ASFA Action Issue 964, 17 September 2024
In this issue:
- Family law super splitting amendments: Bill referred to Senate Committee
- Scams prevention framework: consultation
- Australia’s tax system: new Senate Committee inquiry
- Update on other Bills: super on PPL, privacy, AML/CTF and more
- Superannuation forecasts: update to ASIC relief instrument
- Delivering Better Financial Outcomes: tranche 1 regulations
- First Home Super Saver Scheme: ATO guidance, commencement of amendments
- Sustainable finance taxonomy
- Design & distribution obligations: ASIC call to action, updates to regulatory guide
- Payment Times Reporting Rules amendments
- Use of genetic testing results in life insurance underwriting to be prohibited
Family law super splitting amendments: Bill referred to Senate Committee
As reported in ASFA Action issue 961, the Government has introduced into Parliament the Family Law Amendment Bill 2024, which contains some amendments in relation to the superannuation splitting regime, including:
- a new power to make regulations requiring trustees to review the actuarial formulas used to value superannuation interests for family law property matters, in response to a direction from the Minister
- a new duty of disclosure for separated de facto couples, under which each party in the proceeding must give all relevant information and documents in a timely manner to the family law courts and each other party. The duty extends to third parties joined to the proceeding, which might include a superannuation trustee
- examples added of behaviour that may constitute economic or financial abuse in provisions about unreasonably denying financial autonomy – including forcibly controlling a person’s “money or assets, including superannuation” .
The Bill has been passed by the House of Representatives and introduced into the Senate, where it has been referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 31 October. Submissions to the Committee are due by 4 October.
If you have any feedback you would like ASFA to consider in relation to a submission to the Committee, please forward it to Fiona Galbraith by close of business Friday 27 September.
Scams prevention framework: consultation
The Government has released for consultation a draft of legislation to implement its proposed Scams Prevention Framework.
Once finalised, the legislation will:
- enable the Minister to designate sectors and establish sector-specific codes imposing mandatory obligations on designated sectors to combat scammers and protect Australians
- mandate designated sectors to have internal dispute resolution mechanisms that are accessible and transparent for customers
- enable an external dispute resolution scheme to be nominated for all scam complaints made under the Framework.
- build a coordinated intelligence sharing ecosystem by mandating timely reporting and information sharing across industry and government.
The sectors that will initially be designated under the Framework are banks, telecommunication service providers, and a range of digital platform services related to social media, paid search engine advertising and direct messaging services.
The Government undertook an earlier, high-level consultation in November 2023 – January 2024 (see ASFA Action issue 925). Notably, the consultation paper issued as part of that process indicated that sectors to be designated in future could include superannuation.
If you have any feedback you would like ASFA to consider in relation to a submission on the draft Framework legislation, please forward it to Sebastian Reinehr by close of business Friday 27 September.
Australia’s tax system: new Senate Committee inquiry
The Independent Senator Rennick has successfully moved for the establishment of a new Senate Economics References Committee inquiry into Australia’s taxation system.
The terms of reference note that the inquiry is to have particular reference to:
a. the social and economic impact of taxing people who earn less than the cost of living
b. assumptions used by Treasury in modelling income tax cuts
c. the tax arbitrage between onshore and offshore profits that encourage domestic profits to be transferred offshore rather than retained in Australia
d. the tax arbitrage between onshore and offshore profits that puts companies domiciled in Australia at a competitive disadvantage to companies domiciled offshore
e. the abolition of numerous tax loopholes that favour special interest groups, in particular foreign interests
f. the actual net company tax rate after franking credits have been refunded
g. the cost of recycling franking credits to and from Canberra
h. whether capital gains tax concessions for passive investment cause a misallocation of capital into the non-productive economy which has to be offset by higher taxes on active income which drives down productivity and the velocity of money
i. related matters.
Senator Rennick’s speech to the Senate when seeking the inquiry notes (amongst other things) the differential between tax rates inside and outside superannuation and his view that superannuation should be taxed based on income levels.
The Committee is due to report by 10 December, with submissions due by 18 October.
If you have any feedback you would like ASFA to consider in relation to a submission to the Committee, please forward it to Ross Clare by close of business Friday 11 October.
Update on other Bills: super on PPL, privacy, AML/CTF and more
In addition to developments in relation to the Family Law Amendment Bill 2024 (see earlier item), there have been several other updates of relevance to superannuation since the last ASFA Action.
Superannuation on Government-fund Paid Parental Leave (PPL)
As reported in ASFA Action issue 961, the Government has introduced into Parliament the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024. This proposes to add a superannuation contribution to the Commonwealth-fund Paid Parental Leave Scheme, for eligible recipients of Parental Leave Pay (PLP) under the Scheme.
During debate in the House of Representatives, the Opposition unsuccessfully moved amendments proposing that eligible recipients of PLP be given a choice between receiving:
- superannuation contributions on government funded PPL as proposed by the Government’s Bill; or
- an additional two weeks of government funded PPL; or
- a one-off payment equal to the total value of the superannuation entitlement for government funded PPL.
The Bill has now been passed by the House of Representatives without amendment and introduced into the Senate.
Privacy reforms
The Government has introduced into the House of Representatives the Privacy and Other Legislation Amendment Bill 2024, proposing significant reforms to Australia’s privacy laws. While none of the reforms are specifically directed at superannuation, many will be relevant to the way superannuation entities collect, hold, use and disclose personal information collected from fund members and beneficiaries.
The reforms follow a period of extensive review of the Privacy Act 1988, commenced by the former Government in 2019. Most recently, the Government released its response to that review in September 2023 (see ASFA Action issue 917). The Government has indicated that the Bill implements 23 of the 25 legislative proposals that it agreed to adopt in its response to the review.
The reforms include:
- clarifying that the ‘reasonable steps’ required of entities to protect information in Australian Privacy Principle 11 include technical and organisational measures
- providing greater certainty about when personal information can be disclosed overseas, and increasing mechanisms to facilitate the free flow of information across national borders while ensuring the privacy of individuals is respected (including by introducing a mechanism to prescribe countries and binding schemes as providing substantially similar protection to the APPs, to assist entities to assess whether to disclose personal information to an overseas recipient, and
- requiring entities to include information in privacy policies about automated decisions that significantly affect the rights or interests of an individual
- introducing a new statutory cause of action to address serious invasions of privacy
- facilitating information sharing where there has been an eligible data breach of an entity, to prevent or reduce the risk of harm arising from misuse of personal information
- introducing new penalties for breaches of the Privacy Act and strengthening the enforcement powers for the Commissioner and the courts
- enabling the Australian Information Commissioner to undertake public inquiries on matters relating privacy
- introducing requirements that entities must include information in privacy policies about the kinds of personal information used in, and types of decisions made by, computer programs that use personal information to make decisions (automated decision making (ADM) systems) that could reasonably be expected to significantly affect the rights or interests of an individual.
The Bill also contains a range of other measures, including around doxxing (the intentional malicious disclosure of an individual’s personal data online) and the establishment of a Children’s Online Privacy Code.
Reforms to AML/CTF regime
The Government has introduced into the House of Representatives the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. This proposes a range of reforms to anti-money laundering and counter-terrorism financing (AML/CTF) laws, following two rounds of consultation (most recently, see ASFA Action issue 944).
Of potential relevance to superannuation, the reforms include:
- simplifying, clarifying and modernising the AML/CTF regime – including replacing the current prescriptive AML/CTF program and customer due diligence requirements with clear, risk-based and outcomes-focussed obligations
- reforming international funds transfer instruction reports
- moving current exemptions under the AML/CTF Rules into the Act
- simplifying, clarifying and updating obligations in relation to exceptions for assisting an investigation of a serious offence, the tipping off offence
- clarifying the treatment of information subject to legal professional privilege for the purposes of the reporting and information disclosure obligations
- introducing new information gathering powers for AUSTRAC and update definitions
- repealing the Financial Transactions Reports Act 1988.
- allowing the Minister to make transitional rules concerning any amendments introduced by this Bill.
Value of a penalty unit
As reported in ASFA Action issue 940, the Crimes and Other Legislation Amendment (Omnibus No 1) Bill 2024 increases the value of a Commonwealth penalty unit from $313 to $330, with effect from 1 July 2024. Penalty units are used to describe the amount payable for monetary penalties imposed for criminal offences in Commonwealth legislation and territory ordinances. The Bill has been passed by the House of Representatives and introduced into the Senate.
Superannuation forecasts: update to ASIC relief instrument
ASIC has registered the ASIC Corporations (Amendment) Instrument 2024/733. This updates the existing legislative instrument ASIC (Superannuation Calculators and Retirement Estimates) Instrument 2022/603, which exempts providers of superannuation calculators and retirement estimates (collectively referred to as ‘superannuation forecasts’) from certain regulatory requirements related to providing financial product advice if they provide their superannuation forecasts within the terms of the ASIC relief. When providing superannuation forecasts under Instrument 2022/603, providers must present superannuation forecasts in today’s dollars and must, by default, convert future dollars to today’s dollars using the prescribed default inflation rates, unless a user has inputted an alternate rate.
The prescribed default inflation rates reflect nominal wage inflation while a user is in the accumulation phase, and consumer price inflation while a user is in the retirement phase.
Instrument 2024/733 updates the prescribed rate of nominal wage inflation from 4 per cent to 3.7 per cent per annum with effect from 1 January 2025. During the period 11 September to 31 December 2024, either the updated rate of 3.7 per cent or the current rate of 4 per cent may be used. The update aligns the default rate with the long-term forecast of nominal wage inflation in the 2023 Intergenerational Report.
ASIC consulted on a draft of the amendment in July-August this year – see ASFA Action issue 954 for background.
ASIC has also updated Regulatory Guide RG 276 Superannuation forecasts: Calculators and retirement estimates to reflect the amendment to the legislative instrument.
Delivering Better Financial Outcomes: tranche 1 regulations
The Government has registered the Treasury Laws Amendment (Delivering Better Financial Outcomes) Regulations 2024. These support the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (DBFO Act), which implanted tranche 1 of the Government’s response to the Quality of Advice review.
The Regulations:
- support written information or documentation requirements for the purposes of section 99FA of SIS Act to continue to be met electronically
- remove requirements related to Fee Disclosure Statements, update record keeping obligations for new consent requirements and remove references to civil penalties which are removed in the DBFO Act
- align requirements for Financial Services Guides and website disclosure information and make other consequential amendments
- streamline the regulations for conflicted remuneration in line with the changes to the DBFO Act
- ensure the informed consent requirements apply for benefits given in relation to a general insurance product where personal advice is provided.
The Government consulted on a draft of the Regulations in June-July – see ASFA Action issue 950 for background.
First Home Super Saver Scheme: ATO guidance, commencement of amendments
As reported in ASFA Action issue 941, the Government proclaimed 15 September as the commencement date for amendments made by the Treasury Laws Amendment (2023 Measures No. 3) Act 2023 to improve the flexibility of the First Home Super Saver Scheme.
To coincide with the commencement, the ATO has published Taxation Ruling TR 2024/4 First home super saver scheme and Guidance Note GN 2024/1 First home super saver scheme to provide guidance on the operation of the Scheme.
The ATO has also withdrawn an earlier version of the guidance note, GN 2018/1.
Sustainable finance taxonomy
Treasury has published the interim report from the Australian Sustainable Finance Institute (ASFI), on the development of the sustainable finance taxonomy.
As reported in ASFA Action issue 948, development of the taxonomy is a key priority in the Government’s sustainable finance agenda. The taxonomy’s initial development phase is being led by ASFI in partnership with Treasury.
ASFI’s interim report outlines developments to date and alignment analysis of the taxonomy deliverables with the policy objectives and provides a summary of stakeholder consultation.
Design & distribution obligations: ASIC call to action, updates to regulatory guide
ASIC has released the findings from its latest design and distribution obligations surveillance, which looked at the obligation for product issuers to take reasonable steps to support appropriate distribution of their financial products.
The findings are outlined in Report 795 Design and distribution obligations: Compliance with the reasonable steps obligation. While the latest surveillance did not include any providers of superannuation products, ASIC’s call to action includes points of relevance for all providers. Specifically, the report recommends issuers improve distribution practices regarding the selection and supervision of distributors, training staff, marketing materials, consumer questionnaires, and information and monitoring outcomes.
ASIC has also released minor updates to its Regulatory Guide RG 274 Product design and distribution obligations to provide greater clarity around ASIC’s guidance on the appropriateness requirement for target market determinations (TMDs). ASIC notes that the changes to RG 274 will not require product issuers to update their TMDs.
Payment Times Reporting Rules amendments
The Government has finalised amendments to Rules supporting the Payment Times Reporting Scheme (PTRS).
Under the PTRS, large businesses and government enterprises – including some superannuation funds – must submit payment times reports to the Payment Times Reporting Regulator every 6 months. This includes information on their standard payment terms, actual payment performance, and the use of supply chain financing arrangements.
The Payment Times Reporting Amendment Act 2024 was recently passed by Parliament. The Act makes a range of amendments to improve the operation of the PTRS, implementing the Government’s response to a statutory review undertaken last year. In July-August this year, the Government consulted on a draft of amendments to the supporting Rules. (See ASFA Action issues 957 and 954 for background.)
The Government has now registered the Payment Times Reporting Rules 2024. These prescribe the:
- entity information that a reporting entity or a reporting nominee must provide to the Regulator
- information that must be included in a payment times report, including modified content requirements for special kinds of entities
- method to determine whether an entity is a slow small business payer
- meaning of a qualifying payment time of 20 days or less, for the purposes of determining a fast small business payer
- information relating to the Scheme that may or must be published on the Register
- transitional provisions for reporting periods beginning before 1 July 2024, with the 2020 version of the Rules continuing to apply, on and after 1 July 2024, to a payment times report for these reporting periods
Use of genetic testing results in life insurance underwriting to be prohibited
The Government has announced that it will implement a total ban on the use of adverse genetic testing results in life insurance underwriting.
The Government’s announcement follows a consultation process that concluded in January (see ASFA Action issue 925). As part of that process, the Government noted that the Disability Discrimination Act 1992 provides an exemption for life insurers to use genomic or genetic test results when underwriting life insurance contracts. While the life insurance industry introduced a partial moratorium in 2019 prohibiting the use of these tests below certain financial limits, concerns have continued that consumers are being discouraged from participating in clinical genetic testing and medical research involving genetic testing.
While default insurance in Australia provided through a superannuation fund or employer is not individually underwritten, 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.
The Government has now announced that it will “end the ability to discriminate based on adverse predictive genetic test results by banning their use in life insurance underwriting”, with the ban to be subject to a 5 yearly review. The Minister has indicated the Government is aiming to have legislation in Parliament to implement the ban in this term.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
