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December 12, 2012

Unclaimed Moneys Regulations

The following regulations have been made to implement the unclaimed moneys changes:

  • Banking Sector Legislation Amendment Regulation 2012 (No. 1) amends the Banking Regulations 1966 and the First Home Saver Accounts Regulations 2008 to specify conditions for a number of bank accounts or deposits and First Home Saver Accounts to become unclaimed moneys.
  • Retirement Savings Accounts Amendment Regulation 2012 (No. 3) amends the Retirement Savings Accounts Regulations 1997 to introduce a 12 month inactivity test for uncontactable members of a super fund. This will clarify the amendments to the unclaimed monies legislation, ensuring that accounts of uncontactable members, which have been active in a 12 month period, are not unnecessarily transferred to the ATO .

UPDATE
The RSA test stipulates that the RSA holder is uncontactable if and only if:
(i) either:
(A) the RSA provider has never had an address for the RSA holder; or
(B) 2 written communications have been sent, or, if the RSA provider so chooses, one written communication has been sent, by the RSA provider to the RSA holder’s last known address and returned unclaimed; and
(ii) the RSA provider has not received a contribution or rollover in respect of the RSA holder within the last 12 months of the RSA holder’s being an RSA holder.

Comlaw has also published a consolidated Superannuation (Unclaimed Money and Lost Members) Act 1999.

Background

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Posted 12th December 2012 by David Jacobson in Financial Services, Insurance, Superannuation, Tax

December 5, 2012

Superannuation reform update

The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 has been passed by Parliament and received Royal Assent on 3 December 2012.

The Act:
• 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 on a look-through basis;
• requires the disclosure and publication of key information in relation to superannuation funds;
• allows only funds that offer a MySuper product and exempt public sector superannuation schemes to be eligible as default funds in modern awards and enterprise agreements;
• allows exceptions from MySuper for members of defined benefit funds;
• requires trustees to transfer certain existing balances of members to MySuper by 1 July 2017; and
• provides rules in relation to eligible rollover funds (ERFs).

The Government moved amendments to define accrued default amounts as member balances where the member has either not provided any investment direction to the fund at all or where the member's entire balance is invested in the fund's default investment option.

The Act will require superannuation funds to publish their full portfolio holdings on their website twice annually as well as require the disclosure of the remuneration of directors and executives of each superannuation fund.

The fourth and final tranche of MySuper legislation has now been introduced into Parliament: the Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Bill 2012 will be considered when Parliament next sits in 2013.

The Bill:

  • over-rides any provisions in a fund’s governing rules that require the trustee to use a specified service provider, investment entity or financial product.
  • provides APRA with the power to issue infringement notices for certain breaches of the Act.
  • requires superannuation trustees to provide eligible persons, generally on request, with the reasons for decisions made in relation to a complaint.
  • requires persons who have suffered loss or damage due to a director’s contravention of duties under the SIS Act to seek leave from the court before bringing an action against a director;
  • extends the availability of the legal defence for trustees and directors in court proceedings to proceedings involving breaches of MySuper obligations;
  • amends the defences by directors to actions for loss or damage suffered as a result of the making of an investment or the management of reserves to take into account the relevance of the breach of covenants or MySuper obligations to the loss or damage suffered
  • only prohibits directors of corporate trustees (and individual trustees) from voting on any company business in limited circumstances, including where a conflict of interest arises.

Licensing, registration & authorisations
From 1 July 2004, trustees of registrable superannuation entities (RSEs) must hold a Registrable Superannuation Entity licence (RSE licence) issued by APRA. In addition, all RSEs must be registered with APRA prior to commencing operations. Trustees first must have been granted an RSE licence to be able to register an RSE. APRA has published application forms here.

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Posted 5th December 2012 by David Jacobson in Financial Services, Superannuation

Fair Work Amendment Act 2012

The Fair Work Amendment Bill 2012 has been passed by Parliament and received Royal Assent on 4 December 2012.

The Act renames Fair Work Australia as the Fair Work Commission.

Changes to the unfair dismissal application and hearing process
The unfair dismissal application and hearing process is changed by:

  • aligning the timeframes for making unfair dismissal claims and general protections dismissal claims at 21 days: the time limit for lodging an unfair dismissal claim has been extended from 14 to 21 days from the date of the dismissal. The time limit for lodging a general protections claim based on dismissal has also been changed to 21 days, from 60 days;
  • authorising costs orders against a party in an unfair dismissal matter, where that party has caused the other party to incur costs by acting unreasonably;
  • authorising an adverse costs order against lawyers or paid agents who encourage applicants to pursue speculative unfair dismissal claims on a no win, no fee basis;
  • providing the Fair Work Commission with discretion to dismiss applications in certain circumstances, such as when the applicant, without any reasonable explanation or excuse, fails to attend a hearing or comply with an order made by the Commission or has failed to discontinue an application after a settlement agreement has been concluded.

Default Superannuation Arrangements
The Act introduces new requirements in relation to modern award terms about default superannuation, and a process under which the FWC will review default fund terms every 4 years, at the same time as the 4 yearly review of modern awards (the first such review must be conducted as soon as practicable after 1 January 2014).

An Expert Panel has been created , which will subsume the functions of the Minimum Wage Panel (MWP) and will include members with relevant expertise to allow them to be appointed to the Expert Panel assessing default superannuation funds or to the Expert Panel responsible for the annual minimum wage review.

Technical improvements
The Act implements several technical and clarifying recommendations made by the Fair Work Act Review related to modern awards, enterprise agreement making and industrial action.

Background

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Posted 5th December 2012 by David Jacobson in Superannuation, Workplace

November 28, 2012

Unclaimed Moneys Bill passes House of Reps

The Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 has been passed by the House of Representatives, with amendments relating to transitional procedures.

The Government has also announced details of new Regulations.

The Bill will now be sent to the Senate for passage this week. UPDATE: Passed by Senate on 29 November 2012.

UPDATE 6 December: Royal Assent given on 4 December 2012. Download the Act as passed.

The Bill will bring forward the time at which money is recognised under the relevant law as lost or unclaimed.

Amounts held by ADIs will become unclaimed moneys three years after the last deposit or withdrawal (other than fees or interest), instead of seven years. Amounts held by FHSA providers become unclaimed moneys three years after the last contribution or withdrawal (other than fees, taxes or interest). Amounts held by insurers will become unclaimed moneys three years after the policy matures, instead of seven years. Superannuation funds will transfer funds of unidentifiable members after 12 months instead of five years.

Transition
The amendments will provide more time to ADIs, FHSAs providers, life insurers and superannuation funds to implement the changes. They will now have until 31 May 2013 to report on and transfer lost accounts and other lost moneys to Australian Securities and Investments Commission or the ATO as appropriate.

ADIs are required to make a supplementary assessment and payment by 31 May 2013 in addition to the seven year assessment and payment currently required by 31 March 2013. The default assessment date for supplementary payment is 30 May 2013. However, ADIs could pick any date as their assessment date, between 31 December 2012 and 29 May 2013.

ADIs do not need to assess the seven-year unclaimed amount again in the supplementary assessment as they already did so in the original assessment. This means that the supplementary assessment does not need to include the seven-year unclaimed amount to avoid double counting.

The amendments include:

  • The date for assessment of unclaimed moneys for ADIs has been set as 31 December each year.
  • the minimum unclaimed money amount that is required to be reported and transferred to ASIC will be $100 or such other amount as may be prescribed

Regulations
To avoid capturing accounts unintentionally, the Government will introduce regulations so that children’s accounts will still need to be inactive for seven years before being treated as lost. In addition, regulations will specify that First Home Saver Accounts will be excluded until the requirement to make a deposit in four years has been met.

The regulations will also clarify that term deposits remain excluded and sub-accounts will continue to be treated as part of a parent account when determining whether there has been activity on an account in the last three years. Linked accounts (that is, an account that a customer must hold as a condition of holding another account with the same bank, building society or credit union) and mortgage offset accounts will be treated similarly.

The regulations will also clarify that accounts that are frozen by a court order or other legal requirement will also be excluded while they remain frozen and that the three year inactivity period will restart when the freeze is lifted.

The regulations will also clarify that superannuation accounts that have been active in the last 12 months, but where the member is uncontactable, will not be transferred to the ATO.

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Posted 28th November 2012 by David Jacobson in Corporations Act, Financial Services, Insurance, Superannuation

November 23, 2012

Superannuation reforms passed

The Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the Superannuation Auditor Registration Imposition Bill 2012 have been passed by Parliament and are awaiting Royal Assent.

The changes include:

  • from 1 October 2011 to 1 July 2017, superannuation funds that merge can roll-over unrealised gains or losses on revenue and capital assets and allow the transfer of realised revenue losses and capital losses.
  • a new registration regime for self-managed superannuation fund (SMSF) auditors, commencing on 31 January 2013. The measure will require auditors to register with ASIC.
  • superannuation providers will be required to provide statements for all members who held an interest in the fund at any time during the reporting period, not just those for whom contributions are received.
  • a tax file number validation service which can be used by employers and trustees to ensure the information they hold for their employees and members is correct.

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Posted 23rd November 2012 by David Jacobson in Superannuation, Tax

Director liability for company’s unpaid super guarantee charge

Under the Tax Laws Amendment (2012 Measures No. 2) Act 2012 directors are now personally liable for their company's unpaid super guarantee charge.

Companies have until 28 November 2012 to ensure their super guarantee obligations are up to date for the June 2012 quarter or directors risk having to pay the super guarantee charge (SGC) personally.

If you hold a position of director in a company that has not paid the 9% super guarantee (superannuation contributions) for the June 2012 quarter and the company does not lodge the overdue SGC statement with the Australian Taxation Office (ATO) by 28 November 2012, the only way to avoid personal liability will be to pay the outstanding super guarantee charge (SGC).

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Posted 23rd November 2012 by admin in Corporate Governance, Superannuation, Tax

November 16, 2012

Superannuation prudential standards finalised

The Australian Prudential Regulation Authority (APRA) has released a response paper and 11 final prudential standards for the superannuation industry.

The final prudential standards include six standards covering matters common to other APRA-regulated industries, where APRA’s approach has been to harmonise requirements between regulated industries 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 the Government recommended that 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.

The majority of the requirements in the prudential standards will take effect on 1 July 2013.

Langes are experienced in advising on risk management, outsourcing, business continuity management, governance, Fit and Proper policies and conflicts of interest.

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Posted 16th November 2012 by David Jacobson in Financial Services, Risk Management, Superannuation

Stronger Super Regulations – Insurance and MySuper

Treasury has released exposure draft Superannuation Legislation Amendment Regulation 2012 for consultation.

The regulations give effect to changes arising from legislation implementing MySuper and governance reforms. The proposed regulations will amend the Corporations Regulations 2001, Superannuation Guarantee (Administration) Regulations 1993, and Superannuation Industry (Supervision) Regulations 1994.

The remaining regulation changes for Stronger Super MySuper and Governance will be released in coming months.

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Posted 16th November 2012 by David Jacobson in Insurance, Superannuation

November 14, 2012

ASIC SMSF auditor update

From 1 July 2013, auditors will need to be registered with ASIC as an approved SMSF auditor if they wish to conduct SMSF audits.

The new SMSF auditor register will begin on 31 January 2013 and will be available to the public.

Existing 'approved auditors’ can apply for registration under transitional arrangements between 31 January 2013 and 30 June 2013.

Auditors will need to apply to ASIC by 30 April 2013 to ensure their application can be processed by 1 July 2013.

UPDATE: 12 December 2012

In preparation for the introduction of the new self-managed superannuation fund (SMSF) auditor regime, ASIC has released Regulatory Guide 243 Registration of self-managed superannuation fund auditors (RG 243), which explains:
• how to apply for registration as an approved SMSF auditor
• the types of registers of SMSF auditors ASIC will maintain, and
• the transitional arrangements for the registration of existing approved auditors of SMSFs.

ASIC has also released a new class order Competency standards for approved SMSF auditors ([CO 12/1768] Competency standards for auditors of self-managed superannuation funds), which details the SMSF auditing competency standards SMSF auditors will be required to meet in the new regime.

More

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Posted 14th November 2012 by David Jacobson in Corporations Act, Superannuation

November 1, 2012

Unclaimed Moneys Bill update

The Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 has been introduced into the House of Representatives.

If passed, the Bill will amend the Banking Act 1959, First Home Saver
Accounts Act 2008, Life Insurance Act 1995, Superannuation (Unclaimed Money and Lost Members) Act 1999, Australian Securities and Investments Commission Act 2001, and Corporations Act 2001 to give effect to the unclaimed moneys measures announced in the 2012-13 Mid-Year Economic and Fiscal Outlook (discussed here).

The Bill will bring forward the time at which money is recognised under
the relevant law as lost or unclaimed.

Amounts held by ADIs (other than in RSAs or FHSAs) will become unclaimed moneys three years after the last deposit or withdrawal (other than fees or interest), instead of seven years.

As a transitional measure, the Bill extends the deadline to 30 April 2013 for ADIs to report on, and transfer to the Commonwealth, unclaimed moneys as at 31 December 2012.

According to the Australian Financial Review, the independent MHR's are seeking more information on the measures.

UPDATE 2 November: The Senate Economics Legislation Committee has a new inquiry into the Bill.

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Posted 1st November 2012 by David Jacobson in Corporations Act, Financial Services, Insurance, Superannuation
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