Welcome to the latest issue of the KHQ Super Alert, the last for the 2023/24 financial year! This week Treasury released a consultation paper which seeks feedback about recent changes to electronic document execution and virtual meetings. ASIC also published a speech delivered by one of its Commissioners in relation to financial advice.
KHQ article – Breaking down Braz
Today we have published an edited version of the article written by Sanela Osmanovic which was originally published in the Australian Superannuation Law Bulletin in May 2024. In Braz v Host-Plus Pty Ltd [2023] FCA 1454, the Federal Court considered the unfortunate circumstances of a scammer who swindled over $170,000 out of a member’s superannuation account. The article explores the various practical questions about trustees applying the outcomes of the case, especially in light of the additional media attention surrounding this case during the week.
Click here for details.
ATO – Changes to income stream ruling
On 26 June 2024, the ATO published an amended version of Taxation Ruling 2013/5 Income tax: when a superannuation income stream commences and ceases. The purpose of the amendments is to:
- update the Ruling to ensure it reflects recent legislative amendments;
- ‘clarify how the general principles in that Ruling apply in the context of successor fund transfers’; and
- ‘remove practical compliance approaches that are no longer current’.
For example, the Ruling now makes clear that ‘[w]here the trustee of the successor fund assumes the liability to pay superannuation income stream benefits, a new superannuation income stream will be taken to commence from the interest in the successor fund’.
Click here for details.
ATO – Survey in relation to APRA-regulated funds
On 26 June 2024, the ATO announced that it had reviewed industry feedback in relation to its administration of the superannuation system. It was pleased that APRA-regulated funds provided a positive response, and explained that it has taken note of the feedback to publish further ‘information on super administration and reporting, successor fund transfers and tax governance’.
Click here for details.
Parliament – Bill exempting large APRA funds from NALI/NALE provisions
On 25 June 2024, the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 finally passed both Houses of Parliament. As referred to in our Super Alert of 15 September 2023, the Bill will amend:
- the rules for non-arm’s length expenses for superannuation entities (with retrospective effect), including by exempting large APRA-regulated funds and exempt public sector funds ‘from the non-arm’s length income rules to the extent they relate to non-arm’s length expenses’ (although they will still be ‘subject to the remaining non-arm’s length income rules for income derived on a non-arm’s length basis’); and
- ‘the Corporations Act to reinstate AFCA’s jurisdiction to hear complaints relating to superannuation, whether or not they meet the definition of superannuation complaint in the Corporations Act’. This amendment seeks to clarify the ‘policy intent’ of AFCA’s jurisdiction following the decision in MetLife v Australian Financial Complaints Authority [2022] FCAFC 173.
While the Senate requested several amendments be made to the Bill before it was passed, the House of Representatives disagreed with all proposed amendments. So the Bill has passed in its original form, except the year of the Bill has been updated to 2024.
Click here for details.
Treasury – Review into operation of electronic document execution and virtual meetings
On 24 June 2024, Treasury released a consultation paper called ‘Statutory Review of the Meetings and Documents Amendments’ prepared by an independent panel considering the effects of Schedule 1 of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 and Corporations Amendment (Meetings and Documents) Act 2022. The following topics are being examined by the panel:
- ‘regarding meetings of members [ie, shareholders], whether (compared to physical meetings) wholly online or hybrid meetings have created difficulties for members, in terms of their participation and voting in meetings or otherwise, and if so, how those problems might be addressed, and whether the cost of convening and holding wholly online or hybrid meetings is higher or lower than physical meetings’; and
- ‘regarding meetings of directors, any issues that have arisen in the conduct of directors’ meetings after the commencement of the [Acts]’
- ‘whether the [Acts] have succeeded in facilitating simple and efficient operation of technology neutral giving, signing and execution of documents’; and
- ‘whether, after the [introduction of the Acts], there are greater risks of fraudulent or other misuse of the law regarding signing and execution of documents’.
The consultation period closes on 19 July 2024.
Click here for details.
Parliament – Senate report into first Quality of Advice Bill
On 21 June 2024, the Senate Economics Legislation Committee tabled to Parliament its report in relation to the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024. As referred to in our Super Alert of 5 April 2024, the Bill implements the initial recommendations from the Quality of Advice Review and makes other technical amendments to Treasury laws. The Committee has recommended that the Bill be passed.
Click here for details.
ASIC – Speech in relation to financial advice matters
On 19 June 2024, ASIC published a speech delivered by Commissioner Alan Kirkland in relation to financial advice. Mr Kirkland reflects on the reforms in the financial advice industry in the past decade and made the following comments:
- ‘on 1 January, all in-scope financial firms…were due to report Internal Dispute Resolution data to ASIC… we expect to publish some observations from the initial data collections later this year, as well as providing feedback to industry, to improve the quality and consistency of reporting’; and
- in relation to advice fee deductions, ASIC is ‘focusing on trustees and calling on them to improve their oversight practices – calling on them to take a risk-based approach to protecting their members’ interests…[but] we are not asking trustees to check every piece of advice – that would not be practical’.
Click here for details.
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