The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 8 December 2014, ASIC Class Order [CO 14/1217] was registered with the Federal Register of Legislative Instruments. The Class Order extends the relief provided under ASIC Class Order [CO 13/1534] in relation to the requirement that superannuation product dashboards be included in periodic statements. Under ASIC Class Order [CO 13/1534] the relief from the requirement to include superannuation product dashboards in periodic statements applies to periodic statements with a reporting period ending before 1 January 2015. ASIC Class Order [CO 14/1217] extends this to apply to periodic statements with reporting periods that end before 1 July 2015. The Explanatory Statement for the Class Order is available here.
- On 12 December 2014 ASIC Class Order [CO 14/1252] was registered. According to the Explanatory Statement the purpose of the Class Order is to revise the definitions contained in Schedule 10 to the Corporations Regulations, including "indirect cost" and "management cost", in order to clarify the costs that must be disclosed in Product Disclosure Statements and periodic statements. The Class Order also "addresses some provisions that could be interpreted in an anomalous way that were included in the Regulations as part of the Stronger Super reforms."
The Class Order applies to PDSs from 1 January 2016 and to periodic statements from 1 January 2017.
- On 15 December 2014, the Treasurer issued a media release announcing that the 2014/2015 Mid-Year Economic and Fiscal Outlook had been released. Among other things, it includes a summary of superannuation-related policy decisions taken since the 2014-2015 Budget and the impact of those decisions on the Budget. In particular, it includes information about the provision of funding to the ATO to implement changes, to apply from 1 July 2016, intended to simplify the application of the Superannuation Guarantee Charge for the late or short payment of superannuation contributions.
- On 15 December 2014, the Corporations Amendment (Revising Future of Financial Advice) Regulation 2014 was registered, commencing on 16 December 2014. According to the Explanatory Memorandum the Regulation "makes a number of amendments to the Corporations Regulations 2001 (Cth) [relating to] Part 7.7A of the [Corporations Act]: the Future of Financial Advice (FOFA) provisions." The Explanatory Memorandum sets out the legislative history of the Regulation (including the disallowance of a previous version of the Regulation in the Senate) and sets out the changes made by the Regulation to the FOFA provisions of the Corporations Act.
- On 15 December 2014, the Corporations (Statements of Advice) Repeal Regulation 2014 was registered. According to the Explanatory Statement the Regulation repeals the Corporations Amendment (Statements of Advice) Regulation 2014, which would have made a number of amendments to the Corporations Regulations 2001 from 1 January 2015. The Explanatory Statement explains that the government had agreed to make these amendments in order to secure the support of minor parties in passing the government's FOFA reforms. However, the government has decided to repeal the amendments as the agreement with those minor parties is no longer in force.
- In December, ASIC circulated Draft Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements for comment. The draft sets outs proposed amendments to Regulatory Guide 97 to, among other things, reflect the modifications to the Corporations Regulations made under the above-mentioned ASIC Class Order [CO 14/1252]. Submissions on the Draft Regulatory Guide should be made to ASIC by 27 February 2015.
Case law judgements
- On 11 December 2014, the Supreme Court of Victorian handed down a lengthy judgment in Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liq) & Ors. The matter involved allegations that Product Disclosure Statements in relation to certain managed investment schemes contained representations that were misleading or deceptive, and omitted information that was required to be included under Part 7.9 of the Corporations Act, and were therefore "defective" within the meaning of the Corporations Act. The Court found that none of the PDSs the subject of the proceedings were defective by reason of the inclusion of the alleged misleading or deceptive representations or by reason of the alleged omission of information. Importantly, the Court also determined that the plaintiff's had failed to establish that they would not have invested in the schemes had the PDSs not contained the alleged misrepresentations or included the alleged omitted information.
- On 12 December 2014, the Federal Court of Australia handed down judgment in Deputy Commissioner of Taxation v Lyons  FCA 1353. In the course of the proceedings Mr Lyons admitted to various contraventions of the SIS Act in relation to a self-managed superannuation fund of which Mr Lyons and his former wife were trustees. Mr Lyons and his former wife also ran a retail business that was suffering financially. Mr Lyons, in his capacity as trustee of the SMSF, made several transfers from the fund to his brother-in-law, amounting to almost the entire cash assets of the fund. Upon each transfer, the brother-in-law immediately transferred the money into the couple's retail business. In the proceedings Mr Lyons admitted that his actions contravened the following provisions of the SIS Act:
- section 62 sole purpose test – he had contravened this section by maintaining the fund for the significant purpose of "making back-to-back loans to provide working capital" for his retail business;
- section 65 lending prohibition – he had contravened this section by lending money of the fund to his relative, who was also a member of the fund;
- section 84 in-house asset rules – he had breached this section by making loans from the fund that caused the market value ratio of the fund's in-house assets to exceed 5%; and
- section 109(1) arm's length investment rule – he had breached this section by making investments in his capacity as trustee of the fund in circumstances where he and the other parties to those transactions failed to deal with each other at arm's length.