Welcome to the latest issue of the KHQ Super Alert. This week Parliament passed Bills to make changes to ASIC’s product intervention powers and to establish the Financial Regulator Assessment Authority. The Bill to establish a single disciplinary body for financial advisers was also introduced. The ATO has also issued a reminder to trustees in relation to the tax treatment of COVID-19 early release payments and the regulations to reduce the minimum pension drawdown rates for another financial year have been registered.
Parliament – Reduction in minimum pension drawdown rates extended
On 24 June 2021, the Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 were registered on the Federal Register of Legislation. As referred to in our Super Alert of 4 June 2021, these regulations amend the SIS Regulations ‘to extend the temporary reduction in minimum payment amounts for account based pensions, allocated pensions and market linked pensions (and for the equivalent annuity products) by half for the 2021-22 financial year’.
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Parliament – Bill to amend ASIC’s product intervention powers
On 24 June 2021, the Treasury Laws Amendment (2021 Measures No. 4) Bill 2021 was passed by both Houses after being introduced to the Senate earlier in the week. The Bill proposes various amendments to several Treasury laws including the Corporations Act 2001. The Bill proposes to amend the Act ‘to provide that ASIC is not prohibited from making a product intervention order that has conditions relating to fees, charges or other consideration paid or payable as remuneration by a retail client or consumer to a person, including the provider (or their associates) of a financial product’.
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Parliament – Bill to establish single disciplinary body for financial advisers
On 24 June 2021, the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 was introduced to the House of Representatives. According to the Explanatory Memorandum, the Bill proposes to:
- expand ‘the role of the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers to ensure that less serious misconduct does not go unaddressed’;
- create ‘new penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act’;
- introduce ‘a new registration system for financial advisers to improve the accountability and transparency of the financial services sector’;
- transfer ‘functions from FASEA to the Minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers’; and
- introduce ‘a single registration and disciplinary system under the Corporations Act for financial advisers who provide tax (financial) advice services’ and remove ‘duplicate regulation’.
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Parliament – Regulator Assessment Bills
On 23 June 2021, the Financial Regulator Assessment Authority Bill 2021 passed both Houses of Parliament after amendments made by the Senate were accepted. As referred to in our Super Alert of 14 May 2021, the Bill proposes to establish the Financial Regulator Assessment Authority to assess the effectiveness and capability of each of APRA and ASIC. The Senate amendments relate to removing the requirement for a staff member from the Department of Treasury to be a member of the Authority’s panel.
The related Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 was passed by both Houses of Parliament the day before. This Bill ‘amends five Acts to make amendments consequential on the establishment of the Financial Regulator Assessment Authority’.
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ATO – Tax treatment of COVID-19 early release payments
On 21 June 2021, the ATO issued a reminder to trustees that any COVID-19 early release scheme payments to members should be excluded from the fund’s pay as you go (PAYG) withholding payment summary annual report. The ATO notes that COVID-19 early release of superannuation payments ‘are tax free and are therefore not included in a member’s assessable income and do not need to be reported to the ATO’. Otherwise, this could result in a miscalculation of tax and require remediation by the fund. This tax treatment is different from payments made under other compassionate grounds (as these should continue to be included in PAYG reporting).
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ASIC – Extension of dealing authorisation relief
On 18 June 2021, the ASIC Corporations (Amendment) Instrument 2021/550 was registered on the Federal Register of Legislation. Relief is currently provided to trustees of public offer entities in the ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 which provides that the trustee does not need to hold an AFSL ‘covering the provision of the financial service of dealing in a financial product (other than an interest in the entity) by the trustee in the ordinary course of operation of the entity’. ASIC has extended this relief to all RSE licensees given that non-public offer trustees will from 1 July 2021 be regulated consistently with public offer trustees.
ASIC has advised that the relief will end on 31 December 2022 and that ‘no immediate action is required by trustees who currently rely on the relief or wish to do so in the future’.
