Issue 660, 19 February 2018
In this issue:
- Reversionary transition to retirement income streams: consultation
- New dispute resolution framework: bill passed
- Structured arrangements involving receipt of franking credits: ATO alert
Reversionary transition to retirement income streams: consultation
The Government has published exposure draft legislation to allow reversionary transition to retirement streams (TRIS) to revert automatically regardless of the status of the dependant beneficiary. Submissions are due to Treasury by Friday 23 February.
Treasury has advised that a new paragraph will be inserted into the legislation that carves out reversionary beneficiaries from the special ‘retirement phase’ provisions for TRIS. This means that—on the death of the member—the ordinary retirement phase provisions apply. As a benefit is payable to the reversionary beneficiary, the reversionary TRIS will either remain in the retirement phase or—if the primary beneficiary had not already satisfied a condition of release—will enter the retirement phase
If you have any feedback you would like ASFA to consider including in a submission to Treasury, please forward it to Fiona Galbraith by the close of business Wednesday 21 February.
New dispute resolution framework: bill passed
The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 was passed by the House of Representatives on 14 February. The Bill has already been considered by the Senate (see ASFA action issues 654 and 644 for more information) and is now awaiting royal assent.
The Bill establishes the Australian Financial Complaints Authority (AFCA) as a new external dispute resolution body to replace the Superannuation Complaints Tribunal (SCT) and Financial Ombudsman Service. The Minister has indicated that she intends AFCA to commence taking complaints no later than 1 November 2018. The SCT will continue for a period—expected to be around two years—to clear existing complaints. Further developments in relation to the establishment of AFCA—including consultation on its proposed terms of reference—are expected in coming months (see ASFA Action issue 651).
The Bill also provides ASIC with powers to impose new requirements in relation to internal dispute resolution. While these powers apply from the day after the Bill receives royal assent, they cannot take practical effect until ASIC has issued a legislative instrument and regulatory guidance material specifying its requirements.
Structured arrangements involving receipt of franking credits: ATO alert
The ATO has issued a taxpayer alert about a review it is conducting of certain structured arrangements involving the transfer of shares in the period around the shares’ ex-dividend date.
TA2018/1 – Structured arrangements that provide imputation benefits on shares acquired on a limited risk basis around ex-dividend dates explains the ATO’s concern that these arrangements involve taxpayers inappropriately receiving franking credits in breach of rules designed to maintain the integrity of the imputation system.
The arrangements of concern involve an Australian taxpayer with an existing investment in shares acquiring an additional parcel of the same shares. The additional shares are held for a short period over the exdividend date, however the taxpayer has nominal or no economic exposure to those additional shares. The arrangements have typically been marketed to investors such as equity funds and large superannuation funds.
The ATO has recommended that taxpayers who have entered (or are contemplating entering) into an arrangement of this type seek independent professional advice, review their arrangements, and discuss their situation with the ATO by emailing PGIAdvice@ato.gov.au.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
