ASFA Action Issue 957, 30 July 2024

In this issue:

 

Payment Times Reporting Scheme: consultation on draft Rules

The Government has commenced consultation on 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. 

As reported in ASFA Action issue 954, the Payment Times Reporting Amendment Act 2024 (PTRA Act) 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 – see ASFA Action issue 926 for details. The amendments will commence on 7 September. 

Treasury has now released for consultation draft Rules that will repeal the Payment Times Reporting Rules 2020 and remake them to support the amendments made by the PTRA Act. The draft Rules prescribe the:

Treasury is seeking submissions on the draft rules by close of business Monday 19 August.

 

Trustee risk reserves: final tax determination  

The ATO has published Taxation Determination TD 2024/6 Income tax: trustee risk reserves – deductibility of payments made by a superannuation fund to its trustee. 

The Determination outlines the ATO’s views in relation to the tax implications of actions taken by some funds and trustees in response to amendments to indemnification provisions in section 56 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) that took effect from 1 January 2022. Those amendments made any provision in a fund’s governing rules void to the extent it had the effect of exempting or indemnifying a trustee from certain penalties. Impacted funds and their trustees have taken differing approaches to address the risk of exposure to penalties arising from the amendments. This has included funds making payments to establish or build a trustee risk reserve for this purpose.  

The Determination sets out when the ATO will consider such payments to be deductible to the fund under section 8-1 of the Income Tax Assessment Act 1997 (the general deductions provision). 

The Determination notes that a payment by the fund to the trustee will not be deductible to the fund under section 8-1 where it is objectively determined on the facts that:  

This is because the payments made by the fund are losses or outgoings of capital, or of a capital nature. 

A payment by the fund to the trustee will be deductible to the fund under section 8-1 where it is objectively determined on the facts that the fund is making a payment to the trustee for trustee services (‘trustee fees’). These trustee fees are ongoing and recurrent charges for the services provided by the trustee to the fund, which may be increased from time to time in accordance with the powers and terms of the trustee’s engagement to reflect the increased cost of providing its services to the fund. (However, where some of the expenditure incurred by the fund is in relation to gaining or producing exempt income or non-assessable non-exempt income, a reasonable apportionment will be required by the fund in respect of its deduction.) 

The ATO consulted on a draft of the determination in December-January (see ASFA Action issue 926). The final determination is substantively identical to the draft.

 

Lodgement of audited fund financial reports: ASIC reminder 

ASIC has reminded trustees that recent reforms to the financial reporting and auditing obligations for superannuation funds commenced on 1 July, with trustees now required to lodge audited financial reports for each fund within three months of the end of the fund’s financial year with fees incurred for late lodgement. For most funds, the first deadline will be 30 September 2024. (See ASFA Action issues 906 and 904 for background.)

Audited financial reports must include the financial statements and notes, directors’ declaration, auditor’s report and director’s report, which contains remuneration disclosure.  

ASIC has emphasised that: 

ASIC has also drawn attention to its inventory of superannuation trustee transparency and disclosure obligations (INFO 278), which it updates periodically. (Note – while an update had been scheduled for the first half of the 2024 calendar year, this has not yet occurred – the published version is current as at 31 October 2023.) 

APRA Prudential Handbook: final version launched 

APRA has launched the final version of its new digital Prudential Handbook following the release of the beta version in June (see ASFA Action issue 952). 

The Handbook brings together all of APRA’s prudential standards, prudential practice guides and relevant supporting information into one place. The digital format ensures the Prudential Handbook can be easily navigated and caters to a range of different users across regulated industries and in the broader community. 

The release of the Handbook completes APRA’s project to modernise the prudential architecture. The project commenced in 2021 with the goal of making APRA’s regulatory framework clearer to understand, simpler to navigate, and more adaptable to ongoing changes in the operating environment.  

Since its commencement, the project has delivered changes to the design and presentation of APRA’s prudential framework to enable: 

 

AFCA: final approach document schedule for 2024-25 

AFCA has published its finalised schedule for issuing new or updated Approach documents during 2024-25. AFCA’s Approach documents are intended to support consumers’ and financial firms’ understanding of AFCA’s approach to certain issues and how it reaches decisions. 

In relation to superannuation, AFCA has indicated it will: 

AFCA consulted on a draft of the schedule in June – see ASFA Action issue 951 for background. 

Consultation on the new and updated Approach documents will take place in due course. 

AFCA has also issued a consultation feedback document indicating that it will consider developing an Approach document on underwriting of insurance within superannuation for the 2025–26 financial year. (This Approach document was requested by ASFA on behalf of our members.)

 

ASFA REGULATORY WATCHLIST

ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

 

 

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