Financial Services eBulletin - 7 May 2014

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

  •  On 27 April 2014, the Grattan Institute released a report entitled Super sting: how to stop Australians paying too much for superannuation. The report, authored by Jim Minifie, concludes that Australians pay average fees of 1.2 percent on their superannuation account balances, which is more than three times the median OECD rate.   
  • On 28 April 2014, Treasurer Joe Hockey announced that Australia and the United States had signed an intergovernmental agreement (IGA) to improve international tax compliance and to implement the US Foreign Account Tax Compliance Act (FATCA). FATCA imposes due diligence and reporting obligations on non-US financial institutions, including Australian financial institutions. Treasury stated that the key objective of the IGA is to assist in the facilitation of FATCA for Australian financial institutions and to reduce the overall burden on Australian business. This is to be achieved by measures that provide for the reporting of the required information via the ATO under existing Australia-US tax treaty arrangements. The Government will introduce legislation to give effect to FATCA shortly, and the public consultation process will commence immediately thereafter. Treasury has released Exposure Draft - Tax and Superannuation Laws Amendment (2014 Measures No #) Bill 2014: FATCA and an Explanatory Memorandum for public comment.   
  • On 29 April 2014, the FSC announced it will commence legal action in the Federal Court to challenge the validity of the constitution of the Fair Work Commission's (FWC) Expert Panel for the selection of default MySuper products. The FSC intends to argue that the current constitution of the Expert Panel is invalid. The FSC's announcement comes following the decision of the FWC Full Bench, 2014 Review of Default Fund Terms [2014] FWCFB 2728, where President Ross denied the FSC's request for a hearing on the Expert Panel's validity and a seven-day extension on MySuper submissions.   
  • On 29 April 2014, in the decision of AAT Case [2014] AATA 247, Re The Public Servant and FCT, the Administrative Appeals Tribunal (AAT) upheld a private ruling that a settlement payment to a senior public servant was compensation capable of being characterised as a taxable employment termination payment (ETP) under section 82 - 130(1) of the Income Tax Assessment Act 1997 (Cth), as opposed to a non-taxable personal injury payment within the terms of the exclusion in section 82 - 135(i).   
  • On 5 May 2014, Acting Assistant Treasurer Senator Mathias Cormann announced that the Federal Government has decided to defer the start date for the choice product dashboard and the introduction of a portfolio holdings disclosure regime to 1 July 2015. While Senator Cormann stated that the "Government remains fully committed to these reforms", he says they were "rushed in without adequate consultation in the dying days of the previous government."