Monthly technical roundup - December 2022

Caps on admin fees for home care packages and ban on exit fees

On 9 November 2022, the Aged Care Amendment (Implementing Care Reform) Act 2022 (Cth) received Royal Assent.

The Act bans home care providers from charging exit fees and places the following limits on the package and care management fees that home care providers can charge a recipient. The type of fees and associated caps are:

• Care management fees will be capped at 20% of the package level; and
• Package management fees will be capped at 15% of the package level.

These changes will take effect from 1 January 2023.

Temporary increase to Work Bonus Scheme

On 23 November 2022, the Social Services and Other Legislation Amendment (Workforce Incentive) Act 2022 (Cth) received Royal Assent.

The Act contains the following measures that are aimed at encouraging pensioners to stay in or return to the workforce:

• provide eligible pensioners (age pensioners and certain DVA payment recipients) with a one-off $4,000 income credit to their work bonus income bank. The credit, which ceases on 31 December 2023, essentially increases the maximum amount the pensioner can earn from $7,800 to $11,800 before their pension is reduced.
  This measure came into effect on 1 December 2022;
• allow eligible pensioners to suspend (instead of cancel) their payments for up to 2 years if they lose their benefits due to their income exceeding the income test. This will enable the individual and their partners to resume receiving the payments once they become eligible within the 2-year period, without needing to lodge a new claim.
  This measure will take effect on 1 January 2023;
• allow eligible pensioners to retain their Pension Concession Card for up to 2 years after their pension ceases due to failing the income test. 
  This measure will take effect on 1 January 2023.

Changes to Child Care Subsidy (CCS)

On 29 November 2022, the Family Assistance Legislation Amendment (Cheaper Child Care) Act 2022 (Cth) received Royal Assent.

The measures contained in the Act include:

• providing families earning up to $80,000 per year access to a child care subsidy (CCS) rate of 90%;
• for families earning over $80,000 per year, the CCS rate will taper down by 1% for each additional $5,000 of family income, until it reaches 0% for families earning $530,000 (new CCS base rate);
• no changes to the existing measure that provides a higher CCS rate to families with multiple children aged 5 or under in care. For the second and younger children aged 5 or under in care, the families will receive an additional 30%, up to the maximum rate of 95%. Families will also be entitled to the higher CCS rate up until a family income of $356,756 (for the 2022-23 financial year). If the families earn $356,756 or higher, all children in the family will be entitled to the new CCS base rate until the entitlement reaches 0% at $530,000;
• a base level of 36 subsidised hours of child care per fortnight will be available for First Nations children, regardless of activity levels.

The above changes will take effect from 1 July 2023.

Reduction to downsizer contribution age

On 28 November 2022, Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 (Cth) passed both houses and is awaiting Royal Assent.

Amongst other measures, the legislation reduces the eligibility age for individuals to make downsizer contributions to superannuation from age 60 to age 55.

It also removes the $250 non-deductible threshold for work-related self-education expenses. As a result of the removal of this threshold, individuals may be able to claim deductions for self-education expenses under the Income Tax Assessment Act 1997 (Cth) if:

• the expense is incurred in gaining or producing assessable income;
• the expense is not private, domestic or capital in nature; and
• the deduction is not prevented by a provision in that Act.

If the Bill receives Royal Assent before 31 December 2022, these changes will take effect from 1 January 2023.

Electric cars exempt from FBT regime

On 28 November 2022, the Treasury Laws Amendment (Electric Car Discount) Bill 2022 (Cth) passed both houses and is awaiting Royal Assent.

The legislation provides an exemption from fringe benefits tax (FBT) on zero or low emissions vehicles that are first held and used on or after 1 July 2022.

To be eligible, the value of the vehicle at first retail sale must be below the luxury car tax threshold for fuel efficient cars ($84,961 for 2022-23) and be held by the provider and used by or made available for private use of employees.

Social security measures to incentivise downsizing

On 29 November 2022, the Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Act 2022 (Cth) received Royal Assent.

The Act amends the Social Security Act 1991 (Cth) and Veterans’ Entitlements Act 1986 (Cth) to:

• extend the existing assets test exemption from 12 months to 24 months (or up to 36 months on a case-by-case basis in extenuating circumstances) for the principal home sale proceeds intended for the purchase of a new principal home; and
• ·apply only the lower threshold deeming rate (currently 0.25%) to the asset test exempt principal home sale proceeds when calculating deemed income.

The Act will take effect from 1 January 2023.

One-off increase to pension for totally and permanently incapacitated veterans

On 30 November 2022, the Veterans’ Affairs Legislation Amendment (Budget Measures) Act 2022 (Cth) received Royal Assent.

The Act amends the Veterans’ Entitlements Act 1986 (Cth) to provide a one-off increase to the Totally and Permanently Incapacitated veterans’ payment rates by $1,000 per year ($38.46 per fortnight).

The new rate will apply from 1 January 2023.

Skills, training and technology boost

On 23 November 2022, the Treasury Laws Amendment (2022 Measures No. 4) Bill 2022 (Cth) was introduced to Parliament.

Some of the proposals contained in the Bill were measures announced in the March 2022 Federal Budget, aimed at encouraging small business to train and upskill their employees as well as introducing temporary measures to support small businesses with their digital operations.

If passed, this would allow businesses with an aggregated turnover of less than $50 million to:

• deduct an additional 20% of eligible expenditure incurred for external training (by a registered training provider) to upskill their employees. The eligible expenditure must be incurred between 7.30pm (by legal time in the Australian Capital Territory) on 29 March 2022 and 30 June 2024; and
• deduct an additional 20% of eligible expenditure incurred on expenses and depreciating assets which supports the business’s digital operations. The eligible expenditure must be incurred between 7.30pm (by legal time in the Australian Capital Territory) on 29 March 2022 and 30 June 2023.

Financial adviser exam clarification

On 23 November 2022, the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 (Cth) was introduced to Parliament.

One of the measures contained in the Bill is an amendment to the Corporations Act 2001 (Cth) which clarifies that existing financial advisers who have not passed the financial adviser exam by the relevant exam cut-off dates and have ceased to be a relevant provider before the relevant cut-off dates:

• are eligible to be re-authorised to provide personal advice once they have passed the exam; and
• have until 1 January 2026 to meet the education requirements or courses approved by the Minister.

Improving the integrity of off-market share buy-backs

On 17 November 2022, the Government released the exposure draft and explanatory materials seeking industry feedback on its proposed measures aimed at improving the integrity of off-market share buy-backs.

The measures contained in the draft legislation include:

• where a listed public company undertakes an off-market share buy-back of a share or non-share equity interest, no part of the purchase price can be taken to be a dividend.  This measure would align the tax treatment of off-market share buy-backs undertaken by listed public companies with the tax treatment of on-market share buy-backs; and
• distributions by a listed public company that are considered consideration for the cancellation of a membership interest (as part of a selective reduction of capital) will also be un-frankable.

The Government is seeking industry feedback. The consultation period closes on 9 December 2022.

Director ID exemption and update

On 15 November 2022, the ATO released the following draft legislations that provide an exemption from the obligations to apply for a director identification number:

• ABRS 2022/D1 Corporations (Eligible Officer Exclusion - non-individuals and resigned directors) Determination 2022; and
• ABRS 2022/D2 Corporations (Aboriginal and Torres Strait Islander) (Eligible Officer Exclusion - resigned directors) Determination 2022.

These instruments specify the classes of people (e.g. corporate directors or directors who have resigned) who would be effectively exempt from obtaining a director identification number.  

Additionally, the ATO announced on 30 November 2022 that the Australian Business Registry Services (ABRS) will not apply any compliance resources to determine whether individuals have met their director ID obligations by 30 November 2022, if they apply for the director ID by 14 December 2022.

Investment governance for super funds

On 17 November 2022, APRA released for consultation draft Prudential Practice Guide – SPG 530 Investment Governance (SPG 530), aimed at assisting trustees in meeting their requirements under the recently strengthened Prudential Standard SPS 530 Investment Governance (SPS 530).

The updated guide provides superannuation trustees with guidance in the formulation, implementation, maintenance and oversight of their investment strategy. SPG 530 also sets out prudent practices in relation to investment risk management arrangements to ensure trustees:

• clearly articulate what their investments are designed to achieve and how it supports the delivery of member outcomes;
• have the capability and capacity to select and manage investment and associated risks; and
• have a clear, objective, operationally independent and robust performance assessment framework.

APRA is seeking industry feedback on the draft guidance. The consultation period closes on 17 March 2023.

Consultation into Buy Now, Pay Later

On 21 November 2022, the Government announced the release of an Options Paper seeking feedback on the future regulatory framework for buy now, pay later (BNPL) arrangements under the National Consumer Credit Protection Act 2009 (Cth) (the Credit Act).

Currently, BNPL products are not regulated under the Credit Act and are not subject to responsible lending standards. Additionally, providers of BNPL products do not need to hold an Australian Credit License.

The Government recognised that this unintended regulatory gap has the potential for consumer harm due to the absence of key protections available to other products regulated by the Credit Act, and outlined the following 3 options to close the regulation gap:

• Option 1 – strengthening the BNPL Industry Code and supplement the Code with an affordability test;
• Option 2 – partly bringing BNPL into the Credit Act, including licensing providers and a sliding ‘unsuitability test’; and
• Option 3 – Completely bringing BNPL into the Credit Act to be in line with credit cards and other traditional credit products.

The consultation period closes on 23 December 2022.

Updated guidance on exchange traded products (ETP) naming conventions

On 24 November 2022, ASIC announced that Information Sheet 230 Exchange-traded products: Admission guidelines (INFO 230) had been updated.

In the revised Information Sheet, ASIC divided the naming conventions into two levels of labelling:

• primary labels (‘ETF’ and Structured Products’) based on product types; and
• secondary labels (‘Active’ and ‘Complex’) for products with specific risks or strategies.

The revised naming convention for ETPs is one of ASIC’s measures to ensure that admission and monitoring standards of ETPs continue to support fair, orderly and transparent markets. Additionally, the overall reduction in the number of defined labels should encourage licensed exchanges and ETP issuers to consider whether their products are true to label.  

Financial adviser exam dates for 2023

On 30 November 2022, ASIC released the sitting dates for the financial adviser exams for 2023 and confirmed that all exams will be delivered by remote proctoring.

The key dates are:

Strengthen transfer planning in super

On 10 November 2022, APRA released Discussion Paper - Superannuation transfer planning: Proposed enhancements seeking feedback from superannuation trustees and other industry stakeholders.

The Paper sets out APRA’s measures to enhance planning by superannuation trustees in the event they need to transfer members out of or into their fund. The measures include:

• Introducing requirements to elevate the standards set out in Prudential Standard SPS 515 Strategic Planning and Member Outcomes (SPS 515) to ensure all RSE licensees are appropriately prepared to transfer or receive members;
• Introducing new requirements relating to MySuper product assets, in the event of cancellation of an authority to offer a MySuper product (expected to come into effect from 1 July 2023); and
• Update the transfer planning guidance to replace Prudential Practice Guide SPG 227 Successor Fund Transfers and Wind-ups (SPG 227).

The submission period closes on 10 March 2023 and APRA intends to consult on the revisions to SPS 515 and updated transfer planning in the first half of 2023.

New fixed method for WFH deductions

On 2 November 2022, the ATO released Draft Practical Compliance Guideline 2022/D4 - Claiming a deduction for additional running expenses incurred while working from home - ATO compliance approach.

Before 1 July 2022, there were three methods in claiming a tax deduction for work-from-home expenses. The three methods were:

From 1 July 2022, taxpayers can continue to claim the actual expenses or use the revised fixed-rate method of 67 cents per hour, which apportions expenses relating to energy expenses, internet, mobile/telephone expenses, stationery and computer consumables.  The shortcut method ceases from 1 July 2022.

The consultation period closed on 30 November 2022.

New ruling on personal services income

On 23 November 2022, the ATO released TR 2022/23 – Income tax: personal services income and personal services businesses.

The Ruling outlines how the ATO identifies personal service income (PSI), how the PSI rules apply to individuals or entities, and how the personal services business test is applied.

The ATO noted that this new Ruling replaces the tax rulings below whilst maintaining the principles set out in those ruling and taking legislative changes and judicial decisions into account:

• Tax Ruling TR 2001/7 Income tax: the meaning of personal services income; and
• Tax Ruling TR 2001/8 Income tax: what is a personal services business.