4 September 2020

Recent developments

Welcome to the August technical roundup, which provides an update on reforms and announcements for the month of August. As with previous months, a focus on Coronavirus response packages continued throughout August, with one measure relating to superannuation choice passing both Houses of Parliament

Bills

Superannuation choice

The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 was passed by both Houses of Parliament on 25 August, and awaits Royal Assent.

This Bill amends the Superannuation Guarantee (Administration) Act 1992, ensuring employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. This applies to new workplace determinations and enterprise agreements made on or after 1 January 2021.


JobKeeper payments

The Coronavirus Economic Response Package (JobKeeper Payments) Amendment Bill 2020 was introduced to Parliament on 26 August. The Bill passed both Houses of Parliament on 1 September and awaits Royal Assent. The extension of the JobKeeper scheme to 28 March 2021 (as announced by the Government in July) is included in Schedule 1 of the Bill.

Details of the revised scheme will be made in subsequent amendments to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.

Legislative Instruments

Frozen fund relief

On 26 August, ASIC registered ASIC Corporations (Hardship Withdrawals Relief) Instrument 2020/778.

The relief measures will ease some of the statutory restrictions on Responsible Entities (REs) of registered managed investment schemes and make it easier for REs of frozen funds to enable withdrawals by investors suffering hardship. Previously, ASIC granted hardship relief to REs of frozen funds on a case-by-case basis only.

ASIC has also issued Information Sheet 249, a revised Regulatory Guide 136 Funds management: Discretionary powers and provided information on hardship withdrawals for members of frozen funds.

To be eligible to make hardship withdrawals from frozen funds, a member must meet at least one ‘hardship criteria’ such as severe financial hardship, unemployment for over three months, compassionate grounds, or permanent incapacity.

An eligible member may withdraw up to a total of $100,000 of their investment over a maximum of four withdrawals per calendar year.

Members of frozen funds should contact their RE for information on hardship withdrawals in the first instance.

Government announcements

Additional changes to JobKeeper payment

On 7 August the Government announced further changes to the JobKeeper Payment program to assist more businesses to qualify.

Under the changes, a business or not-for-profit will only be required to satisfy the turnover test in:

  • Sept 2020 quarter (generally compared with Sept 2019 quarter), for Phase 1 of JobKeeper extension, and
  • Dec 2020 quarter (generally compared with Dec 2019 quarter), for Phase 2 of JobKeeper extension.

This change will allow a business to qualify for both JobKeeper and the JobKeeper extension even if its turnover has not substantially reduced until after June 2020.


Pandemic leave disaster payment

On 3 August 2020 the Federal Government announced it will establish a $1,500 pandemic leave disaster payment for people living in Victoria who don’t have any income as a result of being required to self-isolate or quarantine because:

  • they have coronavirus (COVID-19)
  • they have been in close contact with a person who has COVID-19
  • they care for a child under age 16, who has COVID-19 or
  • they care for a child under age 16 who has been in close contact with a person who has COVID-19

The Government announced that the payment would be extended to Tasmania on 26 August 2020.

The payment is taxable income, and eligibility requirements can be found on the Services Australia website.

Regulator views

ATO

Additional super guarantee charge

On 3 August the ATO released a Draft Practice Statement setting out proposed guidelines on the remission of additional super guarantee charge (SGC) after the SG amnesty ends on 7 September 2020. Under Part 7 of the Superannuation Guarantee (Administration) Act 1992, this additional SGC (Part 7 penalty) is up to 200% of the SGC amount.

The Draft Practice Statement sets out a 4-step process for what the ATO will consider in making decision on the amount of the Part 7 penalty, and when penalty relief may be applied. When finalised, the Practice Statement will apply from 8 September 2020.

APRA

MySuper Product Heatmap frequently asked questions

APRA published a new set of frequently asked questions (FAQs) regarding the release of the  MySuper Product Heatmap, which was last updated in June 2020.

The FAQs provide guidance on how to understand the APRA MySuper Product Heatmap, as well as answering technical questions regarding the Heatmap.


Quarterly statistics

On 25 August, APRA released quarterly superannuation statistics for June 2020.

Over the 12 months to June 2020, there was a 0.6% decrease in the value of total superannuation assets. Quarterly benefit payments were $37.4 billion, significantly higher than the March 2020 quarter ($21.1 billion) and June 2019 quarter ($20.5 billion) due to payments made under the Early Release Scheme.

APRA also released the quarterly life insurance statistics for June 2020 on 27 August.

The life insurance industry’s performance continues to be challenged. Net loss after tax was $1.6 billion for the year to June 2020. Performance of all risk products deteriorated over the year apart from the Individual Lump Sum product.

Other

FASEA approved degrees

On 6 August FASEA confirmed it has approved the Graduate Diploma of Financial Planning for the University of New South Wales, offered from 1 July 2019, as an approved degree.

In addition, FASEA has approved the following two bridging units offered by the University:

  • Ethics for Professional Advisers; and
  • Behavioural Finance Advice.

The approved courses will be added to a future Degree, Qualifications and Courses legislative instrument.

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