On 26 April 2013, the Government released its responses to the following 2 reports: Richard St. John's Report - Compensation arrangements for consumers of financial services and the report of the Parliamentary Joint Committee on Corporations and Financial Services on its Inquiry into the collapse of Trio Capital. According to the media release from the Minister for Financial Services and Superannuation, Bill Shorten, while both reports "indicate no systemic issues in the regulation of the superannuation industry, they do recommend a range of improvements to governance arrangements to assist investors in understanding and managing risks." The Government has accepted the majority of the recommendations made by both reports, including:
- "legislative changes to strengthen the professional indemnity insurance requirements of providers of financial services that deal with retail consumers";
- "changes to improve the communication of risks to investors and to ensure the adequacy of regulatory processes";
- "consultation papers by Treasury on powers to support [ASIC] in its enforcement role and to improve the governance arrangements of managed investment schemes"; and
- not establishing at this time a last resort scheme for compensating consumers impacted by a financial collapse, though it will leave the option open for future consideration, taking account of "any residual levels of under-compensation after improvements in the industry's conducts standards have been implemented".
Also, the report notes that:
- a Superannuation Regulators Working Group will formed, comprising members of Treasury, APRA, ASIC and the ATO who will work together to implement the Government's response; and
- as a result of the Trio Report, the Government referred the issue of investment fraud in the superannuation industry to the Heads of Commonwealth Operational Law Enforcement Agencies.
Also on 26 April 2013, Treasury released an independent assessment report of the regulatory framework relating to Trio Capital - Review of the Trio Capital Fraud and Assessment of the Regulatory Framework. According to Treasury, the review considers the events which led to the collapse of Trio Capital from an independent standpoint as well as the "responses of ASIC and APRA and aspects of the regulatory framework." The review found that:
- "ASIC and APRA carried out their roles and responsibilities appropriately, under the current regulation framework;
- the [b]oard of Trio Capital failed to manage and monitor risks associated with overseas investments;
- certain financial planners may not have put member interests first and may not have adequately advised their clients of their responsibilities to manage investment risks when choosing to invest through a self-managed superannuation fund (SMSF); and
- some [SMSF] trustees had an insufficient understanding and knowledge of the risks pertaining to their investments"
On 1 May 2013, the Government released draft Tax Laws Amendment (Sustaining the Superannuation Contribution Concession) Bill 2013, draft Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013 and a corresponding draft explanatory memorandum. The amendments give effect to a reform announced in the 2012 - 2013 Budget by proposing to reduce the concession that high income earners (those with income above $300,000) receive on their concessional superannuation contributions from 30% to 15% by imposing the tax under Division 293 of the Income Tax Assessment Act 1997.
According to the explanatory material, the "superannuation contributions that are potentially affected are concessional contributions—low tax contributions—to interests other than defined benefit interests and defined benefit contributions for defined benefit interests, other than contributions that are subject to excess contributions tax. Certain contributions to interests in constitutionally protected funds, including employer contributions and defined benefit contributions, are also potentially impacted by the change. Special rules apply to Commonwealth judges and justices, and certain State higher level office holders".
On 7 May 2013, the Minister for Financial Services and Superannuation, Bill Shorten, announced the release of exposure draft legislation "Tax and Superannuation Laws Amendment (2013 Measures No. 3) Bill 2013: Superannuation concessional contributions cap" and a draft explanatory memorandum to bring forward the start date of the new concessional contributions cap.
According to the Treasury release, the legislation will "implement the higher concessional superannuation contributions cap for older individuals announced by the Government on 5 April 2013... To help those nearing retirement to build the adequacy of their retirement savings the Government is introducing a higher superannuation contributions cap of $35,000 for older individuals. For individuals aged 60 and over, the new higher cap will apply from 1 July 2013. Individuals aged 50 and over will be able to access the higher cap from 1 July 2014. The higher cap is temporary and will cease when the general cap indexes to $35,000 (expected to be 1 July 2018). The exposure draft legislation will amend the Income Tax Assessment Act 1997 [and] the Income Tax (Transitional Provisions) Act 1997." Submissions are due by 13 May 2013.