Welcome to the latest issue of the KHQ Super Alert. This week the ATO published a ruling in relation to the non-arm’s length income expenditure rules which were amended in 2019. ASIC also released its proposed cost recovery measures for the 2020/21 financial year, and the Government is requesting feedback from the industry on proposed regulatory measures for cyber security.
ATO – Ruling issued in relation to non-arm’s length income expenditure
On 27 July 2021, the ATO published Law Companion Ruling 2021/2 titled ‘Non-arm’s length income – expenditure incurred under a non-arm’s length arrangement’. The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Act 2019 amended the Income Tax Assessment Act 1997 to “ensure that the non-arm’s length income rules for superannuation entities apply in situations where a superannuation entity incurs non-arm’s length expenses in gaining or producing the income”.
The ATO’s Ruling “clarifies how the amendments to section 295-550…operate in a scheme where the parties do not deal with each other at arm’s length and the trustee of a complying superannuation entity incurs non-arm’s length expenditure (or where expenditure is not incurred) in gaining or producing ordinary or statutory income. The amendments apply in relation to income derived in the 2018-19 income year and later income years, regardless of whether the scheme was entered into before 1 July 2018”.
The ATO has also released a draft update to Tax Ruling 2010/1 to “explain the proposed interactions between the non-arm’s length income provisions and the rules concerning superannuation contributions”.
ASIC – 2020/21 Cost recovery implementation statement
On 23 July 2021, ASIC published its Cost Recovery Implementation Statement for the 2020/21 financial year. The Statement “outlines ASIC’s estimated regulatory costs for 2020-21 and how these will be recovered as industry levies under the industry funding model”. ASIC is seeking feedback from interested parties about the indicative levies. The feedback period closes on 13 August 2021.
Click here for details.
Government – Cyber security regulations
On 13 July 2021, the Department of Home Affairs released a discussion paper titled ‘Strengthening Australia’s cyber security regulations and incentives’. The paper relates to the Government’s consultation “on stronger cyber security regulations and incentives to support a growing digital economy and respond to a growing threat environment, particularly ransomware”.
The Government is seeking feedback “on possible voluntary and regulatory measures in…setting clear cyber security expectations…for corporate governance…[and] protecting consumer rights through appropriate legal remedies for victims”. As these measures will apply to all companies, any corporate trustees will be caught by the proposed changes.
Interested stakeholders are invited to provide a submission to the discussion paper and attend interactive virtual open forums which will be held in August. The feedback period closes on 27 August 2021.
Click here for details.
As referred to in our Super Alert of 23 July 2021, the consultation period for Treasury’s position paper on the retirement income covenant closes in one week on Friday 6 August.