Welcome to the latest issue of the KHQ Super Alert. This week, ASIC announced its proposal to extend the relief provided by three legislative instruments, and the AASB released preliminary industry feedback on proposed climate-related sustainability reporting standards.

ASIC – Proposal to extend operation of legislative instruments

On 7 August 2024, ASIC issued a media release announcing that it is proposing to extend the operation of the legislative instruments listed below for five more years:

• Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice;
• ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716; and
• ASIC Credit (Breach Reporting—Prescribed Commonwealth Legislation) Instrument 2021/801.

According to ASIC, the instruments ‘are operating efficiently and effectively, and continue to form a necessary and useful part of the legislative framework’. The instruments are all due to expire in October this year.

The consultation period closes on 4 September 2024.

Federal Court – Continuous disclosure obligations breach

On 5 August 2024, the Federal Court handed down its decision in Australian Securities and Investments Commission v Noumi Limited [2024] FCA 862. In this case, the Court found that Noumi breached its continuous disclosure obligations under the Corporations Act 2001 (Cth) by failing to notify the ASX of various inventory and revenue information. As a result, the value of its inventory was overstated. Noumi has been ordered to pay a penalty of $5 million in instalments.

In a separate media release, ASIC Deputy Sarah Court said that ‘[c]ompanies have a fundamental responsibility to ensure compliance with their continuous disclosure obligations. By failing to do so, they not only cause harm to investors by denying them the information they are entitled to, they also erode confidence in Australia’s financial markets’.

ATO – Rise in online portal misuse

On 5 August 2024, the ATO issued a news release advising that there has been an increase in the misuse of its ‘external vendor testing environment’ (EVTE). The ATO has reminded its users (which can include superannuation professionals) that ‘EVTE is not designed for:

• load or performance testing
• submission of large transaction volumes’.

The EVTE ‘is a testing platform that allows digital service providers…to demonstrate their capability in meeting a defined set of test scenarios with well-formed requests/messages…[in order] to demonstrate your product/service operates as expected’.

ATO – Updated examples of remedial power uses for superannuation law

On 1 August 2024, the ATO updated its webpage which provides summaries of situations where the ATO’s ‘remedial power was unable to be used to modify the superannuation law’. The ATO can ‘modify the operation of tax law in circumstances where entities will benefit, or at least be no worse off, as a result of the modification’.

Examples where this remedial power was not suitable for superannuation law include:

• the application of ‘transitional capital gains tax relief for unsegregated super funds’;
• changes requested to ‘excess non-concessional contributions rules and associated earnings formula’; and
• a request to exercise ‘extra discretion for early release of superannuation’ on compassionate grounds to provide medical treatment.

AASB – Industry feedback for climate-related financial disclosures released

On 30 July 2024, the Australian Accounting Standards Board (AASB) released an update about the outcomes from stakeholder feedback in relation to a consultation document it released in October 2023.

As reported in our Super Alert of 5 April 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) is currently before Parliament and it proposes to introduce a requirement for a ‘sustainability report’ to be included in the annual financial reports required under Chapter 2M of the Corporations Act 2001 (Cth). Once passed, the new obligations for these disclosures are intended to be phased-in over a period of 4 years, starting with a limited group of very large entities and then expanding progressively to other entities.

The contents of the sustainability reports will be determined in accounting standards made by the AASB. The AASB has noted as part of this update that stakeholder feedback ‘strongly encouraged greater alignment with the International Sustainability Standards Board’s IFRS S1 & IFRS S2 baseline’.