Issue 749, 15 April 2020
In this issue:
- COVID-19 Coronavirus: new compassionate ground for early release of super
- COVID-19 Coronavirus: ASIC regulatory work, priorities and FAQs
- COVID-19 Coronavirus: relief for financial advice
- COVID-19 Coronavirus: JobKeeper payment
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:
- CRT Alert 012/2020, indicating that on occasions when a fund needs to contact a member in order to meet its obligation to pay a Coronavirus early release benefit as soon as reasonably practicable, a fund is able to use the Provision of Details Service (PODS) to obtain current contact details for the member
- CRT Alert 13/2020 indicating that as at the end of Wednesday 8 April 2020, a total of 617,800 individuals had registered their interest in the Coronavirus early release measure on the ATO website (up from 361,000 on 2 April)
- CRT 014/2020, setting out an updated version 3 of the design and implementation frequently asked questions for 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:
- confirmation that the release of updated complaints handling standards is deferred “until further notice”
- confirmation of the relief provided in relation to financial advice (see below item in this issue of ASFA Action)
- indication that ASIC is considering amending the transitional fee and cost disclosure (RG 97) arrangements for Product Disclosure Statements (PDSs) “to allow entities to come into the new disclosure regime from 30 September 2020 and requiring any PDS given after 30 September 2022 to comply with the new disclosure regime”
- indication that ASIC will defer (to a date yet to be advised) the first reporting date for portfolio holdings disclosures, “recognising that current conditions may make it difficult for trustees to prioritise the development of appropriate disclosures”.
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:
- act fairly, honestly and efficiently
- report material breaches of the law
- maintain records of the financial services they provide
- ensure appropriate supervision of the provision of financial services and credit activities, even where staff are working remotely.
ASIC has also updated its COVID-19 frequently asked questions (FAQs) to include:
- what ASIC is doing to allow greater access to advice through superannuation as a result of COVID-19
- whether trustees can apply to ASIC for relief from requirements in the Corporations Act 2001 or Superannuation Industry (Supervision) Act 1993.
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
- To assist the provision of affordable advice on early access to super, ASIC has:
- issued a temporary no-action position for superannuation trustees to expand the scope of personal advice that may be provided by, or on behalf of, the superannuation trustee as ‘intra-fund advice’
- allowed advice providers not to give a statement of advice (‘SOA’) to clients when providing advice about early access to superannuation
- permitted registered tax agents to give advice to existing clients about early access to superannuation without needing to hold an Australian financial services (AFS) licence.
- ASIC’s relief and no-action position are temporary and subject to the important conditions, including:
- clients must be provided with a record of advice (‘ROA’, a shorter, simpler document setting out the advice that is being provided), which meets certain content requirements
- the advice fee, if any, is capped at $300
- the advice provider must establish that the client is entitled to the early release of their superannuation
- the client must have approached the advice provider for the advice.
2. Relief to extend the timeframe for providing time critical SOAs
- To assist financial advisers meet the demand for time-critical advice during this difficult time, ASIC has provided temporary relief to give advice providers up to 30 business days (instead of 5 business days) to give an SOA after time-critical advice is provided.
3. Relief to enable a ROA to be given in certain circumstances
- ASIC has provided temporary relief to allow the provision of a ROA to existing clients even though:
- the clients’ personal circumstances have changed as a result of the COVID-19 pandemic
- the client sees an adviser from the same AFS licensee or practice, not their original adviser.
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:
- set up a framework for the Commissioner of Taxation to provide financial support—including the JobKeeper payment—to assist businesses and their employees through the downturn caused by the pandemic
- amend the Fair Work Act 2009 to provide for increased flexibility around employees’ hours of work, performance of duties and location of work that apply where an employer has issued a ‘JobKeeper enabling direction’ and require JobKeeper qualifying employers to meet minimum payment obligations to employees who are subject to these arrangements.
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.