Issue 745, 30 March 2020
In this issue:
- COVID-19 Coronavirus: new compassionate ground for early release of super
- COVID-19 Coronavirus: updating super income stream balances
- COVID-19 Coronavirus: AML/CTF compliance report due date extended
- COVID-19 Coronavirus: scrutiny of superannuation industry to include liquidity
- COVID-19 Coronavirus: deferral of Intergenerational Report
COVID-19 Coronavirus: new compassionate ground for early release of super
The Coronavirus Economic Response Package Omnibus Act 2020 provides for a new compassionate ground for the early release of superannuation for those impacted by the pandemic. This Act was introduced into and passed by Parliament on 23 March and received Royal Assent on 24 March (see ASFA Action issues 743 and 742 for background and the conditions that apply to the early release).
The ATO has published CRT Alert 004/2020, providing some important information about how the early release will be administered.
The Alert indicates the process for applicants will be as follows:
- the ATO will begin deploying the application form for individuals to use for coronavirus early release of super on Monday 20 April and individuals will commence applications from that date
- an individual can make one application in the 19-20 financial year and one application in the 20-21 year prior to 24 September 2020 when the measure ends
- the application will be accessed in one of two ways:
- the member will authenticate themselves through MyGov and complete the application form in ATO Online
- for those unable to access online services, the individual will be able to call the ATO, confirm their identity and complete the application over the phone
- The application will require the person to certify that they are eligible and includes information about the consequences of making false applications. The individual will then:
- review a list of their open accounts and the last account balance reported for those accounts (in most cases that is 30 June 2019)
- input the amount they would like to release from each account (there are no limitations on what the individual can input only that in total the amount can’t exceed $10,000)
- input the bank account details they would like the money paid into and give authorisation for the ATO to provide it to the fund(s) and for the fund(s) to release the money into that account.
The process for funds will be as follows:
- funds can expect to start receiving notifications from Tuesday 21 April
- the ATO will provide the details in an electronic data file, with details to be confirmed early this week and made available on the ATO’s website
- funds will need to download the file via the Bulk Data Exchange (BDE) channel and process the information provided by the ATO. The Government expects funds to process the payments and release the amounts to the individual as soon as possible.
The current process for existing categories of compassionate release of super will continue as is and is unaffected by the process for the new COVID-19 related early release.
AUSTRAC has indicated that it will introduce a rule under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF) to ensure that superannuation funds making payments to their members under the early release initiative, where the payment is approved by the ATO and processed through MyGov and ATO online, will not have to conduct additional customer verification under the AML/CTF regime. AUSTRAC will update its website with further information in due course.
COVID-19 Coronavirus: updating super income stream balances
ASFA understands that Services Australia has written to providers of superannuation income streams regarding reporting updated income stream balances to reflect the unforeseen downturn in the share market due to the COVID-19 pandemic.
Services Australia has noted that the changes to the values of many members account balances can mean that some recipients of social security pensions are not receiving their full entitlement because their assessment was based on their superannuation income stream account balance as last reported in February, before the market downturn.
We understand Services Australia is seeking urgent advice—by close of business today if possible—from superannuation income stream providers as to whether they will be in a position to lodge a new file with recent data, and the possible timeframe in which it could be provided. Any questions should be directed to: income.streams@servicesautralia.gov.au.
COVID-19 Coronavirus: AML/CTF compliance report due date extended
Due to the exceptional circumstances surrounding the COVID-19 pandemic, AUSTRAC has indicated it will continue to accept lodgements of compliance reports by reporting entities until 30 June, without risk of compliance action. The AML/CTF Compliance Report 2019 would ordinarily be due by 31 March.
AUSTRAC has also stated that it will constructively work with reporting entities as they manage their money laundering and terrorism financing risks during this disruptive period. This includes considering the entity’s circumstances when applying the AML/CTF laws.
AUSTRAC has established a webpage for updates in relation to COVID-19.
COVID-19 Coronavirus: scrutiny of superannuation industry to include liquidity
The House of Representatives Standing Committee on Economics has deferred the upcoming hearings scheduled as part of its ongoing review of the four major banks and other financial institutions.
As relevant to superannuation, Committee Chair Tim Wilson MP has stated the following:
“In the last round of hearings the superannuation sector dismissed the committee’s concerns about liquidity associated with the structure of their funds. Considering the super funds are now claiming liquidity issues which is inconsistent with the spirit of evidence they had previously submitted, the committee is reserving its right to hold a hearing with APRA, and the superannuation sector in the interests of financial stability”.
COVID-19 Coronavirus: deferral of Intergenerational Report
In ASFA Action issue 742, we reported that the Government would defer the date for release of the next Intergenerational Report (IGR), due to the COVID-19 Coronavirus pandemic.
The Coronavirus Economic Response Package Omnibus Act 2020 was introduced into and passed by Parliament on 23 March and received Royal Assent on 24 March. Schedule 15 of this Act amends the Charter of Budget Honesty Act 1998 to provide that the next IGR is to be “publicly released and tabled on or before 30 June 2021”. (The Act also includes the new compassionate ground condition of release for those impacted by the pandemic, and halves the minimum drawdown rate for account based income streams, see ASFA Action issue 743.)
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
