Financial Accountability Regime
Summary: Following a number of recommendations from the banking royal commission, these bills establish the Financial Accountability Regime (FAR), which replaces and extends the existing Banking Executive Accountability Regime. The FAR imposes a strengthened responsibility and accountability framework for entities in the banking, insurance and superannuation industries and their directors and senior executives. It is designed to improve the risk and governance cultures of Australia’s financial institutions and will be jointly administered by APRA and ASIC.
Stage: The bills received Royal Assent and were passed into law on 14 September 2023 and will take effect for superannuation and insurance entities in March 2025.
Objective of superannuation
Summary: The bills seek to legislate that: “The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
Under the legislation policy-makers would be required to assess future changes to superannuation legislation for compatibility with this objective.
Stage: Treasury released the bills for consultation on 1 September 2023.
Better Targeted Tax Concessions
Summary: This bill reduces the tax concessions for individuals with a total superannuation balance (TSB) above $3 million by imposing an additional 15 per cent tax on certain earnings under a new Division 296 of the Income Tax Assessment Act 1997.
Special rules for modified treatment of defined benefit and some retirement phase interests, including the valuation of such interests, will be addressed through specific provisions in subsequent regulations.
Stage: The government sought feedback to consultation by 18 October 2023. If passed, the changes will commence from the 2025-26 income year onwards.
Performance test regulations
Summary: The annual performance test is conducted by the Australian Prudential Regulation Authority (APRA) for superannuation products. The regulations amend the performance test’s:
- testing period, benchmarks and member notification letter
- test for trustee-direct products
- accuracy and clarity to ensure they’re fit for purpose when extended to trustee directed products
- Your Super comparison tool to ensure it reflects updated reporting standards.
Stage: The regulations were released on 3 August 2023 and apply from 1 July 2023.
ATO to focus on SG non-compliance
The Australian Taxation Office (ATO) has committed to sharpening its focus on ensuring employers meet their obligations to pay superannuation to employees. The Commissioner of Taxation said the ATO would maintain its momentum in engaging with taxpayers with an outstanding debt to ensure they met their obligations in 2023-24.
The ATO’s key deliverables are to:
- continue work to create a transparent view of employees’ SG for all funds and all employers in one place, to support the ATO to follow up employer non-compliance more proactively
- improve nudges to support employers to self-correct SG issues and keep track with their obligations
- continue to focus on employer and superannuation fund reporting timeliness, completeness, and accuracy, and
- include new measurements of superannuation guarantee charge raised, collected and distributed in the annual report.
ASIC’s concerns about employee super on-boarding
The Australian Securities and Investments Commission (ASIC) has stated that companies that direct employees towards particular super funds via on-boarding programs could be undermining consumer protections and the superannuation stapling regime.
ASIC stated the promotion of a super fund, typically shown at the point an employee may be choosing a fund for their employer contributions, could steer them away from other possibly more appropriate options.
While this type of advertising is legal, ASIC warned there are ways funds can overstep, such as if an advertisement is misleading.
ASIC said it has, “raised concerns about the potential impact on consumers of this practice publicly and with Treasury.”