ATO notice in preparation – superannuation issues (April 5, 2022)
The ATO develops advice and guidance on the following pension issues:
- Update to Tax Ruling TR 2013/5: The Ruling, which focuses on the start and end of a superannuation income stream, will be updated to ensure it reflects recent updates legislative updates on retirement pensions. Changes are expected to happen by mid-2022
- super benefits in breach of rules: The ATO is developing a practice notice to provide guidance on the Commissioner’s discretion to deal with super benefits received in breach of statutory requirements. Practice notice expected to be completed by June 2022
- Ordinary meaning of ’employee’: The ATO has issued a Decision Impact Statement taking into account the High Court’s judgment on the ordinary meaning of ’employee’.
ASIC Statement: ASIC Monitoring Investment Change (April 6, 2022)
ASIC has issued a statement following its recent monitoring of 23 trustees which revealed significant shortcomings in trustees’ conflict management provisions regarding investment switching. ASIC said it expected robust systems to prevent directors and senior executives from misusing sensitive price information for personal gain, but instead found significant gaps in the systems. trustee conflict management provisions regarding change of investment.
ASIC also described actions administrators had taken, as a result of the monitoring, to improve their conflict management, including:
- update or establish policies and practices to address ASIC shortcomings highlighted by:
- identify the change as a potential conflict of interest
- incorporate measures to prevent inappropriate trading (such as the introduction of blackout periods or trading windows)
- extend conflict agreements to cover related party transactions of directors and senior executives.
- increase engagement at the board level to provide greater board oversight, input and direction, such as increased oversight of staff transactions, which include change activities
- raise staff awareness of conflict policies and their obligations through better internal communication and training
- undertake an independent review of the administrator’s overall conflict management framework.
ASIC to Allow Automatic Repeal of Temporary COVID-19 Relief for Financial Advice on April 15, 2022 (April 7, 2022)
ASIC has confirmed that it will not extend instrument 2021/268 ASIC Corporations (COVID-19—Advice-related Relief), which relieved financial advisers to provide advice statements during the COVID-19 pandemic. ASIC believes the repeal of the instrument is appropriate given the current state of COVID-19.
Main retirement pension rates and thresholds (April 11, 2022)
The following main retirement pension rates and thresholds will apply at the beginning of the 2022 financial year:
- contribution limits:
- concessional contribution ceiling: $27,500
- non-concessional cap $110,000
- Amount of the CGT cap: $1,650,000.
- super payments:
- reduced rate cap: $230,000
- untaxed plan limit: $1,650,000.
- Division 293 threshold: unchanged at $250,000
- pension guarantee percentage: 10.5%
- Maximum contribution base for the retirement pension benefit: $60,220
- government co-contributions:
- lower income threshold: $42,016
- upper income threshold: $57,016.
- transfer balance limits:
- general transfer balance limit: $1,700,000
- defined benefit income limit: $106,250.
ATO statement: Paying a super for under 18s (April 13, 2022)
The ATO reminds employers that from 1 July 2022 they must pay pension guarantee contributions for employees under the age of 18 if they work more than 30 hours a week. The ATO reminds employers of this upcoming requirement in light of the recent repeal of the statutory minimum monthly wage threshold that applies to superannuation guarantee contributions.
APRA Prudential Standard CPS 226 – Margin and risk mitigation for non-centrally cleared derivatives (April 18, 2022)
APRA registered Decision No. 1 of 2022 (Cth) on Banking, Insurance, Life Insurance and Superannuation (Prudential Standard) (SPC 226), which sets out non-centrally cleared derivatives margin requirements for fiduciaries.
In Appendix D of CPS 226, new Foreign Object Margin requirements have been inserted primarily due to the impact of Brexit. These changes respond to new regulatory jurisdictions resulting from the UK’s withdrawal from the European Union.
ATO statement: Statement of account balances following a successor funds transfer (April 19, 2022)
The ATO has issued a statement on the importance of promptly reporting account balances following a successor funds transfer (SFT). The ATO stated that:
- administrators should not reuse the previous June 30 date when reporting a new account balance following an SFT
- Trustees must report annual balances as of June 30 no later than October 31 following the end of the relevant fiscal year
- trustees must ensure that member account information provided through the Member Account Attribute Service (MAAS), including Australian Business Numbers, unique superannuation identifiers and member account identifiers , are identical to those reported for member account transaction services.
AUSTRAC works with companies to target ransomware and criminal use of digital currencies (April 21, 2022)
AUSTRAC has published two financial crime guides on preventing ransomware attacks and criminal abuse related to digital currencies.
The guides contain practical information and indicators to help trustees identify and report if a payment could be linked to ransomware attacks or if someone could use digital currencies to commit money laundering, scams or financing of terrorism.
APRA Letter to Trustees: “Crypto-Assets: Risk Management Expectations and Policy Roadmap” (April 21, 2022)
APRA presented its policy roadmap and initial risk management expectations for trustees engaged in activities associated with crypto-assets. In particular, APRA expects trustees to:
- conduct appropriate due diligence and comprehensive risk assessments before engaging in activities associated with crypto-assets
- consider the principles and requirements of Prudential Standard CPS 231 Outsourcing or Prudential Standard SPS 231 Outsourcing when relying on a third party to conduct activities involving crypto-assets
- apply strong risk management controls with clear accountabilities and meaningful reporting to the board on key risks associated with new businesses.
APRA also expects trustees to consult with it and ASIC when trustees are unclear about prudential, disclosure, or conduct requirements and expectations when undertaking activities associated with crypto-assets. .
(Cth) Superannuation Amendment (Superannuation Levy) Regulations 2022 (1 April 2022)
This Regulation amends the SIS Regulation to extend the temporary reduction of 50% of the minimum payment amounts for account repos, allocated repos and market-related repos for the financial year 2022.
Treasury Laws (Allowing the Commutation of Certain Revenue Streams) Regulations 2022 (April 4, 2022)
The regulations make minor and technical amendments to the SIS Regulations and the Income Tax Assessment Regulations 2021 (1997 Act) to secure certain product commutations as specified in Section 294-10(1) of the Income Tax Assessment (Cth) Act 1997, which result in amounts paid in excess of the transfer balance cap, may be satisfied. Previously, the SIS Regulation did not allow such switches.
Cases and other recent developments
ASIC Suspends Dixon Advisory AFS License (April 19, 2022)
ASIC has released a statement on its suspension from the AFSL of Dixon Advisory after Dixon Advisory moved into voluntary administration on January 19, 2022. The terms of the suspension:
- allow Dixon Advisory’s AFS license to continue operating until May 9, 2022 so that existing customers who have not yet switched to another provider can continue to access financial services
- require Dixon Advisory to maintain dispute resolution agreements, including membership of the Australian Financial Complaints Authority, until April 8, 2023
- require Dixon Advisory to maintain compensation arrangements that comply with Section 912B of the Companies Act 2001 until April 8, 2023.
The suspension and former voluntary administration came after ASIC initiated civil penalty proceedings (which have now been stayed) over alleged conflicts, breaches of best interest and improper advice to retail customers.
ASIC statement on Westpac penalized $113 million (April 22, 2022)
ASIC has released a statement regarding recent Federal Court proceedings ordering Westpac to pay $113 million in fines for widespread compliance failures across multiple businesses, including banking, pension, wealth management brands. Wealth and Insurance from Westpac.
Pension-related penalties included:
- Inadequate Disclosure of Fees: Westpac and its advisory business charged ongoing contribution fees for financial advice to retail clients without disclosing or properly disclosing these fees. It is estimated that over an eight-year period, at least 25,000 customer accounts were charged at least $10.6 million in fees that were not disclosed or properly disclosed. The court-ordered fine was $6 million.
- super insurance: Westpac’s subsidiary, BT Funds Management, charged members insurance premiums that included commission payments, despite the banning of commissions as part of the Future of Financial Advice reforms. Some members also paid fees to financial advisers, through their bonuses, even though they had elected to withdraw the financial adviser fee component from their superannuation account. Over 9,900 BT Funds members have been affected. The fine imposed by the Court was $20 million.