Issue 540, 12 June 2014
In this issue:
- Section 29QB disclosure obligations: ASIC to provide Class Order relief
- Section 29QC: ASIC to provide Class Order relief
- ATO letter to all employers
- ATO Employer SuperStream checklist
- New choice of fund form
- New accounting standard released for superannuation entities
Section 29QB disclosure obligations: ASIC to provide Class Order relief
ASIC has advised ASFA that it will shortly issue a Class Order providing Registrable Superannuation Entity (RSE) Licensees with ‘safe harbour’ time frames for publishing certain documents and information required under section 29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act) on their websites.
Section 29QB requires RSE licensees to publish on their websites, and keep up to date at all times, prescribed information about executive officer remuneration and a range of documents and information about the RSE licensee and the fund.
The specific details of what must be published are set out in regulations 2.37 and 2.38 of the Superannuation Industry (Supervision) Regulations 1994. While the disclosure obligations were initially intended to apply from 1 July 2013, ASIC provided Class Order relief deferring them until 1 July 2014, and has been consulting with the industry with a view to clarifying the requirements and the appropriate timeframes for publishing the required documents and information.
ASIC has now indicated that it will shortly issue a Class Order setting out safe harbour timeframes for the publication of the documents and information prescribed by regulations 2.37 and 2.38. If the documents and information are published within these time frames, a RSE licensee will be deemed to have complied with section 29QB of the SIS Act. We understand that the Class Order will also modify regulation 2.37 to clarify the term ‘financial year’ as being the financial year of the RSE licensee, in respect of publishing details of executive officer remuneration.
The Class Order will use the concepts of ‘triggers’ and ‘release times’ to deal with the complexity of the individual disclosure items. An RSE licensee will be able to take advantage of the safe harbour relief if it updates the fund’s website within a given time after the day on which a trigger event has occurred for the particular disclosure item. In effect, ‘update time’ = trigger + release time.
The release times will be:
- twenty business days, for executive officer details (items 1-4 in regulation 2.37(1))
- four months for remuneration items (items 5-156 in regulation 2.37(1)
- twenty business days for all information and documents required under regulation 2.38.
We expect the Class Order to be available on the ASIC website within the next week.
Section 29QC: ASIC to provide Class Order relief
ASIC has also advised ASFA that it will shortly issue a Class Order providing Registrable RSE Licensees with relief from compliance with the requirements of section 29QC of the SIS Act. The relief will operate for a period of 12 months, until 30 June 2015.
Background
Section 29QC requires that, where an RSE licensee provides information calculated in a particular way to APRA under a reporting standard, if the same or equivalent information is given to another person, including on a website, then the RSE licensee must ensure that this information is calculated in the same way as the information given to APRA.
The purpose of the requirement is to improve the comparability of information about superannuation products, as the provision of inconsistent information through multiple means can be detrimental to members and can inhibit informed decision making.
Since the provision was legislated, the industry has raised concerns about the relationship between the disclosure requirements administered by ASIC and the data that is required to be reported under APRA’s reporting standards, as a result of section 29QC of the SIS Act.
Although this matter was addressed in the joint ASIC/APRA letter to trustees, sent in March 2014, industry concerns regarding meeting the 1 July 2014 commencement date remained, particularly with respect to investment performance, return targets, asset allocation and fees and costs.
ATO letter to all employers
The Australian Taxation Office (ATO) has advised ASFA that it will be sending a letters to all Australian employers about their SuperStream obligations. The letters are intended to help employers understand their obligations, and encourages them to investigate their options and start preparing for SuperStream.
A staggered release of the letters will commence from 20 June 2014, and will be sent to approximately 900,000 employers.
As a primary focus of the ATO communication is for employers to talk to their payroll provider, clearing house or default fund, funds and service providers should expect an increase in enquiries from employer clients about how you can help them prepare for SuperStream.
The letter is a companion piece to the employer SuperStream checklist (see next item), and an ATO media release encouraging employers to prepare for SuperStream.
ATO’s Employer SuperStream checklist
The ATO has published on a step-by-step guide to preparing for SuperStream on its employer-checklist website. The document, which provides information for both small employers and medium and large employers, is full of tips that funds may wish to include in their communications to employers.
New choice of fund form
Funds that offer a pre-populated choice of fund form to members should be aware that a new choice form will be released by the ATO on 1 July. The form change is required to capture the new data required by SuperStream.
Details of the changes can be gained from reviewing the recently released revised Standard Choice Form data specifications:
New accounting standard for superannuation funds released
On 6 June 2014, the Australian Accounting Standards (AAS) Board released AASB1056-Superannuation Entities.
The Standard supersedes AAS 25 Financial Reporting by Superannuation Plans, which was first issued in March 1993.
AASB 1056 applies to annual reporting periods beginning on or after 1 July 2016, but may be applied to earlier annual reporting periods, provided the early application is disclosed. The Standard applies to general-purpose financial statements of each superannuation entity that is also a reporting entity, and to financial statements of a superannuation entity that are held out to be general-purpose financial statements.
The Standard states that:
“AASB 1053 Application of Tiers of Australian Accounting Standards establishes a differential reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards; and
(b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 1 requirements incorporate International Financial Reporting Standards (IFRS), including Interpretations, issued by the International Accounting Standards Board (IASB), with the addition of paragraphs on the applicability of each Standard in the Australian environment.
Publicly accountable for-profit private sector entities are required to adopt Tier 1 requirements, and therefore are required to comply with IFRS. Furthermore, other for-profit private sector entities complying with Tier 1 requirements will simultaneously comply with IFRS. Some other entities complying with Tier 1 requirements will also simultaneously comply with IFRS.
Tier 2 requirements comprise the recognition and measurement requirements of Tier 1 but substantially reduced disclosure requirements in comparison with Tier 1. AASB 1053 specifically deems superannuation plans regulated by the Australian Prudential Regulation Authority (APRA), other than Small APRA Funds, to be entities that have public accountability. Accordingly, those APRA-regulated superannuation plans that are classified as ‘large’ prepare Tier 1 general purpose financial statements.
AASB 1056 Superannuation Entities does not permit Tier 2 general purpose financial statements for superannuation entities.
Tier 1 requirements incorporate International Financial Reporting Standards (IFRS), including Interpretations, issued by the International Accounting Standards Board (IASB), with the addition of paragraphs on the applicability of each Standard in the Australian environment.
Publicly accountable for-profit private sector entities are required to adopt Tier 1 requirements, and therefore are required to comply with IFRS. Furthermore, other for-profit private sector entities complying with Tier 1 requirements will simultaneously comply with IFRS. Some other entities complying with Tier 1 requirements will also simultaneously comply with IFRS.
Tier 2 requirements comprise the recognition and measurement requirements of Tier 1 but substantially reduced disclosure requirements in comparison with Tier 1.
AASB 1053 specifically deems superannuation plans regulated by the Australian Prudential Regulation Authority (APRA), other than Small APRA Funds, to be entities that have public accountability. Accordingly, those APRA-regulated superannuation plans that are classified as ‘large’ prepare Tier 1 general purpose financial statements.
AASB 1056 Superannuation Entities does not permit Tier 2 general purpose financial statements for superannuation entities.
AASB 1056 is among a number of Australian Accounting Standards that are specific to Australian entities.”
The release of AASB1056 is the most significant impact on Superannuation financial reporting in 20 years.
