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Issue 614, 8 December 2016 

In this issue: 

 

Review of financial services complaints schemes: interim report 

The expert panel conducting a review of the financial systems’ external dispute resolution (EDR) framework has released its interim report, recommending a number of significant changes to the current EDR arrangements. 

The Review (refer ASFA Action issues 608, 602 and 601 for background) has made a number of recommendations in relation to the handling of superannuation complaints. These include transitioning the current Superannuation Complaints Tribunal to a new, industry-funded superannuation ombudsman with a view to ultimately integrating it into a single ombudsman scheme covering all financial services complaints. 

The Review Panel has also recommended that the industry develop a superannuation code of practice, and noted that it sees considerable merit in introducing an industry-funded compensation scheme of last resort for financial services. 

Submissions on the interim report are due by 27 January, with the Panel scheduled to provide its final report to the government by the end of March. 

If you have any feedback that you would like ASFA to consider including in its submission to the Panel, please forward it to Julia Stannardbyclose of businessWednesday 11 January. 

 

Non-payment of Superannuation Guarantee: Senate inquiry 

The impact of non-payment of Superannuation Guarantee (SG) entitlements has been referred to a parliamentary committee for inquiry. 

On 1 December, the Senate agreed to a motion by Opposition spokesperson for superannuation, Senator Katy Gallagher, that the Senate Economics References Committee inquires into the impact of non-payment of SG entitlements. The inquiry will consider a range of matters, including: 

If you have any comments or data that you would like ASFA to consider including in our submission to the Committee, please forward it to Ross Clareby close of business Tuesday 20 December. 

 

QROPS update 

The United Kingdom (UK) Government is consulting on changes to the conditions to be an ‘overseas pension scheme’ and a ‘recognised overseas pension scheme’ which must be met in order to receive UK tax relief for contributions or transfers. 

On 5 December, Her Majesty’s Revenue and Customs (HMRC) published draft guidance, Pension tax for overseas pensions, in relation to these proposed changes. 

This document provides guidance in relation to the proposed changes, as well as to the UK taxation of payments out of the funds that have received UK tax relief. HMRC has called for comments on the draft guidance by 1 February 2017. 

If you have any comments on the draft guidance, please forward them to Fiona Galbraithbyclose of business Friday 20 January 2017. 

 

Consumer protection in the financial sector: Senate inquiry 

The adequacy of consumer protection measures in the banking, insurance and financial services sector will be considered by a parliamentary committee. 

The Senate Economics References Committee will undertake an inquiry into the regulatory framework for the protection of consumers, with particular reference to: 

The Committee will provide its report to the Senate by the last sitting day of the autumn sittings of 2018. 

 

Departing Australia superannuation payments: further tax changes 

The government has further amended its recent reforms to the tax treatment of departing Australia superannuation payment (DASPs). 

In ASFA Action issue 613, ASFA advised the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 had been passed by Parliament. That Bill increased the tax that must be withheld from a DASP made to a working holiday maker to 95 per cent from the taxed element of the taxable component. 

The changes to the DASP tax were part of a package of measures to reform the tax arrangements for working holiday makers (known colloquially as the ‘backpacker tax’). The Bill increased the rate that tax must be withheld from the taxable component of DASP paid to a working holiday maker from 1 July 2017 from to 95 per cent (see ASFA Action issue 611 for further details). 

After passage of those amendments, the government agreed to a revised DASP withholding rate of 65 per cent as part of a deal to secure passage of the legislation setting the tax rate for (non-superannuation related) income earned by working holiday makers. The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016 was introduced into Parliament on 1 December and passed on the same day, to give effect to this change. 

 

Budget superannuation changes: draft ATO guidance 

The ATO has released three pieces of draft guidance on implementation of the transfer balance cap, one of the key reforms that were announced in the 2016/17 Budget and passed by Parliament in November (refer ASFA Action issues 613, 612 and 601 for more details).  

The guidance takes the form of three draft ‘law companion guidelines’. A law companion guideline is a type of public ruling that gives the ATO’s view on how recently enacted law applies. 

The draft guidance comprises: 

 

Superannuation calculators: deferral of ASIC requirement 

ASIC has deferred until 1 July 2018 the commencement of a new requirement that was to apply to superannuation and retirement calculators from 1 April 2017. 

ASIC issued ASIC Corporations (Generic Calculators) Instrument 2016/207 in April. This instrument updated and continued relief from licensing, conduct and disclosure obligations for providers of generic financial calculators. ASIC also issued guidance highlighting a key change that require any estimate of a future return included in a calculator to be adjusted for inflation using an assumed rate of inflation of 2.5 per cent (see ASFA Action issues 598 and 600). 

That requirement to use the assumed inflation rate of 2.5 per cent was to apply from 1 April 2017. ASIC has now issued ASIC Corporations (Amendment) Instrument 2016/1090, deferring the commencement date for that requirement to 1 July 2018. ASIC advises that it has granted the deferral because there are a number of current superannuation reforms that may impact on how superannuation calculators should present and calculate estimates in the future. 

AISC will monitor the impact of these reforms to assess the ongoing appropriateness of the requirement under Instrument 2016/1090 for superannuation and retirement calculators to adjust future returns for inflation using a rate of 2.5 per cent. 

 

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