Super Alert – 26 July 2024: First Home Super Saver Changes; Second Ddo Prosecution; Payment Times Reporting Scheme

Welcome to the latest issue of the KHQ Super Alert. ASIC was busy this week issuing a reminder about upcoming new financial reporting obligations and providing an update about its second successful DDO prosecution. The ATO has also released its final determination about the deductibility of payments made out of a fund and into a trustee risk reserve.

ASIC – REMINDER ABOUT NEW CHAPTER 2M FINANCIAL REPORTING OBLIGATIONS

On 25 July 2024, ASIC published a reminder for superannuation trustees about the upcoming new obligations ‘to lodge audited financial reports…with ASIC within three months of the end of the fund’s financial year’ (for most funds this deadline is 30 September 2024). ASIC notes that ‘[a]udited financial reports must include the financial statements and notes, directors’ declaration, auditor’s report and director’s report, which contains remuneration disclosure’.

It explains that ‘ASIC has worked with APRA to facilitate a single lodgement point, with trustees now able to lodge compliance reports required under APRA’s prudential standard SPS 310 Audit and Related Matters with ASIC at the same time as their audited financial reports. Once lodged, audited financial reports of superannuation funds will be publicly available free of charge on ASIC’s website’.

Click here for details.

ATO – FINAL DETERMINATION IN RELATION TO PAYMENTS MADE TO TRUSTEE RISK RESERVES

On 24 July 2024, the ATO published the final version of taxation determination 2024/6, titled Income tax: trustee risk reserves – deductibility of payments made by a superannuation fund to its trustee, after the consultation period for the draft version concluded on 19 January 2024. As reported in our Super Alert of 8 December 2023, this determination sets out the ATO’s view about the deductibility of payments made out of a fund, to a trustee in their personal capacity, in order to establish a trustee risk reserve having regard to the restrictions in section 56 of the SIS Act. These payments will not be deductible in certain circumstances as outlined in the determination.

Some changes have been made by the ATO between the draft and final version such as including further case law references to support its position, however the substance of the rulings has not changed.

Click here for details.

TREASURY – DRAFT LEGISLATION IN RELATION TO PAYMENT TIMES REPORTING SCHEME

On 23 July 2024, Treasury released draft legislation called the ‘Payment Times Reporting Rules 2024’ for consultation. As reported in our Super Alert of 12 July 2024, the Payment Times Reporting Amendment Act 2024 (Cth) passed both Houses of Parliament earlier this month. According to Treasury, these rules support the new Act and contain ‘technical matters such as reporting content and calculation methodologies required for payment times reporting’.

The consultation period closes on 19 August 2024.

Click here for details.

TREASURY – INSURANCE IN SUPERANNUATION SPEECH

On 23 July 2024, Treasury published a speech about insurance in superannuation delivered by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP. The key points made by Mr Jones include the following:

  • many of the ‘5.7 million Australians [who] rely on the default life insurance coverage provided by their superannuation trustee…don’t see 2 separate systems’ when things go wrong and ‘they won’t accept their super fund shifting the blame’;
  • ‘if we are to ensure the superannuation system delivers on its promise then addressing the role of insurance in super is integral’;
  • ‘[t]he top issue raised in complaints to the Australian Financial Complaints Authority about superannuation over the past 3 financial years related to delays in claims handling’; and
  • ‘a good customer experience [in relation to insurance] will increasingly shape the ongoing community support for the superannuation system’.

Click here for details.

APRA – FINAL DIGITAL PRUDENTIAL HANDBOOK LAUNCHED

On 23 July 2024, APRA announced that the final version of its new digital Prudential Handbook has been completed. As reported in our Super Alert of 21 June 2024, the digital handbook contains a search function allowing users to search for topics across all regulated industries.

According to APRA, the handbook is designed to:

  • improve ‘the design of the framework, which is now structured in clear pillars, and rationalising and consolidating standards and guidance where it makes sense to do so’;
  • use ‘technology to make it easier to access and manage the standards, guidance and supporting policy information’; and
  • respond ‘in an adaptable and agile way to emerging risks in a manner that integrates with – rather than adds to – the existing framework’.

Click here for details.

FEDERAL COURT – SECOND DDO JUDGMENT

On 19 July 2024, the Federal Court delivered its judgment in Australian Securities and Investments Commission v American Express Australia Limited [2024] FCA 784. In this case, ASIC alleged that American Express had breached its design and distribution obligations in relation to credit cards that were distributed to certain customers.

Making the trial process more straightforward, ASIC and American Express jointly filed a ‘Statement of Agreed Facts and Admissions’ and ‘Joint Submissions on Penalty’. American Express admitted the contraventions for a period in mid-2022 and acknowledged that it:

  • ‘knew that there was a circumstance in respect of each of the [credit cards]…that reasonably suggested that the TMDs for the [credit cards] were no longer appropriate’;
  • ‘ought reasonably to have known…that the cancelled application rates for the [credit cards] were a circumstance that would reasonably suggest that the TMD for each of the [credit cards] was no longer appropriate’; and
  • ‘did not cease issuing the [credit cards]…[or] take all reasonable steps to ensure that [the distributor] was informed that it must not continue distributing the [credit cards]’.

As a result of the admitted contraventions and the joint statements and submissions, the parties sought agreed declarations of contraventions, orders in relation to pecuniary penalties and an order that American Express pay ASIC’s costs of the proceeding in the agreed sum of $200,000. The Court made the declarations and orders, and a pecuniary penalty of $8,000,000 was ordered in respect of American Express’s conduct declared to be contraventions of s 994C(4) of the Corporations Act.

In an associated media release, ASIC Deputy Chair Sarah Court is quoted as saying that ‘this is an important decision, because it highlights the requirement for issuers and distributors of financial products to customers to have in place adequate systems to monitor events and circumstances that suggest a target market determination is no longer appropriate.’

Click here and here for details.

ATO – FIRST HOME SUPER SAVER SCHEME CHANGES FOR APRA FUNDS

On 19 July 2024, the ATO issued a news update flagging future technical changes to the First Home Super Saver scheme from 15 September 2024. The ATO has advised that ‘[p]rocesses will stay the same, however in some limited cases, released amounts may be returned to the member’s super fund’. In this case, the fund must accept the repayment of the amounts and then wait to receive a release authority from the ATO for the repaid funds.

Click here for details.

ASIC – SHARING INFORMATION WITH THE OAIC

On 19 July 2024, ASIC issued a media release announcing that it has signed a Memorandum of Understanding with the Office of the Australian Information Commissioner (OAIC). This arrangement ‘allows for information sharing, enabling the two agencies to proactively share information for the purposes of exercising powers or performing functions, and in response to written requests. It sets out steps and actions for the request, sharing, use and confidentially of information’.

Click here for details. 

ASIC – INFORMATION SHEET 165 ON LEGAL PROFESSIONAL PRIVILEGE UPDATED

On 17 July 2024, ASIC released minor updates for Information Sheet 165 ‘Claims of legal professional privilege’. Updates have been made to reference the Federal Court case ASIC v Noumi Ltd [2024] FCA 349.

In relation to the ‘voluntary confidential disclosure of [privileged] information’, the information sheet notes that ‘ASIC may elect to accept, on a confidential basis, privileged information’ if ‘ASIC and the privilege holder agree the disclosure of the information to ASIC is not a waiver of any privilege existing at the time of the disclosure’ and that parties ‘should consider seeking legal advice in relation to this issue. In this regard, see ASIC v Noumi Ltd [2024] FCA 349 which is under appeal as at the time of publication’.

Click here for details.

ATO – THIRD-PARTY DATA CONTROLS RATING

On 19 June 2024, the ATO issued a news update recommending all large superannuation funds be ready from 1 July 2024 for the ATO to start rating third-party data tax controls during its assurance reviews. This recommendation is in line with the ‘Governance over third-party data supplementary guide’, released in 2022.

The ATO has advised that it will be checking super funds’ systems and processes to:

  • ‘ensure accurate reporting of third-party data’; and
  • ‘mitigate the risks of inaccuracies in income tax reporting and distribution statements, where applicable’.

Click here for details.

Do you want more information?

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.