- AIST Policy News - 19 June 2017
AIST Policy News
ATO consulting with industry on event-based member reporting
The Australian Tax Office (ATO) is engaging with key industry stakeholders – including AIST – on proposed changes to the reporting of superannuation information.
The changes being considered would shift away from annual Member Contribution Statement reporting to more frequent event-based reporting of member data, to provide a range of benefits for both funds and members. The data that is collected will be visible to individuals looking at their superannuation details on MyGov. Exactly what will be shown on MyGov is still being discussed but it must be information that is meaningful and useful to consumers
After initially being called the MiX project (Member information eXchange services) the project has now been split into two parts:
- Member Account Attribute Service (MASS): how funds report member details (or member attributes) to the Australian Tax Office.
- Member Account Transaction Service (MATS): how funds report transactional details such as contributions made.
Unclaimed Superannuation Monies, lost member reporting and Member Contribution Service will be superseded by these new requirements.
The Member Account Transaction Service (MATS) will redesign the current MCS to allow more regular reporting of contributions as well as to satisfy elements of Single Touch Payroll (STP) reporting. The frequency of reporting is an important consideration and needs to recognise both the time involved allocating contributions to individual accounts and the resolution of reconciliation issues.
AIST believes a shift to more responsive reporting gives greater visibility to consumers about their superannuation and would help reduce SG noncompliance.
AIST also believes there are important details still to be resolved including more clearly demonstrating how the changes would benefit consumers, be supported by a comprehensive business case, address the cost of implementation, be integrated with other changes, include ongoing consultation and facilitated implementation over a 12 month period from settlement of the project design, and resolve administrative issues.
The ATO’s overview of the MAAS and and MATS project can be accessed here.
Members wanting more information can contact AIST Executive Manager Policy & Research David Haynes at email@example.com
Super changes roadmap released
The Australian Tax Office (ATO) has created a Superannuation Changes Roadmap that plots changes to the super system including compliance dates, deliverables and consultation dates.
The Road Map is a live document that will be published periodically. AIST will continue to share the roadmaps when they are made available.
The 18 month picture as at 24 May, 2017 is now available.
Details enclosed include:
- Compliance Dates
- Deliverables against Plan
- Change Control
- Industry feedback for consideration
- Risks to overall program
ASIC industry funding model passed into law
Bills necessary for creating an industry funded model for ASIC have passed the Senate.
The ASIC Supervisory Cost Recovery Levy Bill 2017 has been passed by Senate, creating the necessary law for the introduction of an ASIC industry-funding model.
AIST strongly support the new model that will see greater transparency of the regulators funding and also increase certainty as to how much funding will be received.
However, we remain disappointed that the establishment of a statutory levy – as part of the new model – is not compliant with the Government’s own cost recovery guidelines. The statutory levy may mean that funds will need to pay for items that were not previously leviable.
Regulations that provide additional detail on the operation of the industry funding model are expected to be made shortly, ahead of the commencement of the model on 1 July 2017. AIST has already made a submission regarding the draft regulations which reiterate both our support and concerns.
The changes delivers on recommendations from the 2014 Murray Financial System Inquiry, as well as the 2013 Senate Inquiry into ASIC’s performance.
Senate passes Bill for Parliamentary Commission of Inquiry into Banking
The Senate has agreed to a Parliamentary Commission of Inquiry into banking and financial services.
The Banking and Financial Services Commission of Inquiry Bill 2017 was put forward by the Senator Whish-Wilson from the Greens and co-sponsored by Senators Hanson, Hinch, Lambie, Roberts and Xenophon. Senator Williams also supported the Bill during the debate.
This Bill seeks to establish a parliamentary inquiry into the banking and financial services sector that reports to Parliament on particular matters.
While the Bill passed the Senate on Thursday, it has now been introduced to the House of Representatives. The Bill must pass the House of Representatives before the Inquiry can go ahead.
Notably, the Bill appoints a Commission to establish the causal factors for misconduct in the financial services industry, including misaligned incentives, culture, inadequate regulation and regulatory power, and ‘moral hazard’ extending from government guarantees.
The full terms of reference are available here.
Funds falling short on key compliance areas
A new ASIC report has identified a number of areas where funds are falling short of compliance with their obligations.
The report - Responsible entities' compliance with obligations: Findings from 2016 proactive surveillance program - found that funds have room for improvement when it comes to managing conflicts of interest, breach reporting, custody, risk management, rewards and incentives, cyber resilience and whistleblowing. 4 in 5 of the asset owners failed at least one component of the ASIC review.
To assist responsible entities, ASIC has made recommendations to improve their compliance in line with a model of 'what good looks like' in the funds management sector including:
- ensuring professional indemnity coverage is adequate for the nature, size and complexity of the responsible entity's business;
- reviewing and, where necessary, strengthening their conflicts management measures;
- reviewing custody measures to ensure they meet the requirements;
- accountability from top management about disputes;
- reviewing and strengthening existing cyber resilience measures; focusing on the board's role in influencing the culture of the organisation;
- alignment of remuneration, rewards and incentives with the values of the responsible entity;
- having in place appropriate whistle-blowing measures; and
- measures that reflect a consumer-focussed culture.
The full findings of the report are contained in REPORT 528: Responsible entities' compliance with obligations: Findings from 2016 proactive surveillance program, across 12 key areas (REP 528).
New ATO services not to blame for system outages
A new Australian Tax Office report has said that new products and services were not responsible for the large system outages experienced earlier this year.
An ATO systems report has outlined what happened to IT systems, impact on stakeholders and ATO responses to system outages experienced in December 2016 and February 2017.
Commissioner of Taxation Chris Jordan said that in no way did new products and services under their reinvention program cause the outages.
In summary the report has found that:
- the outage was caused by multiple component failures on the ATO’s primary Storage Area Network (SAN), which was supplied and operated by HPE;
- the impact of the outage was compounded by the design and configuration the SAN – the review found that there was an over emphasis on performance features rather than stability or resilience; and
- the ATO’s business continuity mechanisms, communications and engagement worked well, but into the future need to be more inclusive of partners.
The report also made 14 recommendations for the ATO to improve, including assistance for key stakeholders to better understand the ATO’s business continuity strategies in order for them to improve their own continuity strategies.
Members seeking more information can contact AIST Executive Manager, Policy & Research, David Haynes at firstname.lastname@example.org
Incoming DASP tax rate changes
New tax rates for the Departing Australia Superannuation Payment come into effect from 1 July, 2017.
The tax rates that will apply to DASP from 1 July are:
- 0% for the tax-free component
- 35% for a taxed element of a taxable component
- 45% for an untaxed element of a taxable component
- 65% for a Working Holiday Maker, applied to both the taxed and untaxed element of the taxable component.
New super dashboard
KPMG have launched a new Super Insights Dashboard that uses data to create interactive charts and graphs on various super issues.
The 2017 Super Insights Dashboard – launched earlier this month – uses 10 years of APRA and ATO published data and insights from the KPMG team to create interactive charts and graphs.
These can then be filtered to view industry and fund metrics for a particular year or segment of the market and to view metrics for an individual fund in comparison to a peer group.
The dashboard was launched alongside the 2017 Super Insights Report that provides analysis of the super system as it approaches its 25th birthday. The report identifies a number of challenges funds must address including:
- Retirement income: Members who are being paid a retirement income have more complex and diverse needs.
- Women and super: The lifetime income penalty paid for a broken employment history ends up reflected in many women’s super balances.
- Regulation: Changes to the system’s tax and regulatory settings risk eroding member confidence.
- Purpose: Formally defining superannuation’s purpose may focus current and future policy discussions.
- Operating models: Delivering increased productivity requirements and meeting responsibility expectations of trustee offices.
- Member engagement: Funds are embracing technology to improve their services to members.
- Technology and data: Digital technologies are focusing funds on the 'member journey' - but they need returns on their investments.
- Privacy and security: In a technological age, funds must look to cyber security measures to prevent breaches.