Issue 751, 17 April 2020
In this issue:
- COVID-19 Coronavirus: early release of super – extension to eligible temporary residents
- COVID-19 Coronavirus: early release of super – updated ATO information
- COVID-19 Coronavirus: early release of super – updated AML/CTF guidance
- COVID-19 Coronavirus: Parliament to sit in May – potential scope to consider super bills
COVID-19 Coronavirus: early release of super – extension to eligible temporary residents
In ASFA Action issue 747, we reported that the Government had indicated its intention to extend the Coronavirus compassionate ground for early release of superannuation to “most temporary visa holders with work rights”.
The Government has now registered regulations to give effect to this change.
The Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2020 amend the Superannuation Industry (Supervision) Regulations 1994 to allow temporary residents affected by the adverse economic effects of coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. The Regulations build on the amendments introduced into the SIS Regulations by the Coronavirus Economic Response Package Omnibus Act 2020, which established such grounds of early release for Australian citizens and permanent residents (see ASFA Action issue 745).
Temporary residents are only able to satisfy certain conditions of release, which are listed in regulation 6.01B of the SIS Regulations. Prior to the amendments made in the Regulations, generally temporary residents would be precluded from satisfying the conditions of release relating to the compassionate grounds for coronavirus-related economic effects.
The Regulations allow temporary residents to satisfy the conditions of release relating to these grounds:
- temporary residents who hold a student visa may apply to the Commissioner of Taxation for release if they have held a student visa for 12 months or more and are unable to meet immediate living expenses
- temporary residents who hold a Subclass 457 (Temporary Work (Skilled)) or Subclass 482 (Temporary Skill Shortage) visa may apply to the Commissioner of Taxation for release if they have, on or after 1 January 2020, had their working hours reduced to zero but are still employed by their employer
- other temporary visa holders may apply for release if they are unable to meet immediate living expenses.
The regulations also include equivalent amendment to the Retirement Savings Accounts Regulations 1997.
The application of the Coronavirus early release provisions to temporary residents differs from its application to citizens and permanent residents in one important respect—eligible temporary residents will be able to access the Coronavirus early release only once. The explanatory material states:
Temporary residents may only make an application for release in the financial year ending 30 June 2020. Temporary residents may only apply for one payment of up to $10,000.
In contrast, Australian citizens and permanent residents may apply for two payments of up to $10,000 each in the 2019-2020 and 2020-2021 financial years.
The Regulations commence today, 17 April.
COVID-19 Coronavirus: early release of super – updated ATO information
The ATO has provided updated information on the application and payment process for the Coronavirus compassionate ground early release of superannuation.
CRT 015/2020 notes the new regulations extending the early release to eligible temporary residents (see above item in this issue of ASFA Action) and indicates that:
There is no change to the way funds will be notified of these determinations or the treatment of the amounts released. It will be the same as the original coronavirus early release of super categories.
The ATO has also provided screenshots of the individual application process, so funds have visibility of the individual’s experience and are better able to prepare communication material or engage with their members. CRT 015/2020 also addresses the security controls around the application process.
COVID-19 Coronavirus: early release of super – updated AML/CTF guidance
As reported in yesterday’s ASFA Action (issue 750), AUSTRAC has registered the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2020 (No. 1) to ensure funds making payments to their members under the new Coronavirus compassionate ground for early release of super would not have to conduct additional customer verification under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF).
The explanatory material accompanying the instrument noted that trustees would still have suspicious matter reporting and ongoing customer due diligence obligations relating to the benefit payment.
Today, AUSTRAC published some additional guidance for funds about complying with these obligations.
The guidance addresses ongoing customer due diligence, enhanced customer due diligence and suspicious matter reporting obligations. It provides a number of illustrative scenarios to help funds manage situations involving discrepancies with customer information and certain customer behaviours. It notes that funds “may adopt other approaches to achieve the same or a similar outcome”. The illustrative scenarios cover situations where:
- a member’s date of birth details do not match the ATO notification
- a member receives an unusually large contribution
- an unknown person attempts to change a member’s contact details
- a member receives multiple payments for early release of super
- suspected fraud is identified after an early release payment is made
- the fund receives information from a law enforcement agency after making an early release payment.
COVID-19 Coronavirus: Parliament to sit in May – potential scope to consider super bills
The Prime Minister has indicated that he intends to recall Parliament for a ‘trial week’ during May, to address what he has described as its normal legislative business, as opposed to focusing purely on COVID-19 economic support measures.
While the Prime Minister did not provide any detail, it is possible that this will give scope for Parliament to progress some of the outstanding superannuation-related bills, including:
- the Treasury Laws Amendment (2020 Measures No.1) Bill 2020, which contains amendments to make permanent the current tax relief for merging superannuation funds, that is due to expire on 1 July 2020
- the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, which will facilitate the exit of eligible rollover funds (ERFs) from the superannuation industry by 30 June 2021
- The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, which extends choice of fund to employees under new workplace determinations or enterprise agreements made from 1 July 2020. The Senate Economics Legislation Committee tabled its report on this Bill on 20 March, recommending that it be passed but also recommending that its effect on defined benefit schemes is reviewed two years after its implementation.
- the Treasury Laws Amendment (2019 Measures No.3) Bill 2019, which contains amendments to several aspects of the superannuation and related tax legislation, including in relation to:
- protecting your superannuation, unclaimed superannuation and lost members
- superannuation pensions and rollover of death benefits
- employer reporting of salary sacrificed contributions
- downsizer contributions.
- The Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Bill 2019, which allows separating de facto couples in Western Australia to access the Commonwealth family law superannuation splitting regime. The Senate Standing Committee on Legal and Constitutional Affairs tabled its report on the Bill on 13 March, recommending its passage subject to some technical amendments.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
