Superannuation Alert 10.05.17

Financial Services eBulletin - 10 May 2017

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

Type Subject matter Source Description
Legislative update Release of exposure draft legislation Exposure Draft - ASIC Supervisory Cost Recovery Levy Regulations 2017

On 4 May 2017, the Treasury released for public consultation the Exposure Draft - ASIC Supervisory Cost Recovery Levy Regulations 2017.

According to the related Treasury media release, the proposed regulations, which are to be made under the (not yet passed) ASIC Supervisory Cost Recovery Levy Bill 2017,  are necessary to support the industry funding model for ASIC, commencing in the second half of 2017.  The regulations facilitate the recovery of ASIC's regulatory costs through annual levies and fees-for-service by establishing the mechanisms that will be used to calculate the levies payable by each class of regulated entity, each financial year. 

Interested parties are invited to make submissions in relation to the draft regulations by 26 May 2017.

Insurance in Superannuation Working Group Member communication and engagement Discussion paper

On 5 May 2017, the Insurance in Superannuation Working Group (ISWG) released a discussion paper which seeks feedback on proposals to improve member engagement and understanding of superannuation insurance arrangements.

According to the associated media release, the paper "outlines options to improve member engagement and understanding of their insurance arrangements with superannuation…[with]… practical options…proposed to help bring these aspirations to life including the use of standardised consumer language and terms across the industry".

Proposals outlined in the paper include: 

  • the development of a standard Key Facts Sheet for members as a "user-friendly guide to clearly explain what they are covered for'" and 
  • the introduction of an Insurance Welcome Pack to provide new members with "greater awareness, better information and ownership of the insurance cover that they automatically receive through their superannuation fund".

The discussion paper is part of the ISWG's development of a Code of Practice applicable to superannuation funds.

Interested parties are invited to make submissions by 2 June 2017.

Treasurer updates Productivity Commission inquiry Media release dated 8 May 2017

On 8 May 2017, the Treasurer announced that, as part of the Government's response to the Financial System Inquiry, the Productivity Commission will commence an inquiry on 1 July 2017 into competition in Australia's financial system.

According to the Treasurer, "The Productivity Commission will look at how to improve consumer outcomes, the productivity and international competitiveness of the financial system and economy more broadly, and support financial system innovation, while balancing financial stability objectives".

The Productivity Commission is due to report to the Government by 1 July 2018.  

ATO Superannuation death benefits and the transfer balance cap

On 8 May 2017, the ATO released its final version of Law Companion Guideline LCG 2017/3 (Guideline) which "provides guidance on the tax and regulatory treatment of superannuation death benefits and the treatment of death benefit income streams under the transfer balance cap provisions".

The Guideline provides, among other things, that recipients of reversionary death benefit income streams will receive a transfer balance credit in their transfer balance accounts:

  • for death benefit income streams commencing before 1 July 2017, on the later of 1 July 2017 or 12 months from the day the death benefit income stream becomes payable; and
  • for death benefit income streams commencing on, or after, 1 July 2017, 12 months from the day the recipient became the retirement phase recipient of the death benefit income stream.

The Guideline explains that the reason for the 12 month delay for the transfer balance credit to arise is to give the reversionary beneficiary sufficient time to adjust their superannuation affairs before consequences, such as breach of their transfer balance cap, take effect.

Conversely, recipients of non-reversionary death benefit income streams will receive a transfer balance credit in their transfer balance accounts on the later of 1 July 2017 or on the date the recipient becomes entitled to the death benefit income stream.

Legislative update Treasury Laws Amendment (2017 Measures No 4) Bill 2017

On 9 May 2017, the Federal Parliament resumed for its Winter sittings.

According to the Department of the Prime Minister and Cabinet, the Bills scheduled for introduction and passage in the Winter sittings include the Treasury Laws Amendment (2017 Measures No 4) Bill 2017. The purpose of this Bill is to, according to the announcement:  

  • "provide a Capital Gains Tax rollover where a superannuation fund transfers the balances of members from default superannuation funds to MySuper compliant funds, and the assets which support those balances; and 
  • address existing integrity issues that will be exacerbated by the superannuation reform measures".
 Federal Budget  2017/2018 Federal Budget Treasury Budget website

On 9 May 2017, the Treasurer released the 2017-18 Federal Budget. The key measures that relate to superannuation include: 

  • the introduction of the Australian Financial Complaints Authority as the new complaints handling body for superannuation and financial services (date of effect: 1 July 2018); 
  • the extension of the current tax relief for merging superannuation funds until 1 July 2020 (date of effect: immediately); 
  • the amendment of the small business capital gains tax (CGT) concessions to ensure that the concessions are only able to be accessed in relation to small business assets or small business ownership interests (date of effect: 1 July 2017);
  • the introduction of a first home super saver scheme to allow first home buyers to withdraw voluntary contributions to superannuation for a first home deposit (date of effect: 1 July 2017); and
  • the allowance of persons aged 65 or over to make non-concessional contributions of up to $300,000 from the sale of their principal residence owned for the past 10 years or more (date of effect: 1 July 2018).

More detailed information is available in the Budget Overview document issued by the Government.

 

Further information

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Find Publications

Keyword
Topic