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Issue 590, 6 January 2016 

In this issue: 

 

2016/17 Pre-Budget submission 

The government has called for submissions in regard to the 2016/17 Budget. 

ASFA will be preparing a submission and any suggestions from ASFA members for recommendations to be included in the submission are welcomed. The focus of the submission will be on measures that would impact on government expenditure or revenue in the 2016/17 financial year or later years. 

Suggestions should be provided to Ross Clare by close of business 28 January 2016. 

 

Governance reforms: outcomes of APRA consultation 

APRA has provided an update on the outcomes of its consultation on its proposed changes to the prudential framework to support the government’s governance reforms. The proposed APRA changes, released in August 2015 (see ASFA Action issue 578), include a new prudential standard and practice guide (SPS 512 and SPG 512) on transition to the new governance arrangements, as well as changes to the existing prudential standard and practice guide on governance (SPS 510 and SPG 510). 

In a letter to registrable superannuation entity (RSE) licensees, APRA notes that since the legislation to implement the governance reforms has not yet been passed by Parliament, APRA does not intend to formally finalise its consultation on governance arrangements at this time. However, APRA indicates that it considers it appropriate to provide a response to industry summarising the outcomes on some aspects of the proposed amendments to SPS 510 and SPG 510, as they relate to: 

APRA intends to formally reflect, in the prudential framework, a set of proposals in relation to these matters (as outlined in the letter), at the earliest opportunity. APRA will also respond more formally to the issues raised in submissions, including APRA’s administration of the proposed legislation and the associated transitional arrangements, at the appropriate time. 

 

Choice product dashboard: ASIC consumer testing 

ASIC has released Report 455 Consumer testing of the Choice product dashboard, outlining the results of consumer testing of the choice product dashboard undertaken last year. 

The testing was conducted ahead of the introduction of the requirements for all RSE licensees to include choice product dashboards on websites from 1 July 2016. 

The report found that overall there was a more positive sentiment towards superannuation than in prior testing of the MySuper dashboard in 2013. Some participants considered superannuation to be a topic that could be simplified and better communicated and considered that—for those seeking to understand and compare funds—dashboards are a highly valuable resource. 

The research indicated people may disengage when superannuation information is complex. They may also ignore complex information and generally prefer to focus on simpler elements. The response to the dashboard, while positive overall, depended on many factors, including each participant’s self-reported level of financial awareness. The testing highlighted how sensitive people were to small changes in the design and terminology, demonstrating the need for consistency of information and presentation from superannuation funds. 

One of the key findings was about the use of a ‘super estimator’ using some of the data from the dashboard. In particular, the super estimator appealed to participants who claimed to pay less attention to financial matters. The concept of the estimator is reflected in the draft product dashboard regulations released for consultation (see ASFA Action issue 589) and further information is provided as an attachment to ASIC’s media release. 

ASIC intends to provide further guidance in relation to the product dashboard requirements, with a particular focus on the new requirements, such as the asset allocation pie chart, in the choice dashboard. 

 

Section 29QC deferral 

As advised in ASFA Action Issue 585, ASIC proposed to defer the start date for the consistency requirements in section 29QC of the Superannuation Industry (Supervision) Act 1993 until 1 February 2017, to align with the extension to the fee and cost transition for product disclosure statements. 

In December 2015, ASIC registered ASIC Superannuation (Amendment) Instrument 2015/1098, which modifies Class Order [CO 14/541] RSE licensee s29QC SIS Act disclosure exemption, formalising the deferral. 

 

QROPS update: funds to contact HMRC directly 

As advised in ASFA Action Issue 584, Treasury has been engaging with Her Majesty’s Revenue and Customs (HMRC) in the United Kingdom (UK) regarding relief options for funds and members affected by the rule changes for Qualifying Recognised Overseas Pension Schemes (QROPS), which came into effect on 6 April 2015. HMRC advised that the decisions about relief will be made on a case by case basis and indicated the information that HMRC will need from the trustees of the superannuation funds for each individual who received a transfer from 6 April onwards. 

Further background on this matter, including the potential tax penalties for members under the age of 55 whose benefits were transferred from a UK scheme to an Australian fund after 5 April 2015, can be found in ASFA Action issues 583, 578, 574, 571 and 569. 

ASFA members have raised a number of queries and issues regarding HMRC’s advice in ASFA Action issue 584, which were passed on to Treasury. Treasury wrote to HMRC advising they had been made aware that funds had questions about the relief process and sought a contact point from HMRC for fund inquiries about applications for relief. 

On 23 December HMRC responded as follows: 

Thank you for your letter of 16 December. 

I note that the funds and their industry representatives will themselves be contacting HMRC about the changes they propose to make in order to gain QROPS status. Enquiries should be sent to the following email address: regulations.qrops@hmrc.gsi.gov.uk. 

To assist with dealing with any enquiries, it would be helpful if we could have references, or links to the Australian legislation under which… the funds … [consider they] meet the UK Pension Age Test and therefore meet the requirements to be a QROPS. 

While HMRC’s response only refers to changes to re-gain QROPS status, and does not address applications for relief, it would appear that the same email address should be used for fund queries regarding relief applications as well. 

Members wishing to discuss QROPS should contact Fiona Galbraith. 

 

Single touch payroll: timetable announced 

The government has announced the timetable for implementation of its ‘single touch payroll’ (STP) reforms, which will streamline the reporting of tax and superannuation related information to the Australian Taxation Office (ATO). See ASFA Action issues 556 and 570 for further information on the STP reforms. 

Under STP, information about employers’ Pay As You Go (PAYG) withholdings will be automatically reported to the ATO through Standard Business Reporting (SBR) software. Reporting about superannuation contributions will also be automatically sent to the ATO when payments are made to super funds. 

Following a pilot to be conducted in the first half of 2017, businesses will be able to voluntarily commence STP reporting from 1 July 2017, with the option to make voluntary payments. From 1 July 2018, employers with 20 or more employees will be required to use STP enabled software for reporting to the ATO. The government will make a decision on timing for rolling out STP reporting for employers with less than 20 employees after the pilot is completed. 

In addition, the government will introduce streamlined processes for individuals commencing employment. Individuals will have the option of completing their tax file number declaration and their superannuation standard choice form using the myGov website portal, or through their employer’s business management software. The commencement date for this streamlined process is not presently clear. 

 

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