The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have issued a discussion paper on a proposed online breach reporting system for dual-regulated institutions.

The proposed system aims to simplify the process for regulated institutions to report breaches and reduce breach reporting duplication faced by those institutions regulated by both APRA and ASIC. The superannuation industry is already using an online system to report breaches to APRA. The proposed system will:

• enable all APRA-regulated institutions – authorised deposit-taking institutions, general insurers, life insurance companies, friendly societies and superannuation licensees – to report breaches to APRA online; and
• enable those institutions regulated by both APRA and ASIC to report online breach notifications required to be lodged with both regulators through a single breach report to APRA, thereby eliminating the requirement for jointly regulated institutions to provide separate breach reports for the same incident to both regulators.

APRA and ASIC have invited interested parties to comment on the proposals by 31 October 2007.

In 1994, Australian credit unions lost their exemption from income tax on interest on loans to members. They were placed on a "level playing field" with the major banks and other lenders. What impact did the change have?

In a interesting interview (37.5 minutes free mp3 download), Professor Kent Zumwalt discusses the results of his research: the impact of taxation on credit unions’ return on assets over a 10 year period and their current position in relation to other financial institutions. He also looks at other competitive factors and their implications for credit unions in the United States.

It’s rare to get a long-distance review on the effects of structural change and this easy listening interview draws out some important issues for mutual organisations in particular.

The ATO has issued 2 draft rulings relating to Self Managed Superannuation Funds (SMSF’s).

SMSFR 2007/D1 discusses the sole purpose test in section 62 of the Superannuation Industry (Supervision) Act 1993 (SISA) which prohibits trustees from maintaining
an SMSF for purposes other than for the provision of benefits specified
by subsection 62(1). The draft ruling clarifies when the provision of such other benefits will not contravene the sole purpose test in section 62 of the SISA.

The example given of when section 62 is breached is:

"The trustee of an SMSF invests in a block of holiday apartments
at a popular tourist destination. The members of the SMSF holiday in
this area every year and prior to making the investment owned a
separate holiday house nearby .

The
trustee, when undertaking the investment, additionally negotiated for
members of the SMSF to be able to stay at the apartments for free. This
is not a standard feature of the investment. The members of the SMSF
sell their holiday house immediately after the SMSF makes the holiday
apartment investment.

The
separate negotiation of the benefit, which also has the potential to
materially affect the return on the SMSF’s investment, demonstrates
that the benefit is purposeful and not incidental. The facts given in
this example reveal that the SMSF is being maintained for a purpose of
providing benefits to members other than those specified by section 62.
Therefore, the trustee contravenes the sole purpose test in these
circumstances ."

SMSFR 2007/D2 discusses the circumstances when a trustee or investment manager of an SMSF contravenes paragraph
65(1)(b) of the Act by using the resources of the
SMSF to give financial assistance (other than lending money of the SMSF) to a member of the SMSF or relative of a member of the SMSF.