Financial Services eBulletin - 5 July 2013
In addition to the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Bill 2013 which was mentioned in last week's Super Alert as having been passed by the Senate on 24 June 2013, the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 and the Superannuation (Sustaining the Contribution Concession) Imposition Bill 2013 passed the Senate without amendment on that date and now await Royal Assent. According to the Explanatory Memorandum (which is the same for both Bills):
- The income tax legislation would be amended to "increase the superannuation concessional contributions cap to $35 000 for the 2013-14 financial year for individuals aged 60 years and over, and to $35 000 for the 2014-15 financial year and later financial years for individuals aged 50 years and over."
- The Superannuation (Government Co-contribution for Low Income Earners) Act 2003 would be amended "in order to make technical changes to ensure the low income superannuation contribution operates effectively."
- Tax and superannuation law would be amended "to reduce the tax concession for concessionally taxed superannuation contributions of very high income earners by 15 per cent." The Superannuation (Sustaining the Contribution Concession) Imposition Bill 2013 "contains the mechanism by which the tax concession is reduced."
- On 24 June 2013 ASIC released Consultation Paper 212, Licensing: Training of financial product advisers - update to RG 146, which "sets out ASIC's proposals for changes to the training standards in Regulatory Guide 146 … to enhance the competency of, and quality of advice being provided by, financial service providers." Submissions on CP 212 are due by 30 September 2013.
On 25 June 2013 the following Bills passed the Senate without amendment and now await Royal Assent:
- Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013. According to the Explanatory Memorandum, the Bill "amends the income tax and superannuation law to ensure that income tax is generally not payable on the interest paid by the Commonwealth on unclaimed money from 1 July 2013."
- Tax and Superannuation Laws Amendment (2013 Measures No 2) Bill 2013. The Bill amends the SIS Act to "require trustees to establish and implement procedures in relation to the consolidation of multiple member accounts". The Bill also amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 to "reduce the amount of superannuation co-contribution available from the 2012-13 financial year."
- On 25 June 2013 the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Determination 2013 (No 1) was registered on the Federal Register of Legislative Instruments. The Determination clarifies the formula used and levy payable by entities regulated and supervised by AUSTRAC.
- On 26 June 2013 the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill  2013 received Royal Assent as Act No 61 of 2013. The Bill passed the Senate without amendment on 24 June 2013. The Bill contains the fourth tranche of the MySuper measures and according to the Explanatory Memorandum the key amendments relate to, a fund's governing rules, providing APRA with the power to issue infringement notices for breaches, provision for superannuation trustees to provide eligible persons with the reasons for decisions made in relation to a complaint, risk management systems for dual regulated entities and breaches of directors duties.
On 26 June 2013 the ATO released the following Taxation Determinations:
- TD 2013/10."The application of a deceased member's benefits in a regulated superannuation fund to commence a superannuation income stream from that fund for each of one or more dependant beneficiaries of the deceased member (in accordance with regulation 6.21 of the Superannuation Industry (Supervision) Regulations 1994 is not a transfer of an amount between superannuation interests in that fund for the purposes of subsection 307-5(8) of the ITAA 1997."
- TD 2013/11. "A payment of all or part of a deceased member's benefits in a regulated superannuation fund from that fund to another regulated superannuation fund, to immediately cash those benefits to a beneficiary of the deceased person, is not a 'roll-over superannuation benefit' as defined in section 306-10 of the ITAA 1997."
- TD 2013/12. "The requirement in paragraph 303-5(1)(c) of the ITAA 1997 that 'you are a death benefits dependant' is satisfied by virtue of paragraph 302-195(1)(b) of that Act if the deceased person's child was aged less than 18 just before the deceased person died."
- TD 2013/13. "A payment by the first fund to another complying superannuation fund of a superannuation lump sum arising from the full commutation of a superannuation income stream paid to a person as a beneficiary of a deceased member of the first fund, is a 'roll-over superannuation benefit' for the purpose of section 306-10 of the ITAA 1997 in certain specified circumstances.
- On 26 June 2013 the ATO has released SMSF Determination 2013/1. "Where a deceased member's benefits in a self managed superannuation fund are cashed in the form of a pension or an annuity to a child of the deceased member in accordance with sub-subparagraph 6.21(2A)(b)(ii)(B) of the [SIS Regulations], does subregulation 6.21(2B) of those regulations require the trustee to determine whether the child has a disability of the kind described in that subregulation on the day the child turns 25 (or an earlier date, if applicable under paragraph 6.21(2B)(a) of those Regulations), in order to determine whether the pension or annuity being paid to the child is exempt from the requirement to be commuted and cashed as a lump sum on that day?"
- On 28 June 2013 the Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 was registered. According to the Explanatory Statement, the purpose of the Regulation "is to implement MySuper and governance measures announced by the Government as part of the Stronger Super reforms." The Regulations were first released as an exposure draft for consultation during May and June 2013. As a result, on 27 June, Treasury released a document describing the Outcome of the Consultation Process. As a result of a number of concerns raised, the Government announced a range of changes which were incorporated in the finalised version which was registered. Most of the provisions of the Regulations commence on 1 July 2013. As an associated development, on 28 June 2013, ASIC released a Class Order [CO 13/830] which defers the commencement date of the executive remuneration disclosure obligations.
APRA has added some Frequently Asked Questions regarding Prudential Standards and Guidance for Superannuation:
- Do I need to comply with the existing conditions on my RSE licence relating to capital once the prudential standard on ORFR takes effect on 1 July 2013? (FAQ 61)
- Can an RSE licensee reduce its ORFR target amount to take into account another APRA financial requirement (relating to operational risk) imposed on an investment vehicle into which an RSE invests? (FAQ 62)
- Does the introduction of the superannuation prudential standards affect the conditions on my RSE licence? (FAQ 63)