Welcome to the latest issue of the KHQ Super Alert. This week Parliament passed legislation to increase the Commonwealth penalty unit and introduced two new Bills which propose new cyber security reporting obligations. The ATO also updated its technical guidance in relation to successor fund transfers.

Parliament – Commonwealth penalty unit increased

On 10 October 2024, the Crimes and Other Legislation Amendment (Omnibus No. 1) Bill 2024 (Cth) was passed by both Houses of Parliament. As referred to in our Super Alert of 5 April 2024, the Bill increases the Commonwealth penalty unit from $313 to $330. The change was originally intended to take effect from 1 July 2024, however Parliament made a last minute amendment to the Bill so that this change will take effect on the 14th day after the Bill receives Royal Assent.

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Parliament – Cyber security Bills introduced

On 9 October 2024, the following Bills were introduced to the House of Representatives:

• Cyber Security Bill 2024; and
• Intelligence Services and Other Legislation Amendment (Cyber Security) Bill 2024.

According to the Explanatory Memorandum, one of the key measures of these reforms is to introduce ‘a mandatory reporting obligation for entities who are affected by a cyber incident, receive a ransomware demand and elect to make a payment or give benefits in connection with that cyber security incident’. Reports will be required to be made to the Department of Home Affairs. The reporting obligation will only apply to entities that meet a specified annual turnover threshold. This will be specified in separate rules but is expected to be $3 million.

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ATO – Updated SFT guidance

On 8 October 2024, the ATO announced that it has updated its ‘Successor and intra fund transfer reporting protocol’. The protocol is now split into 12 sub-topics which each provide technical ‘guidance on practical administration, consistent application of the law and [the ATO’s] perspective of industry best practice, including for complex superannuation processes’.

Topics covered include:

• ‘Managing member accounts for super fund transfers’
• ‘Limited-service period for super fund transfers’;
• ‘Super income streams for fund transfers’;
• ‘Defined benefits for super fund transfers’; and
• ‘Notices and authorities and fund income tax’.

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AFCA – Consultation in relation to death benefits guidance

On 7 October 2024, AFCA released a consultation paper setting out the changes that it proposes to make to its ‘Approach to superannuation death benefits’ guidance. According to AFCA, it is proposing to include ‘greater detail about:

• how AFCA applies definitions of terms such as ‘dependant’ and ‘spouse’
• the circumstances in which AFCA might consider it appropriate to include adult children and legal personal representatives in distributions
• trusts for minor children, and
• how AFCA approaches cases where there has been violence or abuse in a relationship, or a claimant has been involved in the death of the fund member’.

The consultation period closes on 25 October 2024.

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ASIC – New guidance in relation to consent requirements for advice fees

On 4 October 2024, ASIC issued two new information sheets and updated two existing information sheets relating to consents to advice fee arrangements. These changes are required in response to amendments to the obligations relating to ongoing fee arrangements and consents made by the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (Cth).

The two new information sheets are INFO 286 FAQs: Ongoing fee arrangements and consents and INFO 287 FAQs: Non-ongoing fee requests or consents. According to ASIC, these materials specify ‘new guidance for financial advisers who will need to, on or after 10 January 2025, get:

• a client’s written consent to enter into or renew an ongoing fee arrangement, or
• a client’s written request or consent to charge non-ongoing fees to that client’s superannuation account’.

The updated information sheets are INFO 256 FAQs: Ongoing fee arrangements and INFO 280 FAQs: Non-ongoing fee consents. ASIC has explained that minor changes have been made to these materials ‘to provide guidance for financial advisers who need to get a client’s written consent before 10 January 2025’.

Click here, here, here and here for details.