20 October 2020

Recent developments

Welcome to the September technical roundup, which provides an update on reforms and announcements for the month of September. The Government and Regulators’ response to Coronavirus continues to evolve, including clarification from APRA on how the superannuation contribution work test applies to someone in receipt of JobKeeper. The month of September also saw the introduction of a bill to increase the maximum number of SMSF members to six. Later in the month, FASEA released the results of the August 2020 Adviser Exam and, to assist those yet to pass the Exam, highlighted some topic areas for improvement.

Acts

JobKeeper payments

The Coronavirus Economic Response Package (JobKeeper Payments) Amendment Act 2020 received Royal Assent on 3 September. 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.

On 15 September, details of the revised scheme were made law under the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 8) 2020, which apply from 28 September to 28 March 2021.


Superannuation choice

The Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 received Royal Assent on 3 September.

This Act 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.

Bills

Increasing SMSF membership

On 2 September, the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 was introduced to Parliament.

This Bill amends the SIS Act to increase the maximum number of allowable members from four to six in SMSFs and small APRA funds (as previously announced in the 2018-19 Budget). It also makes consequential amendments to the Corporations Act, ITAA 1997 and SUMLMA.

If passed, the amendments will apply from the start of the first quarter after the Act receives Royal Assent.

Legislative Instruments

JobSeeker extension and modifications

The Social Security (Coronavirus Economic Response—2020 Measures No. 14) Determination 2020 was registered 30 August 2020 and makes law the extensions and modifications to JobSeeker and social security Coronavirus measures previously announced on 21 July. This instrument:

  • extends the period in respect of which the COVID-19 supplement will be paid
  • reinstates the assets tests and the liquid assets test waiting period for certain payments
  • temporarily increases the income free area to $300 a fortnight for JobSeeker Payment recipients (except recipients who are neither a member of a couple nor principal carer of a child) and Youth Allowance (Other) recipients
  • increases the partner income taper rate for JobSeeker Payment recipients from 25 cents for every dollar over the partner income free area to 27 cents for every dollar over the partner income free area
  • extends other measures put in place by the Social Security (Coronavirus Economic Response—2020 Measures No. 10) Determination 2020 to assist social security payment recipients impacted by COVID-19.

Exposure Drafts

Income Tax Assessment Regulations

The existing Income Tax Assessment Regulations 1997 are scheduled to sunset on 1 April 2021. As a result, Treasury has released exposure draft Income Tax Assessment Regulations 2020 for consultation.

The draft remakes and improves the operation of the 1997 Regulations by omitting redundant provisions, simplifying language, and restructuring provisions for ease of navigation. These changes do not affect the substantive meaning or operation of the provisions except in limited cases that are specifically identified in the draft explanatory material.

The consultation period ends on 19 October 2020.


Education Legislative Instrument

On 2 September, FASEA released for consultation draft amendments to the Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2020.

The proposed amendments include 2 credits of approved recognition of prior learning (RPL) for existing advisers who have completed both a relevant degree and a post graduate relevant degree. These advisers will only be required to complete 2 bridging courses (including Ethics for professionals) to meet their education requirements.

The draft also includes adjustments to some historical course/degree details and incorporates details of degrees and courses approved but yet to be added to the legislative instrument.

Feedback closed 16 September 2020.

Government announcements

SA paid pandemic leave scheme

On 25 August, a Paid Pandemic Leave Scheme was introduced to South Australia, offering ‘isolation’ payments of up to $1,500 for eligible workers who are required to quarantine. It can also be offered to those who care for someone required to quarantine, for up to 14 days following a positive COVID19 test, or as a result of a public health directive.

Under the scheme a separate upfront ‘testing’ payment of $300 will be available for eligible workers in an identified COVID-19 cluster (as determined by the Chief Public Health Officer or delegate), who are required to self-isolate while awaiting a coronavirus test result or as a result of a public health directive.

The scheme will apply from 24 August and more information is available from the SA Department of Health.

Regulator views

ATO

Re-reporting of TAP commutations

The Treasury Laws Amendment (2019 Measures No. 3) Act 2020, which became law on 22 June 2020, provided a new way of calculating the debit which arises in an individual’s transfer balance account when a member commutes a term allocated pension (TAP) which commenced prior to 1 July 2017.

As a result, impacted funds need to review information already reported to the ATO and consider whether they need to amend any reporting in line with the legislation.

At the time the Act became law, the ATO acknowledged that funds, trustees, agents, and other tax professional would need further guidance regarding the timeframe in which the ATO expected any review of the funds reporting to be completed.

On 31 August 2020, the ATO published updated guidance – market linked pensions, with an update to the timeframe for reviewing reporting of commutations of market linked pensions on 1 September.

The ATO does not expect any funds to being to commence retrospective reporting until November 2020, and they intend to provide additional guidance before the end of November as to when the expect retrospective reporting to be completed by. Reporting does not need to be reviewed for a member who is deceased.

ASIC

No action position on FDS and renewal notice obligations - Victoria

On 24 September, ASIC acknowledged that due to COVID-19 restrictions, some financial advice businesses in Victoria might find it difficult to comply with the fee disclosure statement (FDS) and renewal notice obligations.

ASIC does not have exemption or modification powers in relation to the FDS and renewal notice obligations, but it has issued a no-action position. Under this no-action position, ASIC does not intend to take regulatory action against an Australian Financial Services (AFS) licensees or their representatives where their entire business or a substantial part of it is located in Victoria, an FDS was due between 2 August 2020 and 26 October 2020, and certain other conditions are met.


Extension of COVID-19 Advice-related Relief

ASIC has announced it will extend the temporary relief provided under the ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355. This instrument is designed to facilitate the provision of affordable and timely financial product advice to clients and reduces the regulatory disclosure burden during the COVID-19 pandemic period.

The instrument allows an ROA, rather than an SOA, to be provided when financial product advice is given under the ‘Early Release of Superannuation’ and ‘ROA for an Existing Client’ measures.

It also provides a temporary relief to give advice providers up to 30 business days (instead of 5 business days) to give an SOA after time-critical advice is provided where certain conditions are met.

On 23 September ASIC announced that the instrument will be repealed on 15 April 2021 (instead of 15 October 2020).

APRA

APRA clarifies work test application to super fund members receiving JobKeeper

Where an employer is receiving the JobKeeper wage subsidy for an individual, RSE licensees should consider the individual to be gainfully employed for the purpose of the work test,  even if that individual has been fully stood down and is not actually performing work. Read more under FAQ 14.

Other

FASEA October Exam

On 15 September 2020, FASEA announced that it would not offer metropolitan physical location exams in Melbourne for the October sitting . Advisers who have registered for a Melbourne physical location exam will have the option to sit the exam online or defer to a later sitting.


FASEA August Exam results

On 30 September 2020, FASEA released the results from the August 2020 Exam. Of the 1,521 candidates who sat the exam, 82% passed. In releasing the results, FASEA has also highlighted some areas for improvement, particularly amongst unsuccessful candidates. These are:

  1. Financial Advice Regulatory and Legal Requirements:
    • Demonstrating an understanding of the difference between personal advice, general advice and factual information and how they apply to different client scenarios
    • Assessing whether advice recommendations meet the client’s best interests
    • Assessing the impact conflicts of interest may have on advice recommendations
  2. Financial Advice Construction:
    • Identification of client biases and how they may influence clients’ financial decisions and/or investment choices
    • Understanding the context of client requests for advice and how this may impact advice construction
  3. Applied ethical and professional reasoning and communication
    • Applying Standard’s 2, 4 and 12 of the Code of Ethics to advice scenarios
    • Demonstrating an understanding of an adviser’s ethical obligations when advising on complex family structures

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