Superannuation Alert 24.09.15
Financial Services eBulletin - 24 September 2015
The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.
- On 15 September 2015, Her Majesty's Revenue and Customs (UK) updated its website "Guidance - List of Recognised Overseas Pension Schemes notifications" to include "P Wyns Age 55 Super Fund (SMSF)" in the qualifying recognised overseas pension schemes list for Australia.
- On 16 September 2015, the Superannuation Legislation Amendment (Trustee Governance) Bill 2015 (Bill) was introduced to the House of Representatives. According to the Explanatory Memorandum, the Bill makes amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act) to require trustees of registrable superannuation entities (RSE) to have a minimum of one-third independent directors and an independent Chair on their boards".
The key proposed amendments are:
- One-third independent directors - A requirement for all RSE licensees to have a minimum of one-third independent directors on their trustee board and an independent chair (the chair is included in the one-third). RSE licensees will also be required to comply with APRA's proposed governance prudential standards.
- Revised definition of "independent" - A revised definition of "independent" is proposed which states that a person is independent unless that person has a shareholding of more than 5% in the RSE licensee (or a related company) or has a material business relationship with the RSE licensee (or a related company) within the last three years. It is proposed that holding shares which do not give a right or expectation of profit and which are held as a result of holding office as a director of a RSE licensee are disregarded for the purpose of considering independence. The Bill also provides that a person will not be "independent" if the person is (or has been in the preceding three years), a director or executive officer of an employer-sponsor who employs 500 or more members of the fund or an organisation representing the interests of one or more employer-sponsors of the fund, or the members of the fund, that has the right to appoint or nominate for appointment, directors or trustees of the RSE licensee.
- APRA's power to make determination - APRA has the power to make a determination that a person is either independent or not independent. APRA can also direct a RSE licensee to comply with these requirements. A failure to comply with a direction can attract a penalty of 60 penalty units (currently $10,800).
- Reporting - RSE licensees will be required to report whether they have a majority of independent directors on an "if not, why not" basis. It is anticipated that the first reporting obligation will take effect in September 2020.
- Penalties - Civil penalties are not proposed for a contravention of the independent director requirements; however, contravention can result in a fund being directed under section 63 of the SIS Act to not accept any contributions made to the fund by an employer-sponsor.
- Overriding effect - It is proposed that these new requirements will override trust deeds, constitutions, or any other governance rules.
A three year transition period will apply from the date the Bill receives Royal Assent, and during that transition period neither the equal representation rules nor the independent director requirements will apply. This Bill was has been referred by the Senate to the Senate Economics Legislation Committee. The report is due by 9 November 2015.
- On 16 September 2015, the Tax and Superannuation Laws Amendment (2015 Measures No 4) Bill 2015 passed the Senate without amendment and is now awaiting Royal Assent. According to the Explanatory Memorandum, the Bill proposes to amend, among other things, the Superannuation (Unclaimed Money and Lost Members) Act 1999 to "increase the account balance threshold below which small lost member accounts must be transferred to the Commissioner of Taxation from $2,000 to $4,000 from 31 December 2015, and from $4,000 to $6,000 from 31 December 2016".
- On 16 September 2015, in a media release, ASIC noted that they have repealed 60 class orders. This follows the release of a Consultation Paper 229 titled "Repealing redundant ASIC class orders" on 17 April 2015 which detailed the class orders proposed to be repealed. ASIC have advised that these class orders were "due to expire between 2015 and 2022, on subjects ranging from prescribed interest schemes to profile statements. These class orders no longer serve a regulatory purpose."
- On 18 September 2015, the decision of DCT v Ryan  FCA 1037 was delivered by Edelman J in the Federal Court. The decision involved admitted contraventions of sections 62 (sole purpose test), 65 (financial assistance to members), 84 (in-house asset rules) and 109 (arm's length dealing requirement) of the SIS Act by the trustees/members of a self-managed superannuation fund. The respondents had made 68 "loans" to themselves as fund members which totalled $209,677 of which only $23,313 was repaid. The loans were unsecured, had no interest rate and had no repayment term. The Deputy Commissioner of Taxation (Superannuation) applied to the Federal Court to impose civil penalties under section 196 of the SIS Act. The Court noted that the contravention in this case was "serious", "deliberate" and "involved substantial sums of money" and noted that the maximum penalty that could be imposed for the breaches was $220,000. The Court, after considering the circumstances, including the respondent's co-operation, financial position and prior contraventions, imposed a penalty of $20,000 on each trustee to be repaid over a three year period.
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.