Welcome to the second issue of the KHQ Super Alert. This issue mainly covers numerous releases from the regulators. The ATO guidance on SFT reporting may be of particular interest for those underway with SFTs.
ATO – COVID-19 early release integrity and compliance warning
On 18 June 2020, the ATO released a warning directed at individuals applying for COVID-19 early release of their superannuation. The ATO states that it ‘will take action where people deliberately exploit the system’, noting that the general anti-avoidance rule for income tax (Part IVA) may be invoked in some cases.
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ATO – CRT Alert 031/2020
On 19 June 2020, the ATO released a CRT Alert connected with the progress of the Treasury Laws Amendment (2020 Measures No. 3) Bill 2020 through Parliament. The ATO notes that the new measure ‘provides a new way of calculating the debit which arises in an individual’s transfer balance account when a member commutes a market linked pension which is a capped defined benefit income stream’. As a result, the ATO is reviewing its compliance approach on this issue.
Treasury Laws Amendment (2020 Measures No. 3) Bill 2020
On 19 June 2020, the Treasury Laws Amendment (2020 Measures No. 3) Bill 2020 received Royal Assent. It deals with a range of technical matters, including:
- an amendment to the fee cap on low balances to deal with circumstances when a product is only held for part of an income year;
- refinements to the reporting requirements under the unclaimed money legislation;
- amendments to ensure that an account is not an ‘inactive low balance account’ if the member has elected to maintain insurance on that account; and
- amendments to two of the exceptions to the definition of ‘inactive low balance account’.
Click here for details.
ASIC – updated COVID-19 FAQs for superannuation trustees
On 22 June 2020, ASIC updated its FAQs on ‘COVID-19 – Information for superannuation trustees’ by including two new questions and answers:
- How should trustees communicate with members about the Government’s temporary reduction to the minimum drawdown rates for the 2020-21 financial year? (FAQ 1F)
- How can I find out about how COVID-19 has affected other ASIC activities? (FAQ 2D)
Click here for more details.
ASIC – Report on decisions to cut red tape
On 23 June 2020, ASIC released its report (REP 664) on over 600 decisions it made during the period 1 October 2019 to 31 March 2020 to cut regulatory ‘red tape’.
In relation to superannuation, there was one decision reported whereby PDS and exit statement relief was granted for a successor fund transfer between two superannuation funds with different trustees within the same corporate group. ‘There was … to be no change in the administration system or manner in which members’ superannuation benefits would be administered. … Accordingly, we provided relief from the requirement that the trustee give transferring members a PDS relating to the transferee fund. We also granted relief from the requirement to provide members with an exit statement after the transfer’.
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ASIC – Conflicted remuneration proceedings issued
On 23 June 2020, ASIC announced that it has ‘commenced civil penalty proceedings in the Federal Court of Australia against Commonwealth Bank of Australia (CBA) and CBA’s subsidiary, Colonial First State Investments Limited (CFSIL) in relation to alleged conflicted remuneration paid by CFSIL to CBA between 1 July 2013 and 30 June 2019’.
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ATO – Successor fund transfer reporting
On 24 June 2020, the ATO released updated guidance on successor fund transfer reporting. The basic premise is that ‘if a member’s account is transferred from one registrable super entity (RSE) to another RSE with a different Australian business number (ABN), without their members’ consent, an SFT has occurred. … When the trustee of the transferring fund transfers cash and other assets of the fund to a successor fund, the transferring fund makes a payment that is a super benefit, of each member’s benefits to the successor fund. The payment of each member’s benefit is a rollover super benefit.’ From an ATO perspective, certain reporting consequences follow from that premise.
APRA – letter to RSEs on COVID-19 data collection
On 24 June 2020, APRA issued a letter to RSEs on COVID-19 data collection. It states that ‘APRA is releasing a COVID-19 Pandemic Data Collection (PDC) [request] to enable ongoing assessment of the impact of COVID-19 on the superannuation industry and the outcomes being delivered to members. The PDC will continue until issues that are being faced by registrable superannuation entity (RSE) licensees relating to the COVID-19 pandemic have abated. In this regard, a review of the continued need for the PDC will occur in late September 2020.’
Click here for more details.
