Assessment Act 1997 ‘to enable individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions under the bring forward rule’. These changes will be effective on 1 July or 1 October, depending on when the Bill receives Royal Assent.
The Senate had earlier in the day made amendments to the Bill, which were accepted by the House of Representatives. These amendments were to:
- allow individuals who have utilised the COVID early release scheme to make ‘re-contributions’ that do not count towards their non-concessional contributions cap (effective from 1 July 2021); and
- repeal the Superannuation (Excess Concessional Contributions Charge) Act 2013 in its entirety.
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Legislation – family law interest rates set for 2021/22
On 17 June 2021, the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2021 was registered on the Federal Register of Legislation. This Determination ‘provides the interest rate for adjusting entitlements under certain orders or agreements made under the Family Law Act 1975 and for splitting future superannuation benefits for the adjustment period that is Financial Year 2021/22. It also provides the method by which the interest rate is calculated for that purpose for an adjustment period that includes a period within that financial year’.
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Legislation – changes to Anti-Money Laundering Rules
On 16 June 2021, the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2021 (No. 1) was registered on the Federal Register of Legislation. The Instrument ‘inserts new Chapters 3, 6, 7 and 10 in the Anti-Money Laundering and Counter-Terrorism Financing Rules’. Chapter 6 relates to the verification of identity procedures.
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APRA – APRA Connect test environment
On 15 June 2021, APRA announced that the test environment for APRA Connect would go live on Thursday 17 June. This will allow people ‘to become familiar with APRA Connect and trial submission of data’. APRA has also provided a link to a webinar which it conducted on 10 June 2021 which provided ‘an overview of available information and support and included a demonstration of APRA Connect’.
ASIC – further guidance for ongoing fee arrangements
On 15 June 2021, ASIC released an information sheet which sets out frequently asked questions ‘about the obligations that apply to fee recipients who provide personal advice to retail clients under an ongoing fee arrangement’. These obligations will apply from 1 July 2021 and were introduced by the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021.
ASIC has provided responses to questions such as ‘When does an ongoing fee arrangement exist?’, ‘What are the consequences of not complying?’ and ‘What records need to be kept?’. ASIC has noted that it ‘does not have powers to provide exemptions from [these] obligations in the law or to modify how the obligations apply’.
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Parliament – financial adviser regulations proposed
On 11 June 2021, Senator Jane Hume announced that the Government is proposing to make regulations in the next fortnight which relate to the ongoing fee arrangements introduced by the Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021. The regulations are aimed at lowering compliance costs for financial advisers.
Under the Act, financial advisers are ‘required to report the fees paid under an ongoing fee arrangement and provide a reasonable estimate of the fees that will be paid in the subsequent 12 months’. It is proposed that during the transition period of 1 July 2021 to 30 June 2022, financial advisers will be allowed ‘to report an estimate of fees for the 60 days prior to the statement being issued. The estimate would be reported alongside the actual fees charged for the remainder of the previous 12 months’.
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