Superannuation « Australian Regulatory Compliance Review from Langes+ Lawyers

May 9, 2012

Commonwealth Budget 2012-2013

The key points from this year’s Commonwealth Budget include:

Loss carry-back scheme : Companies that incur losses from 2012-13 will be able to carry back losses so that they get a refund against income tax previously paid in respect of the 2011-12 income year. From 1 July 2012, companies will be able to carry back up to $1 million worth of losses to get a refund of tax paid in the previous year. From 1 July 2013 and later years, companies will be able to carry back up to $1 million worth of losses against income tax paid up to two years earlier.

Write-offs: From 1 July 2012, small businesses will be able to write-off any new business asset costing less than $6,500, for as many assets as they purchase. Assets costing $6,500 or more can be depreciated in a single pool from 2012-13 (15 per cent in the year they are purchased, 30 per cent in each subsequent year). Small businesses will be able to also instantly write-off the first $5,000 of a motor vehicle, from 1 July this year.

Increasing the tax-free threshold: the tax free personal income tax threshold will be increased from $6,000 to $18,200.

Tax on employment termination payments: The existing concession for termination payments will be limited to payments related to hardship, namely redundancy payments, compensation for employment-related disputes, and payments for invalidity or death.

Tax concessions on the super contributions of those earning over $300,000: From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30 per cent to 15 per cent (excluding the Medicare levy).The reduced tax concession will only apply to the part of the contributions that are in excess of the threshold. The 15 per cent flat tax on earnings within superannuation (and tax exemption for assets supporting pension payments) will not be affected in any way by this reform.

Measures not being proceeded with:

Standard tax deduction for work-related expenses
50 per cent tax discount for interest income
the 1% cut in company tax due to start for small businesses from July 2012 and for larger businesses a year later.
plans to introduce a higher concessional contribution cap (ie $50,000 instead of $25,000 a year) for those with less than $500,000 in super have been deferred until 1 July 2014.

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Posted 9th May 2012 by admin in Business Planning, Superannuation, Tax

May 4, 2012

Applying for APRA authorisation of MySuper products

The Australian Prudential Regulation Authority (APRA) has released for consultation a discussion paper on proposed arrangements for the authorisation of MySuper products.

Accompanying the discussion paper is a draft authorisation application form together with instructions, as well as draft Prudential Standard SPS 410 MySuper Transition (SPS 410) which sets out requirements for trustees moving member balances into a MySuper product.

A number of elements in the draft authorisation application form request the submission of documents that will be required under the prudential standards, recently released in draft for consultation.

The authorisation process for RSE licensees wishing to offer MySuper products will commence from 1 January 2013. Once authorised, RSE licensees can offer these products from 1 July 2013 onwards.

Draft SPS 410 outlines requirements for all RSE licensees during the transition period from 1 July 2013 to 1 July 2017, by which date all accrued default amounts must be in a MySuper product except in limited circumstances.

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Posted 4th May 2012 by David Jacobson in Financial Services, Superannuation

April 30, 2012

Stronger Super tranche 3

Treasury has released an Exposure Draft of the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 for consultation.

The Bill:
• bans entry fees and sets criteria for the charging of other fees in superannuation, including rules for the charging of financial advice;
• requires all superannuation funds to provide life and TPD insurance to members (excluding defined benefit members) on an opt-out basis;
• enables APRA to collect information;
• allows only MySuper funds to be eligible as default funds in modern awards and enterprise agreements;
• allows exceptions for members of defined benefit funds.

The draft legislation requires superannuation funds to publish on their websites:

details of director and executive pay;
details of what assets the fund has invested in; and
an up-to-date ‘product dashboard’, setting out information on target investment returns, past performance against targets, investment risk, liquidity and fees, in relation to each product offered by the fund.

The draft legislation also provides the remaining legislative elements relating to MySuper, including provisions relating to intra-fund advice and the transition to MySuper.

This Bill is the third tranche of legislation implementing the
Government’s MySuper and governance reforms as part of Stronger
Super. The first tranche of legislation was introduced to the Parliament on 3 November 2011 as the Superannuation Legislation Amendment
(MySuper Core Provisions) Bill 2011 (the MySuper Core Provisions Bill).
The second tranche of legislation was introduced to the Parliament on 16 February 2012 as the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012 (the Trustee Obligations and Prudential Standards Bill).

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Posted 30th April 2012 by David Jacobson in Financial Services, Superannuation

APRA superannuation prudential standards

The Australian Prudential Regulation Authority (APRA) has released 11 draft prudential standards for prudentially regulated superannuation funds for consultation.

The standards will be made pursuant to the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012, when passed.

The draft prudential standards include six standards covering matters common to other APRA-regulated industries, where APRA’s approach has been to harmonise its requirements where appropriate. These standards are:
Prudential Standard SPS 220 Risk Management;
Prudential Standard SPS 231 Outsourcing;
Prudential Standard SPS 232 Business Continuity Management;
Prudential Standard SPS 310 Audit and Related Matters;
Prudential Standard SPS 510 Governance; and
Prudential Standard SPS 520 Fit and Proper.

The remaining five prudential standards cover matters that are specific to superannuation. They include reforms that the Government recommended APRA implement as prudential standards, as well as the relocation of some existing requirements and guidance into new standards. These standards are:
Prudential Standard SPS 114 Operational Risk Financial Requirement;
Prudential Standard SPS 160 Defined Benefit Matters;
Prudential Standard SPS 250 Insurance in Superannuation;
Prudential Standard SPS 521 Conflicts of Interest; and
Prudential Standard SPS 530 Investment Governance.

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Posted 30th April 2012 by David Jacobson in Financial Services, Superannuation

April 24, 2012

APRA superannuation industry overview

The Australian Prudential Regulation Authority (APRA) has published the first edition of its revised Insight publication with an overview of the superannuation industry and details of its plans for implementation of the Government’s Stronger Super reforms.

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Posted 24th April 2012 by David Jacobson in Superannuation

April 19, 2012

Director liability for PAYG withholding and superannuation guarantee obligations

Treasury has released drafts of the Tax Laws Amendment (2012 Measures 3 No. 2) Bill 2012: Companies’ non-compliance with PAYG withholding and superannuation guarantee obligations and Pay As You Go Withholding Non-compliance Tax Bill 2012 for consultation.

Currently under the director penalty regime company directors are personally liable for amounts withheld by their company that have not been remitted to the Australian Taxation Office (ATO). The Tax Laws Amendment (2012 Measures No. 2) Bill 2012: Companies’ non-compliance with PAYG withholding and superannuation guarantee obligations will extend the regime to cover Superannuation Guarantee amounts.

A new director will not be liable to a director penalty for company debts that existed when they became a director until 30 days after they became a director.

Currently a director has a defence in relation to a director penalty if the director had an illness that prevented him or her participating in the management of the company, or if the director took all reasonable steps to ensure compliance.

In addition to these defences, a director that becomes liable to a director penalty for not causing its company to comply with its superannuation obligations will not be liable to a director penalty if the company treated the SGA Act 1992 as applying to a matter in a way that was reasonably arguable and the company took reasonable care in applying the SGA Act 1992 to the matter.

The Bills will ensure that directors cannot have their director penalties remitted by placing their company into administration or liquidation when unpaid Pay As You Go (PAYG) withholding or superannuation guarantee amounts remain unpaid three months after the due date. New directors are not subject to these restricted remission options until 3 months after they become a director of a company, rather than 3 months after a debt arose.

There will be restricted access to PAYG withholding credits for company directors and their associates where the company has failed to pay withheld amounts to the Commissioner of Taxation.

Submissions close on 2 May 2012 to allow for the introduction and passage of the legislation in the Winter 2012 sittings of Parliament.

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Posted 19th April 2012 by David Jacobson in Corporations Act, Superannuation, Tax

March 25, 2012

Compulsory super contributions increased

The Superannuation Guarantee (Administration) Amendment Bill 2011 has been passed by both Houses.

Under the current scheme, all employers are required to make a prescribed minimum level of superannuation contributions to a complying superannuation fund or a retirement savings account (RSA) on behalf of their eligible employees.The Bill increases the Superannuation Guarantee charge from 9 percent to 12 percent of an employee’s ordinary time earnings.

The Superannuation Guarantee charge percentage will be increased to 9.25% on 1 July 2013, 9.5% on 1 July 2014, 10% on 1 July 2015, 10.5% on 1 July 2016, 11% on 1 July 2017 and 11.5% on 1 July 2018. On 1 July 2019 the rate will be set at 12 per cent for 2019-20 and subsequent income years.

The maximum age limit of an employee at which the superannuation guarantee no longer needs to be provided is also abolished. Currently employers are required to contribute to complying superannuation funds of eligible mature age employees aged 70 and older.This Bill removes the SG maximum age limit of 70 and requires employers to contribute to complying superannuation funds of eligible mature age employees aged 70 and older.

The amendments commence on 1 July 2013. They were dependent on the passing of the Minerals Resource Rent Tax package.

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Posted 25th March 2012 by David Jacobson in Superannuation, Tax

March 2, 2012

Superannuation changes

The Government has introduced the Tax and Superannuation Laws Amendment (2012 Measures No. 1) Bill 2012 into the House of Representatives.

The Bill includes measures to:

give eligible individuals the option to have excess concessional contributions of up to $10,000 refunded and assessed at their marginal tax rates, rather than incurring the potentially higher effective rate of excess contributions tax.
sets up the framework for payslip reporting of superannuation benefits. It will require employers to report to employees, on payslips, how much super they will be paying, and when they plan to pay it.
pauses the indexation of the superannuation concessional contributions cap for one year. As a result, the general concessional cap is not expected to increase from $25,000 to $30,000 until 2014-15.
authorises the Australian Taxation Office (ATO) to disclose details of an individual’s superannuation interests and superannuation benefits to a regulated superannuation fund or public sector superannuation scheme, an approved deposit fund, retirement savings account (RSA) provider or their administrators (the bodies).

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Posted 2nd March 2012 by David Jacobson in Superannuation, Tax

February 17, 2012

Super Trustees Duties changes

The Government has introduced the second Stronger Super Bill into Parliament: Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012.

The Bill if passed will implement changes to superannuation trustee duties, including in relation to trustees of MySuper products and directors of corporate trustees.

Additional duties for MySuper trustees will include to:
• promote the financial interests of MySuper beneficiaries, in particular returns to those beneficiaries (after the deduction of fees, costs and taxes);
• annually assess sufficiency of scale; and
• include in their investment strategy an investment return target and level of risk for MySuper members.

Additional duties for trustees of RSEs will include to:
• give priority to the interests of beneficiaries where conflicts arise;
• exercise the same degree of care, skill and diligence as a prudent superannuation trustee;
• have regard to valuation information, expected tax consequences and costs in their investment strategies, and offer a range of options sufficient to allow members to
choose a diversified asset mix;
• have an insurance strategy and meet additional duties in relation to insurance;
• formulate, regularly review and give effect to a risk management strategy; and
• maintain and manage financial resources to cover operational risk.

The Bill also sets out the duties that apply to individual directors of corporate trustees.

With a couple of minor exceptions these additional obligations will not apply to SMSFs. The existing covenants that apply to SMSFs will continue to apply under new sections.

Background: here and here.
(more…)

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Posted 17th February 2012 by David Jacobson in Superannuation

February 15, 2012

ASIC good practice guide on advertising financial products and advice services

ASIC has released RG 234 Advertising financial products and advice services: Good practice guidance (RG 234) setting out its views on the obligations of financial service providers to not make false or misleading statements or engage in misleading or deceptive conduct under the Corporations Act and the ASIC Act.

Who it applies to
ASIC’s guidance applies to:
• promoters of financial products and financial advice services. The promoter will sometimes be the product issuer, but can also be a third party such as a financial adviser, distributor or agent; and
• publishers of promotions about financial products and financial advice services.

Promoters who hold an AFS licence must comply with the ASIC Act to meet their obligation to comply with financial services laws: s912A(1)(c).

What products it applies to
ASIC’s guidance applies to all types of financial products, including:
• investment products;
• risk products;
• non-cash payment facilities; and
• credit facilities.

Although references to ‘financial products’ in this guide mean financial products as defined in the Australian Securities and Investments Commission Act 2001 (ASIC Act) and therefore include credit facilities (see s12BAA, ASIC Act) the guide focuses primarily on advertising of investment and risk products and financial advice services. Different considerations apply for advertising of credit products and services, and ASIC plans to issue additional guidance for credit providers and credit service providers under the National Consumer Credit Protection Act 2009 (National Credit Act).

The good practice guidance also applies to advertising of both general and personal financial product advice. References to ‘financial advice services’ in the guide mean the provision of financial product advice as defined in the ASIC Act: see s12BAB(5).

What the guidance covers
The guidance covers:
• the nature of the product;
• returns, benefits and risks;
• warnings, disclaimers, qualifications and fine print;
• fees and costs;
• comparisons;
• past performance and forecasts;
• use of certain terms and phrases (e.g. ‘free’, ‘secure’ and ‘guaranteed’);
• the advertisement’s target audience;
• consistency with disclosure documents;
• photographs, diagrams, images and examples; and
• the nature and scope of advice.

What media it applies to
It applies to advertising communicated through any medium in any form, including:
(a) magazines and newspapers;
(b) radio and television;
(c) outdoor advertising, including billboards, signs at public venues, and transit advertising;
(d) the internet, including webpages, banner advertisements, video streaming (e.g. YouTube), and social networking and microblogging (e.g. Twitter);
(e) social media and internet discussion sites;
(f) product brochures and promotional fact sheets;
(g) direct mail (e.g. by post, facsimile or email);
(h) telemarketing activities and audio messages for telephone callers on hold; and
(i) presentations to groups of people, seminars and advertorials.

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Posted 15th February 2012 by David Jacobson in Compliance, Corporations Act, Financial Services, Funds, Insurance, Investments, Marketing, Superannuation