The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
|New prudential standard|| |
On 10 August 2017, the Banking, Insurance, Life Insurance and Superannuation (prudential standard) Determination No. 1 of 2017 (Instrument) was registered with the Federal Register of Legislation. The Instrument determines a new prudential standard - Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives.
According to the Explanatory Statement, under CPS 226 "an entity that actively transacts in non-centrally cleared derivatives is required to exchange collateral as appropriate to those transactions to manage the risk of counterparty default, and to have policies and procedures to manage its risks in undertaking that derivatives activity".
|Federal Parliament||Asset roll-over relief for transfers within super fund|| |
On 16 August 2017, the Treasury Laws Amendment (2017 Measures No 4) Bill 2017 (Bill) was passed by the House of Representatives, and will now progress to the Senate.
According to the Explanatory Memorandum, "Schedule 2 of the Bill amends the Income Tax Assessment Act 1997 (Cth) to provide asset roll-over relief for mandatory transfers within a superannuation fund in the transition to a MySuper product".
|Federal Parliament||Medicare Levy rate increase||Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017|| |
On 17 August 2017, the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 was introduced in the House of Representatives to amend the Medicare Levy Act 1986, which, according to the Explanatory Memorandum will "increase the Medicare levy rate from 2 to 2.5 per cent of taxable income for the 2019-20 income year and later income years".
Various other bills introduced in the House of Representatives on 17 August 2017 will incorporate this levy rate increase, meaning that under the proposed changes other related rates will increase for the 2019-20 income year and later income years, including that:
|Federal Parliament||Proposed amendments to AML and CTF Act||Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017|| |
On 17 August 2017, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 (Bill) was introduced into the House of Representatives, proposing to amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988.
According to the Explanatory Memorandum, the Bill aims to strengthen Australia's capabilities to address money laundering and terrorism financing risks and generate regulatory efficiencies, by introducing amendments to:
|ATO||Superannuation provider reporting||Draft SPR 2017/D2|| |
On 16 August 2017, the ATO released a draft instrument on the reporting of event based transfer balance account information in accordance with the Taxation Administration Act 1953 (Cth).
The instrument provides guidance on the way in which superannuation and life insurance providers are required to report transactions allowing the ATO to determine if an individual has exceeded their $1.6m pension transfer balance cap.
According to the instrument, a Transfer Balance Account Report is "required to be lodged, no later than 10 business days after the end of the month, or such later date" as allowed by the Deputy Commissioner of Taxation.
|ATO||PAYG Withholding variation||Draft OPS 2017/D5|| |
On 16 August 2017, the ATO released a draft instrument on PAYG Withholding variation in relation to certain superannuation beneficiaries who have not quoted a tax file number.
According to the instrument, "the amount to withhold is varied to nil for that portion of the payment which is non-assessable non-exempt income of the payee".
This instrument is intended to replace Legislative Instrument No. F2007L02031, which is due for repeal on 1 October 2017
|ATO||Propagation compliance approach||Draft Practical Compliance Guideline PCG 2017/D16|| |
On 21 August 2017, the ATO issued for consultation Draft Practical Compliance Guideline PCG 2017/D16 (Guide), which concerns "propagation arrangements" adopted by RSEs and sets out the ATO's compliance approach to the use of propagation to select assets for disposal. It applies to RSEs that contract with custodians to provide custodial and investment administrative services for the RSE's assets.
According to the Guide, "propagation is a term adopted by custodians to describe a tax parcel selection process. Under propagation, the tax parcel selection methodology agreed with the RSE is applied across the RSE's asset class level holdings instead of being confined to the individual fund manager level. When assets are disposed of, the relevant parcel is selected from the propagated portfolio for each transaction, based on the parcel selection methodology agreed with the RSE".
The Guide outlines the circumstances under which the Commissioner will generally not apply compliance resources to the propagation arrangement of an RSE, and the circumstances under which the Commissioner will treat a propagation arrangement as inappropriate and potentially apply compliance resources.
|Case law update||SCT's determination inconsistent with insurance policy||AIA Australia Ltd v Lancaster  FCA 962|| |
This case involved an appeal against a determination by the Superannuation Complaints Tribunal (SCT). The first respondent, a member of a superannuation fund through which he had obtained income protection insurance, sought to have his income protection policy benefit determined by reference to his actual salary at the date of his disablement. This was higher than the salary amount notified to the applicant insurer, AIA Australia Ltd, at the date of disablement.
The SCT found for the member, and determined that the benefit should have been calculated based on the higher salary. AIA Australia Ltd appealed that determination.
The issue before the court was whether the SCT's ruling was inconsistent with the policy. Chief Justice Allsop set aside the SCT's determination on the basis that it was inconsistent with the policy's terms. The Court found that the SCT erred in setting aside the refusal of a benefit determined by reference to the higher salary.
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