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Issue 578, 2 September 2015 

In this issue: 

 

Governance reforms: APRA consultation on prudential standards and guidance 

APRA has this week released a consultation package on governance arrangements for registrable superannuation entity (RSE) licensees of APRA-regulated superannuation funds. 

This package proposes amendments to APRA’s governance prudential framework in light of the government’s proposed legislative amendments to require boards of RSE licensees to have at least one-third independent directors, including an independent chair. 

The package follows APRA’s letter of 26 June 2015, Governance requirements for RSE licensees: proposed amendments, which sought comment on APRA’s preliminary proposals to supplement the government’s legislative amendments. 

Submissions in response to APRA’s June letter raised concerns about the lack of certainty in relation to the definition of independence, given substantial elements of the definition were, at the time, proposed to be defined in APRA’s prudential standards. 

In August, the government announced that more detail on the definition of ‘independent’ will instead be reflected in the legislation, rather than in APRA’s prudential standards. The package released this week by APRA reflects this updated government position and the responses to APRA’s June letter. It proposes: 

APRA is seeking comments on the draft prudential standards and prudential practice guides by Friday, 23 October 2015. 

Subject to consideration of submissions received from this consultation, and the passage of the proposed legislative amendments, APRA intends to release the final prudential standards and prudential practice guides later in 2015. 

If you have any comments or concerns that you would like ASFA to raise with APRA on the prudential standards and the prudential practice guides, please send your feedback to Jon Echevarria by close of business (COB) Friday, 25 September 2015. 

 

Consultation on an industry funding model for ASIC 

The government has released a consultation paper seeking stakeholders’ views on the potential introduction of an industry funding model for the regulatory activities of ASIC. This forms part of the government’s consideration of the findings of the Financial System Inquiry (FSI). The final report of the FSI, released in December 2014, specifically recommended ASIC’s regulatory activities be funded by industry (see recommendation 29). 

The government is of the view that an industry funding model would: 

The Assistant Treasurer, the Hon. Josh Frydenberg MP, has indicated that the government will consult broadly with the community before making any decision on the potential introduction of an industry funding model, and will also be informed by the findings of the ‘capability review’ of ASIC which has just commenced (this review was another key recommendation of the FSI final report). 

If you have any comments on the consultation paper that you would like ASFA to consider including in our response to Treasury, please forward them to Julia Stannard by COB Wednesday, 23 September 2015. 

 

Consultation on changes to lost member and unclaimed money rules 

On 28 August 2015, Treasury released an exposure draft of the Treasury Legislation Amendment (Spring Repeal Day) Bill 2015. Schedule 2 of this exposure draft includes amendments proposing to: 

These amendments were included in a package of measures to ‘streamline’ the lost member and unclaimed money regimes in the May 2015 Budget, intended to apply from 1 July 2016. As set out in our Budget night ASFA Action issue 566, the other four measures, which are not included in this exposure draft, are: 

The exposure draft also lays the groundwork to allow for the definition of ‘lost member’ to be moved out of the Superannuation Industry (Supervision) Regulations 1994 into the Superannuation (Unclaimed Money and Lost Members) Regulations 1999, at a future point in time. ASFA presumes that this new definition will reflect specific changes to the ‘lost member’ definition that were announced in the May 2015 Budget, including changes to remove the employer sponsored element from the ‘inactive member’ test and recognition of contemporary forms of communication in the ‘uncontactable member’ test. 

If you have any comments that you would like ASFA to consider including in a submission to Treasury on the exposure draft, please forward them to David Graus by COB Monday, 14 September 2015. 

 

Consultation on simplifying the Superannuation Guarantee charge 

In January 2015, the Minister for Small Business, the Hon. Bruce Billson MP, announced changes to simplify and reduce the harshness of the Superannuation Guarantee (SG) charge, which will apply from 1 July 2016. 

As part of the announced changes, the SG charge will be simplified by aligning the earnings base for calculating the SG charge (currently total salary and wages) with the earnings base for calculating SG contributions (ordinary time earnings). 

The changes will also reduce the harshness of the SG charge by aligning the interest component on any SG shortfall with the period contributions are outstanding. These changes will also remove the additional penalties under the Superannuation Guarantee (Administration) Act 1992 and align them with the administrative penalties under the Tax Administration Act 1953. 

Treasury has now released an exposure draft of legislation to implement the changes to the SG charge. 

Submissions on the proposed legislation are due 18 September 2015. If you have any comments or concerns that you would like ASFA to raise with Treasury, please forward them to David Graus by COB Friday, 11 September. 

 

QROPS update: nothing new to report 

Further to the update provided in ASFA Action issue 576, Treasury has advised that it sent a proposal to Her Majesty’s Revenue and Customs (HMRC) with respect to Qualifying Recognised Overseas Pension Schemes (QROPS) on 30 July 2015. Among other matters, Treasury has sought agreement that Australian superannuation funds will be able to apply to HMRC for relief in relation to post-6 April 2015 transfers from the United Kingdom. 

Treasury followed up HMRC with an email on 13 August 2015. 

According to Treasury, the only communication received from HMRC to-date is that they are currently considering Treasury’s proposal—that is, HMRC is yet to respond on any of the specifics of Treasury’s proposal. 

ASFA will continue to update members regarding this matter, including advising as soon as we hear from Treasury that they have received a response from HMRC. 

 

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