Welcome to the latest issue of the KHQ Super Alert. This week, legislation relating to the Compensation Scheme of Last Resort received Royal Assent, APRA released initial findings of its ongoing cyber security assessment and the ATO began consultation on a draft taxation determination on the interaction of the NALI and CGT provisions.
APRA – Initial findings from cyber security assessment
On 5 July 2023, APRA issued a media release summarising its first round of findings in relation to the independent tripartite cyber assessment it is conducting on ‘more than 300 banks, insurers and superannuation trustees’. According to the media release, ‘[t]he assessment required APRA’s regulated entities to appoint an independent auditor to assess their compliance with prudential standard CPS 234 Information Security (CPS 234)’.
According to the media release, in this ‘first tranche of CPS 234 assessments’, approximately 24% of regulated entities were assessed. APRA reports that there were six commonly identified control gaps in this tranche:
- ‘incomplete identification and classification for critical and sensitive information assets’;
- ‘limited assessment of third-party information security capability’;
- ‘inadequate definition and execution of control testing programs’;
- ‘incident response plans not regularly reviewed or tested’;
- ‘limited internal audit review of information security controls’; and
- ‘inconsistent reporting of material incidents and control weaknesses to APRA in a timely manner’.
The second and third tranches of APRA’s assessment are currently underway and the ‘final tranche is expected to be rolled out later in the year’. APRA has encouraged entities to review the weaknesses outlined in the media release and ‘address shortfalls in their cyber security controls and governance policies’.
Click here for details.
Legislation – Compensation Scheme of Last Resort
On 3 July 2023, legislation relating to the establishment of the Compensation Scheme of Last Resort received Royal Assent. The Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Act 2023, the Financial Services Compensation Scheme of Last Resort Levy Act 2023 and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 establishes the Compensation Scheme of Last Resort, a Commonwealth-funded scheme providing compensation to consumers in circumstances where a determination issued by AFCA remains unpaid. For further details on this legislation see our Super Alert from 23 June 2023.
Click here, here, and here for details.
Legislation – APRA’s supervisory levies determined
On 30 June 2023, the Australian Prudential Regulation Authority Supervisory Levies Determination 2023 was registered on the Federal Register of Legislation. This Determination commences on 1 July 2023, and determines the supervisory levies to be paid by APRA-regulated entities for the 2023-24 financial year. These proposed levies were released for consultation in May this year (see our Super Alert from 2 June 2023).
Click here for details.
APRA – Two new quarterly superannuation publications released
On 30 June 2023, APRA released the first iteration of the Quarterly Superannuation Product Statistics and the March edition of the Quarterly Superannuation Industry publication. Both publications utilise data reported by APRA-regulated superannuation funds in accordance with the reporting standards implemented in Phase 1 of the superannuation data transformation project.
According to the related APRA media release, ‘[t]he inaugural issue of the publication shows’:
- the details and structure of 1,161 superannuation products as at 31 March 2023’, including ‘roughly 164,000 investment options offered through these products, of which around 124,000 are available to members to invest in directly, such as shares or term deposits’; and
- ‘key performance metrics for 69 MySuper products and 681 multi-sector investment options available through non-platform choice products in the accumulation phase’, covering ‘around $330 billion of members’ funds (49 per cent of the accumulation choice product segment)’.
Click here, here, and here for details.
ATO – Consultation on draft taxation determination in relation to NALI and CGT
On 30 June 2023, the ATO released a draft taxation determination for consultation called TD 2023/D1 – Income tax: how the non-arm’s length income and capital gains tax provisions interact to determine the amount of statutory income that is non-arm’s length income. TD 2023/D1 will be relevant in calculating ‘statutory income for the purposes of subsection 295-550(1)’ of the Income Tax Assessment Act 1997 (Cth) and ‘tax payable by superannuation funds…using the method statement in subsection 295-10(1)’.
The consultation of this draft taxation determination is separate to the Government’s consultation in relation to the implementation of the NALI/NALE changes announced in the Federal Budget (see our Super Alert from 12 May 2023).
Consultation will close on 28 July 2023.
Click here for details.
This alert was written by Kiara Leslie (Lawyer), Sanela Osmanovic (Senior Associate), Damian Tarulli (Special Counsel), and Natalie Cambrell (Director).
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