Superannuation « Australian Regulatory Compliance Review from Langes+ Lawyers

June 25, 2012

SMSF auditor registration

The Minister for Financial Services and Superannuation Bill Shorten has announced details of SMSF auditor registration.

UPDATE 18 July: Download exposure draft of legislation

Auditors will need to meet the following requirements to be registered as an SMSF auditor:
•hold a tertiary accounting qualification that includes an audit component or have successfully completed study in audit as part of a professional accounting body program;
•meet a fit and proper test;
•hold professional indemnity insurance;
•have 300 hours of SMSF audit experience in the three years prior to registration, subject to transitional arrangements; and
•pass a competency exam, subject to transitional arrangements.

Auditors will be able to apply for registration from 31 January 2013. All auditors must be registered with ASIC by 1 July 2013 to conduct SMSF audits after this time. Auditors required to sit the competency exam will be able to do so from 1 July 2013 and will have until 30 June 2014 to complete the exam and become fully registered.

The competency exam will be developed by the Australian Securities and Investments Commission (ASIC) in consultation with industry.

Transitional arrangements for SMSF auditor registration
Auditors who sign off 20 or more audits in the 12 month period prior to applying for registration will not be required to sit a competency exam to become registered as an SMSF auditor.

Additionally, existing SMSF auditors who have signed off an SMSF audit within a 12 month period will be exempt from the hours based experience requirement when registering.

Ongoing requirements for registered SMSF auditors
Registered auditors will be required to meet ongoing professional obligations including:
•undertaking a minimum amount of Continuing Professional Development (CPD) training every three years;
•complying with the Accounting Professional and Ethical Standards Board’s APES 110 – Code of Ethics for Professional Accountants.

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Posted 25th June 2012 by admin in Corporations Act, Financial Services, Superannuation

June 19, 2012

Shorter PDS regime for superannuation products

The new shorter PDS regime for superannuation products and simple managed investment schemes commences fully on 22 June 2012.

The regulations require prescribed headings, a restricted maximum page length for the primary document and prescribed content, as well as an ‘incorporation by reference mechanism’ which permits additional information to be given to consumers and is deemed to form part of the PDS.

ASIC has published Shorter PDSs: Complying with requirements for superannuation products and simple managed investment schemes (INFO 155) to provide concise guidance for industry on technical issues related to implementation of the new shorter PDS regime.

ASIC has also updated Shorter PDS regime: Superannuation, managed investment schemes and margin lending (INFO 133) to reflect the amendments to the transition period implemented by the Corporations Legislation Amendment Regulations 2011 (No.2).

ASIC will provide interim class order relief from the shorter PDS regime for multifunds, superannuation platforms and hedge funds.

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Posted 19th June 2012 by David Jacobson in Corporations Act, Financial Services, Superannuation

June 8, 2012

Health warnings for financial products and services

Whilst ASIC’s licensing conditions already require financial service providers to be competent to provide their services to consumers, the latest ASIC proposals in respect of advettising guidelines for financial products (see here) make it clear that ASIC is also concerned that financial advertisements contain the appropriate qualifications and warnings to consumers.

The amendments contain an example “Overstating the safety of the product” based an ASIC’s concerns over Westpac advertising margin lending as “stress-free” (see here).

It also emphasises that advertising must be accurate and disclose all of a loan’s features.

ASIC RG 234 already deals with disclosing unexpected risks, using certain terms and phrases to understate risks and inappropriate use of certain terms and phrases.

Apart from its other powers ASIC may issue a public warning notice if it has:
(a) reasonable grounds to suspect that a promoter may have contravened a consumer protection provision of the ASIC Act;
(b) satisfied that consumers have suffered, or are likely to suffer, detriment as a result of the conduct; and
(c) it is satisfied that it is in the public interest to issue the notice.

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Posted 8th June 2012 by David Jacobson in Corporations Act, Financial Services, Marketing, National Credit Code, Superannuation, Trade Practices

May 28, 2012

ATO final SMSF limited recourse borrowing ruling

The Australian Taxation Office has published its final ruling SMSFR 2012/1 on Self Managed Superannuation Funds: limited recourse borrowing arrangements.

The ruling is consistent with previous draft rulings on the exceptions to subsection 67(1) of the Superannuation Industry (Supervision) Act 1993 which prohibits a trustee of an SMSF from borrowing money or maintaining an existing borrowing of money.

The ruling sets out the ATO’s interpretation of the exception to the prohibition on borrowing in sections 67A and 67B.

Section 67A permits a borrowing arrangement (an LRBA) if the money borrowed is, or has been, applied for the acquisition of a single acquirable asset and that asset is held in a holding trust.

Section 67B contains the specific circumstances where the borrowing arrangement may be maintained in relation to a replacement asset rather than the asset originally acquired.

It applies to arrangements entered into on or after 7 July 2010 (including an arrangement that is a refinancing of a borrowing of money under an arrangement entered into before, on or after 7 July 2010).

It gives the ATO’s views on 15 different scenarios.

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Posted 28th May 2012 by David Jacobson in Financial Services, Superannuation

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