Issue 810, 21 June 2021
In this issue:
- Your Future, Your Super: Bill passed by Parliament
- Non-concessional contribution bring forward arrangements: Bill passed by Parliament
- Royal Commission implementation: provision of trustee services licensing relief
- Tax withholding schedules
- APRA Super Data Transformation: FAQs
- Family law superannuation interest rate determination
- SMSFs and small APRA fund membership limit: Bill passed by Parliament
Your Future, Your Super: Bill passed by Parliament
The Bill to implement the Government’s Your Future, Your Super reforms has now completed its passage through Parliament.
The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 will implement the Government’s Your Future, Your Super (YFYS) reforms, announced in the October 2020 Federal Budget, in relation to the ‘stapling’ of employees to funds, underperformance by funds and the imposition of a ‘best financial interests’ duty on trustees.
As reported in ASFA Action issue 809, the Bill was passed by the Senate last Thursday 17 June with substantial amendments, including an extension of the commencement date for the ‘stapling’ measure from 1 July to 1 November 2021. The amendments also removed an aspect of the ‘best financial interests’ duty under which the failure to comply with additional requirements – to be prescribed in regulations – would have constituted a contravention of the duty.
The Bill was passed by the House of Representatives late on the afternoon of 17 June, after the House accepted the amendments made by the Senate.
Non-concessional contribution bring forward arrangements: Bill passed by Parliament
A Bill extending eligibility for the non-concessional contribution bring forward arrangements has been passed by Parliament.
As reported in ASFA Action issue 809, the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 was passed by the Senate, with significant amendments, last Thursday morning, 17 June.
The Bill was passed by the House of Representatives on the afternoon of 17 June, with no further amendments.
The Bill, as passed, contains measures to:
- extend the bring forward arrangements to individuals under age 67, for non-concessional contributions made on or after 1 July 2020
- allow individuals who utilised the Coronavirus early release initiative to make ‘recontributions’, between 1 July 2021 and 30 June 2030, that do not count toward their non-concessional contributions cap
- repeal the excess concessional contributions charge for financial years starting on or after 1 July 2021.
Royal Commission implementation: provision of trustee services licensing relief
ASIC has registered a legislative instrument giving trustees of non-public offer superannuation entities temporary relief from aspects of new Australian Financial Services (AFS) licence obligations in relation to providing a superannuation trustee service.
The obligation to have an AFS licence with a ‘providing a superannuation trustee service’ authorisation was introduced by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (RC Response Act), in response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The obligation takes effect on 1 July, for trustees of both public offer and non-public offer superannuation entities.
The Financial Sector Reform (Hayne Royal Commission Response) (Regulation of Superannuation) Regulations 2020 (RC Regulations) repeal, with effect from 1 July, Regulation 7.6.01(1)(a) of the Corporations Regulations 2001. This currently exempts non-public offer trustees from the requirement to hold an AFS licence to deal in a financial product in the capacity of trustee of a superannuation fund.
Trustees of public offer superannuation entities, since 2016, have been covered by an exemption from the requirement in the Corporations Act 2001 to hold an AFS licence covering the provision of particular financial services. This is set out in section 5 of the ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 (section 5 exemption). In particular, this exempts public offer trustees from the requirement to have an AFS licence authorising conduct related to investment activity on behalf of the beneficiaries of the trust (fund members), such as investing in shares, derivatives, and financial products (commonly referred to as ‘dealing’ in financial products). The exemption was limited to public offer trustees because non-public offer trustees were not, at the time Instrument 2016/378 was made, required to be licensed to deal in financial products.
ASIC has now registered the ASIC Corporations (Amendment) Instrument 2021/550 to extend the AFS licence relief provided by the section 5 exemption to trustees of all registrable superannuation entities. The instrument is intended to ensure that from 1 July 2021, trustees of non-public offer and public offer trustees are regulated consistently under the Corporations Act.
According to the explanatory statement, the section 5 exemption “will be made for a period of 18 months (ending 31 December 2022) to allow the continued justification for the relief to be considered having regard to the new financial service” of providing a superannuation trustee service. ASIC notes that:
- after 31 December 2022, the exemption may be removed or continued subject to the outcome of this consideration, which will include consultation with industry
- Instrument 2021/550 also includes an expiry date of 31 December 2022 for the section 5 exemption, with the effect that the exemption will fall away at that date unless extended further by ASIC.
(See ASFA Action issue 788 for background in relation to the RC Response Act and the RC Regulations.)
Tax withholding schedules
The ATO has registered a package of updated tax withholding schedules, including one relevant to the payment of superannuation income streams.
The Taxation Administration Act Withholding Schedules 2021 instrument contains fifteen withholding schedules. Only three of the schedules are being updated, one of these being Schedule 13 – tax table for superannuation income streams.
According to the explanatory statement, the update to Schedule 13 is to reflect the indexation of the defined benefit income cap from 1 July.
APRA Super Data Transformation: FAQs
As reported in recent ASFA Actions, APRA recently finalised ten reporting standards under phase 1 of its Superannuation Data Transformation project. APRA has been publishing frequently asked questions (FAQs) for registrable superannuation entity (RSE) licensees ahead of the first submission of data under the standards on 30 September.
APRA has now published a fourth set of FAQs on the phase 1 standards, as well as some additional worked examples.
Family law superannuation interest rate determination
The Australian Government Actuary has made the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2021. The Determination sets the interest rate for adjusting the superannuation entitlements of separated and divorced spouses under splitting orders and agreements made under the Family Law Act 1975.
The Determination sets the interest rate for the adjustment period that comprises the financial year beginning on 1 July 2021 at 5.7 per cent (no change from the 2020-21 financial year). The Determination also provides the method by which the interest rate is calculated for an adjustment period that includes a period within that financial year.
SMSFs and small APRA fund membership limit: Bill passed by Parliament
A Bill to increase the maximum number of members permitted in a self-managed superannuation fund (SMSF) or small APRA fund has now completed its passage through Parliament.
The Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 includes amendments increasing the maximum number of members of an SMSF or a SAF from four to six.
As reported in ASFA Action issue 809, the Bill was passed by the Senate on the morning of 17 June, without amendment. As this Bill was introduced in the Senate, it then proceeded to consideration by the House of Representatives and was passed without amendment later on 17 June.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
