Issue 1014
In this issue:
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- Banning the use of genetic test results in life insurance: consultation
- Reducing red tape in the tax system: Board of Taxation review
- Breach and IDR reporting data publication: ASIC approach
- Superannuation platform trustee obligations: regulator and Government comments
- Updated tax rulings: superannuation contributions, non-arm’s length expenditure
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Banning the use of genetic test results in life insurance: consultation
The Government is consulting on draft legislation to implement its proposed ban on the use of genetic testing results in life insurance.
According to the explanatory material, the proposed ban stops insurers asking for or using the results when underwriting life insurance policies. There is an exception where both:
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- the policyholder (or their authorised agent or medical practitioner) volunteers the test
- using it improves the policyholder’s or beneficiary’s outcomes.
This follows two earlier rounds of consultation and the Government’s announcement in September 2024 that it would proceed with the ban (see ASFA Action issues 983 and 964 for background).
The earlier consultation paper acknowledged that default insurance in Australia provided through a superannuation fund or employer is not individually underwritten. In contrast, voluntary insurance, including life insurance purchased from an insurer, via a financial adviser or a voluntary increase in group superannuation will generally be individually underwritten.
If you have any feedback you would like ASFA to consider in relation to the draft legislation, please forward it to Ross Clare by close of business Friday 3 October.
Reducing red tape in the tax system: Board of Taxation review
The Treasurer has asked the Board of Taxation to identify ways to “responsibly reduce unnecessary compliance burdens and red tape in the tax system”. This forms part of a broad program of regulatory simplification and focus on measures to improve productivity, following on from the recent Economic Reform Roundtable.
The Board will “look for substantial, material and measurable areas of red tape reduction that directly support productivity” and will “consult with businesses and the broader community to identify areas of business tax law and administration where there are opportunities for red tape reduction”.
While the Board has not yet called for submissions, members are encouraged to forward to Julia Stannard any matters they would like ASFA to consider as part of this process.
Breach and IDR reporting data publication: ASIC approach
ASIC has outlined its approach to publishing two public-facing dashboards containing internal dispute resolution (IDR) and reportable situations (breach) data.
ASIC has confirmed that it will proceed with previously announced plans to publish IDR data reported by financial firms at firm-level. Taking into account feedback received, ASIC has made key changes to how the data will be presented, including around complainant privacy, data comparisons, and explanatory material to support contextualisation. The first IDR dashboard will be published later this year.
ASIC has also indicated that, after careful consideration of feedback received, it will not proceed with its initial proposal to publish firm-level reportable situation data and will instead publish aggregate-level data about reportable situations. In making this decision, ASIC sought to balance the benefits of firm-level transparency against concerns around the maturity of the reportable situations regime, particularly following recent changes to firms’ reporting obligations. ASIC will publish the reportable situations dashboard in October, in line with legislative requirements.
ASIC consulted on its proposals to publish this data in April-May – see ASFA Action issue 992 for background.
Superannuation platform trustee obligations: regulator and Government comments
In the context of well-publicised actions underway regarding the Shield Master Fund and First Guardian Master Fund, and the loss of consumers’ superannuation invested in those products through some platforms, the Government and the regulators have made noteworthy comments about superannuation trustees’ obligations and potential avenues for reform.
The Assistant Treasurer and Minister for Financial Services Daniel Mulino MP noted that ASIC is “continuing to explore all options to hold parties to account and ensure that investors, where possible, are remediated”. Further: “As minister I am also engaging regularly with ASIC, my department, and with key industry stakeholder groups in order to better understand the drivers of conduct that have led to these collapses, and how we can work together with the sectors to implement sensible reforms that better protect consumers in the future… We are seeing failings at every step of the value chain, including from lead generators, financial advisors, superannuation trustees, auditors, managed investment schemes and research houses.”
In notes from a recent joint Superannuation CEO Roundtable, APRA:
- commented that the result of these products being available through some superannuation platforms could weaken confidence in the superannuation system
- expressed that all trustees must work collaboratively as far as possible and appropriate when considering how to lift practices to prevent future harm to investors and consumers
- reminded trustees that the involvement of financial advisers in recommending platform choice products to members does not absolve trustees from their obligations under section 52 of the Superannuation Industry (Supervision) Act 1993 and from compliance with APRA’s prudential requirements.
ASIC reaffirmed its commitment to monitoring trustees’ oversight of advice fee deductions, and urged trustees to disrupt business models that may compromise member outcomes.
Updated tax rulings: superannuation contributions, non-arm’s length expenditure
The ATO has published an updated version of taxation ruling TR 2010/1 Income tax: superannuation contributions.
The ruling has been updated to explain the interactions between the non-arm’s length income provisions and the rules concerning superannuation contributions and reflect the removal of the maximum earnings test for the purpose of deducting personal contributions, from 1 July 2017. This follows consultation on a draft of the update in December 2024-January 2025 – see ASFA Action issue 975 for background.
The ATO has also published an updated version of law companion ruling LCR 2021/2 Non-arm’s length income – expenditure incurred under a non-arm’s length arrangement.
This ruling is primarily of interest for small superannuation funds. The updated version outlines the ATO view as to how the recent amendments to section 295-550 of the Income Tax Assessment Act 1997 apply to a small complying superannuation fund (a complying superannuation entity with no more than 6 members including a self-managed super fund) that incurs non-arm’s length expenditure (NALE) (or where expenditure is not incurred) in gaining or producing ordinary or statutory income. Those legislative amendments completely exempted larger funds from the NALE rules.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.