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Issue 543, 3 July 2014 

In this issue: 

 

New ASFA research on the equity and sustainability of government assistance for retirement income in Australia 

ASFA today released a new research paper on the equity and sustainability of government assistance for retirement income in Australia. 

The first part of the report evaluates the superannuation system against the objectives under which it was established, finding that it is successfully raising retirement incomes, increasing national savings and decreasing government expenditure on the Age Pension. The report states that, over the coming years, the system will need to be adjusted to accommodate the demands posed by an ageing population and reducing tax base. However, the report also acknowledges that it is important that these decisions be made based on accurate information. 

The second part of the report provides an analysis of the tax concessions applied to super, based on taxable income brackets. It finds that the tax concessions applied to concessional superannuation contributions are not significantly skewed towards high-income earners, and, in fact, support the bulk of the working community to save for their retirement. 

However, when it comes to the tax concessions applied to superannuation investment earnings, a disproportionate amount flows to higher-income earners. 

The report also makes a number of recommendations regarding where government policy could be adjusted in order to ensure the distribution of tax concessions is more equitable. 

A media release about the report was sent out today (3 July 2014). 

A full copy of the report can be found here. If you have any questions, please contact Ross Clare. 

 

FoFA amending regulations 

The government has released the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 (the Regulation), which implements the Coalition’s proposed changes to the FoFA regime. 

The Regulation makes the following changes: 

The government had also announced that time sensitive FoFA amendments would be dealt with through regulations and then put into legislation. For this reason, the Regulation also makes the following changes, which will be repealed (to the extent appropriate) following the commencement of the Corporations Amendment (Streamlining of Future of Advice) Bill 2014: 

ASFA members should note that the Opposition has indicated that it may seek to have these regulations disallowed by the Senate. Should the regulations be disallowed – which can occur within 15 sitting days of the Regulations being tabled – they will only be operative from 1 July 2014 to the date of the successful Senate disallowance motion. 

 

New bills: Budget Age Pension changes, pausing of SG increase, and repeal of LISC 

In the lead up to 30 June 2014, the government introduced two bills with significant implications for retirement incomes. 

The first, Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 (No. 2), reintroduces amendments to repeal the Minerals Resource Rent Tax, and the measures which were to be funded from it. This follows the Senate’s failure to pass a previous version of the Bill earlier this year. Of particular relevance to superannuation, the amendments in this Bill: 

The second Bill, Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014, includes amendments to implement a number of changes to social security pensions and payments, as announced in the May 2014 Federal Budget. Of particular importance, the amendments in this Bill will: 

Both Bills were before the Senate when Parliament rose on 26 June 2014. The Senate next sits on 7 July 2014. 

 

New choice form delayed 

The new choice of fund form, which the Australian Taxation Office (ATO) had previously advised would be released on its website on 1 July 2014, has been delayed. 

The ATO advised the industry on Friday 27 June 2014 that a draft from would be released in the week beginning 30 June 2014, and the final form would be released before the end of July. As a result of the delay in issuing the revised form: 

 

APRA data reporting: FAQs, SRPG 700, and use of AUSkey with D2A 

In a recent industry roundtable about APRA data reporting, APRA asked ASFA to pass on a number of messages to those involved in the reporting process. The messages are as follows: 

 

ASIC derivative transaction reporting 

As flagged in ASFA Action issue 537, ASIC derivative transaction reporting was due to commence 1 October 2014 for phase 3 reporting entities (which includes superannuation funds that hold an Australian Financial Services Licence and deal in over-the-counter derivatives). ASIC has now released a Class Exemption (ASIC Instrument 14/0633), which defers and staggers the start date for phase 3 reporting entities. ASIC has also released an explanatory memorandum and a summary of the Class Exemption. 

 

Section 29QB disclosure obligations: ASIC releases further Class Order relief 

As flagged in ASFA Action issues 540 and 541, ASIC has released Class Order 14/509 [CO 14/509], which clarified the requirement under section 29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act) that superannuation websites must be kept up to date at all times. To achieve this, that Class Order provided Registrable Superannuation Entity (RSE) licensees with a ‘safe harbour’ so that, if they update the RSE’s website within the time frames prescribed, they will be taken to comply with the updating obligations under section 29QB. 

[CO 14/509] also modified regulations 2.37 and 2.38 of the Superannuation Industry (Supervision) Regulations 1994 (the Regulations) by clarifying how references to ‘financial year’ are to operate in various circumstances. 

ASIC has now released Class Order 14/592 [CO 14/592]. The purposes of [CO 14/592] are to: 

 

SG not payable under Green Army Programme 

The government has made regulations to ensure that SG contributions are not payable by Green Army service providers to participants in the Green Army Programme. 

The Green Army Programme is a voluntary initiative designed to provide young people aged between 17 and 24 years with hands-on, practical skills, training and experience in environmental and heritage conservation. The Programme will be delivered by external service providers who will be responsible for recruiting, establishing and managing Green Army teams across Australia to engage in approved projects. These service providers will be directly responsible for the disbursement of Green Army allowances to participants. 

The Tax and Superannuation Laws Amendment (Green Army Programme) Regulation 2014 amends the SG regime to ensure that Green Army service providers are not required to treat the payment of a Green Army allowance as ‘salary and wages’ for the purposes of calculating a participant’s entitlement to SG contributions. 

 

APRA supervisory levies for 2014/15 

The Minister for Finance has determined the annual supervisory levy that will be imposed on superannuation entities for 2014/15. 

As it proposed in June 2014 (see ASFA Action issue 539), APRA will now levy pooled superannuation trusts separately to other superannuation funds and at a lower rate. 

APRA has also changed the way that costs are allocated between the restricted component (based on the cost of supervision) and the unrestricted component (based on systemic impacts). In particular, APRA is now allocating the amount to be recovered for the ATO’s implementation of SuperStream to the unrestricted component of the levy. 

Type of entity  Minimum $  Maximum $  Restricted
component % 
Unrestricted
Component % 
Pooled superannuation trust  590  130,000  0.00257  0.001758 
Small APRA fund  590  590  0.00000  0.00000 
Other superannuation fund  590  260,000  0.00513  0.009841 

 

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