Financial Services eBulletin - 25 November 2016
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 11 November 2016, the Superannuation Data and Payment Standards (Payments and Information from the Commissioner of Taxation) Amendment 2016 was registered. According to the Explanatory Statement, it 'extends the application of the Superannuation Data and Payment Standards 2012 to rollover superannuation benefits and contribution payments made between the Commissioner of Taxation and APRA-regulated superannuation entities'. It commenced operation on 12 November 2016.
- On 14 November 2016, AUSTRAC released its draft guidance report entitled, Privacy implications of collecting know your customer information from sources other than from the customer, as a result of amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2016 (No. 1). The report details how to 'carry out an applicable customer identification procedure for AML/CTF purposes [which] involves the collection of some form of "personal information" about an individual', and how this process interacts with an entity's obligations under the Australian Privacy Principles.
- On 16 November 2016, the ASIC Corporations (Repeal) Instrument 2016/1053 was registered. According to the Explanatory Statement, the legislative instrument repeals Class Order [CO 02/1072] Product Disclosure Statements: Top-up relief for managed investment schemes, Class Order [CO 03/237] Updated information in Product Disclosure Statements and Class Order [CO 03/1092] Further relief for joint Product Disclosure Statements.
ASIC has subsequently announced that the repealed Class Orders have been remade into the legislative instruments as follows:
- ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054;
- ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055; and
- ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056.
The purpose of these legislative instruments is to continue the substantive effect of the relief granted by the corresponding class orders previously in operation.
- On 22 November 2016, APRA released its Quarterly Superannuation Performance publication and its Quarterly MySuper Statistics report for the September 2016 quarter. Key findings of the two reports are:
- 'Superannuation assets totalled $2.1 trillion at the end of the September 2016 quarter' which represents a '7.4 per cent increase in total superannuation assets' over the previous year;
- MySuper products have increased by 13.6% to $492 billion; and
- Contribution flows have decreased by 18.7% for the year.
- On 23 November 2016, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 were passed by both Houses of Parliament and are currently awaiting royal assent. These Bills implement the superannuation changes announced in the 2016-2017 Federal Budget and in subsequent announcements (including the imposition of a $1.6m cap on the amount that can be transferred to the tax-free earnings retirement phase of superannuation, and reductions of the annual concessional contributions cap to $25,000 and the annual non-concessional contributions cap to $100,000), as covered in previous Super Alerts, and summarised in the related Explanatory Memorandum.
The Senate Economics Legislation Committee also tabled its report on the same day in relation to the two Bills. The third bill in the government's superannuation reform package, the Superannuation (Objective) Bill 2016, is still before the Senate.
- On 24 November 2016:
- the following Bills were passed by the Senate without amendment, and now await royal assent:
- the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 was passed by the Senate with a request for amendment by Senator Jacqui Lambie, agreed to by the Senate, to reduce the tax rate applicable to working holiday makers from 19% to 10.5%. The Bill now returns to the House of Representatives to consider the amendments.
According to the relevant Explanatory Memorandum, the effect of the package of Bills is, from 1 January 2017, to (among other things):
- apply a 19% [now 10.5% if the requested amendments of the Senate are approved] income tax rate to working holiday maker taxable income (that is assessable income derived from Australian sources by working holiday makers less relevant deductions) on amounts up to $37,000, with ordinary tax rates for taxable income exceeding this amount;
- help protect working holiday makers from unfair employment arrangements by allowing the Commissioner of Taxation (Commissioner) to disclose information that is relevant to ensuring an entity’s compliance with the Fair Work Act 2009 to the Fair Work Ombudsman;
- require employers of working holiday makers to register with the Commissioner, which will allow these employers to withhold tax at income tax rates applying to working holiday makers;
- require the Commissioner to give the Treasurer, for presentation to the Parliament, a report on working holiday makers, which includes statistics and information derived from the register;
- increase the rate of the departing Australia superannuation payments tax to 95 per cent for working holiday makers; and
- reduce the visa application charge for Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas from $440 to $390.
- On 24 November 2016, APRA released for consultation draft Prudential Practice Guide SPG 227 Successor Fund Transfers and Wind-ups (draft SPG 227) and a letter to all RSE licensees explaining that APRA is seeking to update its guidance relating to successor fund transfers. According to the letter, the draft SPG 227 sets out APRA's expectations in the following areas:
- the assessment of ‘equivalent rights’, including what is a ‘right’, accrued benefits and what assessment on a ‘bundle of rights’ basis means;
- the assessment of ‘equivalent rights’ when undertaking an SFT between MySuper products, and between MySuper lifecycle products and MySuper products with a single diversified investment strategy; and
- the equitable treatment of operational risk financial requirement (ORFR) financial resources when undertaking an SFT.
In the accompanying APRA media release, APRA Deputy Chairman Helen Rowell says that ‘APRA recognises that the introduction of MySuper products in 2013-2014, as well as ongoing consolidation and other recent developments in the superannuation industry, have introduced additional complexities for RSE licensees in undertaking a successor fund transfer. APRA has therefore revised its guidance to assist RSE licensees where a successor fund transfer is being considered.’
APRA has requested that written submissions on draft SPG 227 be forwarded to APRA by 17 February 2017.