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ATO takes firm stand on Early Release compliance
The ATO will be taking action where people deliberately exploit the system and access superannuation under the early release measures when they should not.
The ATO has stated it has a variety of data sources to check for claims that were made incorrectly including Single Touch Payroll (STP), income tax returns and information reported by super funds.
Behaviours that attract the ATO’s attention include:
The ATO has updated it’s early release web content with compliance information stating that those who provide false or misleading information could face penalties of more than $12,000 for each false and misleading statement.
Choice bill delayed until August
Despite considerable debate on the Your Super, Your Choice bill, delays have meant it will not be in Parliament again until the August sitting week.
A number of amendments put forward were not passed during debate.
The choice measures were due to begin on 1 July 2020 , but will now be delayed. The Senate resumes sitting on Tuesday 4 August.
Early release update – 10 funds dominate
Ten super funds account for more than two thirds of the total amount of super paid out under the COVID early release scheme, according to the latest data from APRA.
The APRA fund-level data shows that ten funds with the largest number of early release applicants account for $9.76 billion of the total payout of about $15 billion. About half these funds are profit-to-member funds, the other half are retail.
The average payout, which in the early weeks of the scheme was nudging $9000, is trending down at $7425, while funds are taking an average of 3.3 business days to process each payment. Up until the week ending 7 June, more than 2 million Australians had applied for early release.
With some funds reporting that a significant minority of first round applicants have depleted their super account, the second tranche of the early release scheme, set to commence on 1 July, is expected to result in less applicants and lower payouts.
ASIC releases guidance on product intervention power
ASIC has released new Regulatory Guidance 272 on product intervention power.
The product intervention power is a new power for ASIC, which commenced on 6 April 2019 and provides ASIC with the ability to intervene when a product has, will, or is likely to result in significant consumer detriment. The Regulatory Guide provides a high-level overview of the product intervention power including:
In a response to submissions, ASIC noted that its guidance on exercising the product intervention power may be updated over time and future updates will be informed by experience of using the power.
Whilst supportive of new powers, AIST has continued to highlight that for the powers to be effective their implementation must be accompanied by addressing systemic gaps in the disclosure and reporting framework.
AIST calls for risk-weighting of industry levies
AIST is calling for a risk-weighting of super industry levies to ensure fairness and efficiency.
In our submission response to the stakeholder consultation on proposed Financial Institutions Supervisory Levies for 2020-2021, AIST also argues that to make an informed assessment of the proposed levies, discussion papers should be released simultaneously with a Cost Recovery Impact Statement and an updated Regulator Performance Assessment.
The levies aim to recover the majority of the operational costs of the Australian Prudential Regulation Authority (APRA), and other specific costs incurred by certain Commonwealth agencies and departments.
The proposed funding levy for superannuation is 2020-2021 is $82.1 million, a decrease from $89.9 million in 2019-2020.
Whilst it is important that regulators are well resourced to conduct their supervisory duties, AIST has reiterated that the raising of levies should be on a risk-weighted basis and consequently should take into account the volume of regulator activities spent on various entities and sectors.
Levy Bill passes Parliament
The proposed Financial Institutions Supervisory levy amounts for 2020-2021 were subject to legislation that passed Parliament on 18 June 2020.
The Levy Imposition Amendment Bills & the APRA Industry Funding Bill made amendments to increase the statutory cap and allow the necessary amounts to be levied on the largest authorised-deposit taking institutions in 2020. They also make amendments to allow the indexation factor used in calculating the statutory upper limit to use the most recently published CPI figures available.
ACCC fact sheet on early release scams
The Australian Competition and Consumer Commission (ACCC) has released a consumer fact sheet to explain how scammers are taking advantage of the government’s early-release measures.
The document outlines a variety of phishing scams designed to steal superannuation and advises consumers check their myGov account to ensure there are no unexpected applications for financial relief and that their contact details have not been altered.
One in five jobs impacted by COVID
Around 2.3 million people - or 1 in 5 employed people - were affected by either job loss between April and May or had less hours than usual for economic reasons in May, according to new data from the Australian Bureau of Statistics.
The latest workforce data also shows that that Australia’s unemployment rate has reached 7.1 percent, with 227,700 additional job losses experienced in May.
The May drop in employment, of close to a quarter of a million people, added to the 600,000 in April, brings the total fall to 835,000 people since March.
The workforce participation rate has reached a twenty-year low, down to 62.9 per cent. The last time the participation rate was below 63 per cent was in January 2001.
The ABS has also highlighted that women continue to be more adversely affected by the labour market deterioration than men, and younger workers are more likely to be impacted.
Meanwhile, total payroll jobs increased by one per cent through May, according to the latest release of weekly payroll figures from the Australian Bureau of Statistics (ABS).
Head of Labour Statistics at the ABS, Bjorn Jarvis, said: "The latest data showed that the total payroll job losses since mid-March were greatest in the week ending 18 April (8.9 per cent) and had recovered to a 7.5 per cent loss by the end of May."
Payroll jobs worked by females increased by 1.4 per cent through May, compared with 0.4 per cent for males. However, total female job losses since mid-March were still greater (8.0 per cent, compared to 6.3 per cent for males).
Financial advisers given more time to meet educational requirements
The Government’s legislation to provide additional time for existing financial advisers to meet the qualification and examination requirements set by the Financial Adviser Standards and Ethics Authority (FASEA) has passed through Parliament.
Existing advisers must now complete the FASEA exam by 1 January 2022 (one additional year); and meet FASEA's qualification requirements by 1 January 2026 (two additional years). These changes will not apply to new advisers registered after 1 January 2019.
Changes to transfer balance account
The Treasury Laws Amendment (2019 Measures No 3) Bill – which changes the way to calculate the transfer balance account for some members - has passed through the Senate and is waiting Royal Assent.
The amendment will provide a new way of calculating the debit which arises in an individual’s transfer balance account when a member commutes a market linked pension which is a capped defined benefit income stream
The changes – which are retrospective to 1 July 2017 - address the current issue where an individual who commutes a market linked pension which is a capped defined benefit income stream is entitled to a debit valued at ‘nil”.
Corporate Superannuation Association (CSA) winds up
The Corporate Superannuation Association is being wound up after more than 20 years of operation.
CSA retiring CEO Bruce McBain said ongoing rationalisation of corporate (employer-sponsored) funds has seen the number of funds fall to 22, from a high many decades ago of more than 2000.
Established in 1997, CSA played an important role in lobbying on behalf of employer-sponsored funds and their members especially those with a defined benefit component.
AIST wishes to acknowledge Mr McBain’s valuable contribution to AIST’s advocacy work through his work as a long-serving member of our policy committee and a member of AIST.