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Issue 749, 15 April 2020 
In this issue: 

 

COVID-19 Coronavirus: new compassionate ground for early release of super 

As reported in ASFA Action issues 748, 747, 746, 745, 743 and 742, the Coronavirus Economic Response Package Omnibus Act 2020 provides for a new compassionate ground for the early release of superannuation for those impacted by the pandemic. Individuals seeking release of their superannuation under the new compassionate ground will be required to apply directly to the ATO. 

The ATO has issued several updates in relation to the early release measure: 

 

 

COVID-19 Coronavirus: ASIC regulatory work, priorities and FAQs 

As reported in ASFA Action issue 742, ASIC has temporarily changed its regulatory work and priorities to allow it and regulated entities to focus on the impact of COVID-19. This will include the deferral of some activities and redeployment of staff to address issues of immediate concern, including maintaining the integrity of markets and protecting vulnerable consumers. 

ASIC has now provided detail on some of the affected activities, and undertaken to provide “further advice on changes to ASIC work implementing the recommendations of the Financial Services Royal Commission in light of changes to the Parliamentary timetable and any future Government decisions on those measures”. 

Items of particular relevance for superannuation funds in the further detail provided by ASIC include the following: 

ASIC notes that despite the challenges posed by COVID-19, it expects entities to “treat customers fairly, avoid adding further financial harm or burden to consumers, and act to maintain the integrity and efficiency of markets”. 

In addition, licensees continue to have legal obligations including, where applicable, to: 

ASIC has also updated its COVID-19 frequently asked questions (FAQs) to include: 

 

 

COVID-19 Coronavirus: relief for financial advice 

ASIC has announced three temporary relief measures to assist industry in providing consumers with affordable and timely advice during the COVID-19 pandemic. 

The relief, set out in Temporary no-action position for expanded intra-fund advice on early release of superannuation relating to COVID-19 and ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2020/355, involves: 

 

1. Facilitating advice about the Coronavirus compassionate ground for early release of superannuation 

2. Relief to extend the timeframe for providing time critical SOAs 

 

3. Relief to enable a ROA to be given in certain circumstances 

ASIC has indicated that it will conduct surveillance activities to monitor the advice provided under the relief, to ensure advisers, registered tax agents and superannuation trustees are acting in the interests of their clients and members. 

ASIC will consider market developments and consult with key stakeholder before revoking the nstrument of relief and provide 30 days’ notice to the industry. The no action position for superannuation trustees expires when applications for early release can no longer be made. 

ASIC has also published updated information about early access to superannuation on its MoneySmart website. 

 

 

COVID-19 Coronavirus: JobKeeper payment 

As reported in ASFA Action issues 748 and 746, the Government has announced that it will introduce, as part of its COVID-19 economic support package, a wage subsidy for eligible employers and employees. The subsidy will be known as JobKeeper. The Treasurer has now made rules setting out eligibility requirements in relation to JobKeeper. 

The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020: 

The Acts, which received Royal Assent on 9 April, do not contain any provisions specific to the superannuation treatment of payments under the JobKeeper subsidy. As noted in ASFA Action issue 746, a Treasury factsheet indicates that whether Superannuation Guarantee (SG) is payable will depend on factors including whether the JobKeeper payment is used by the employer to subsidise an employee’s existing earnings level or to increase their earnings, or is paid in circumstances where the employee has been stood down without pay and is not performing work-related duties for the employer. 

The Government has now registered the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020, to set out detail in relation to the JobKeeper payment. 

The Explanatory Statement to the Rules notes that the Government will make regulations under the Superannuation Guarantee (Administration) Act 1992 to address the SG implications of the JobKeeper scheme. In particular, the Explanatory Statement indicates the following: 

The regulations will ensure that an employer will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment, disregarding any extra payments made by the employer to satisfy the wage condition for getting the JobKeeper payment. 

For example, if the work actually done by an employee over a period entitled them to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000. Similarly, any liability to superannuation guarantee charge that the employer would have for not making sufficient superannuation contributions would be calculated by reference to that $1,000 base. 

An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper payment. For example, if an employee is entitled to be paid $2,000 for their work, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper payment in relation to the employee. 

An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes. 

 

 

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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