Recent developments

Welcome to the September technical roundup, an update on reforms and announcements for the month of August. During August, several regulations were registered to finalise the Your Future, Your Super reforms. Other items of note include the release of APRA’s inaugural MySuper Product Performance Test results.


COVID-19 Disaster payment – tax treatment

On 10 August 2021, the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Act 2021 received Royal Assent.

The Act contains amendments to the income tax law to treat both the Commonwealth COVID-19 Disaster Payments (for eligible individuals) and COVID-19 Business Support Program Payments (for eligible businesses) as non-assessable non-exempt income, so that these payments are not subject to income tax.

The amendments will apply to qualifying payments made in the 2020-21 income year and later income years.


Child care subsidy (CCS) update

On 27 August 2021, the Family Assistance Legislation Amendment (Child Care Subsidy) Act 2021 received Royal Assent.

The Act:

  • increases the CCS rate by 30 per cent for the second child and subsequent children aged 5 years and under, up to the maximum rate of 95 per cent;
  • retains the current CCS rate for the oldest child under aged 6, based on the family’s combined income; and
  • removes of the CCS annual cap (currently $10,655 per child where the combined income of the family exceeds $190,015).

These changes will take effect from 11 July 2022 (or an earlier date to be fixed by proclamation).


COVID-19 Disaster Payment update

On 26 August 2021, the Paid Parental Leave Amendment (COVID-19 Work Test) Bill 2021 was introduced to Parliament.

The Bill contains amendments to the Paid Parental Leave Act 2010 to allow the days an applicant is on Paid Parental Leave (PPL) or Dad and Partner Pay (DaPP) to count towards the applicant’s eligible work days when assessing the applicant’s eligibility to the COVID-19 Disaster Payments.

This will increase the accessibility.

Legislative instruments

Breach reporting regulations

On 5 August 2021, the Government issued the Financial Sector Reform (Hayne Royal Commission Response—Breach Reporting and Remediation) Regulations 2021 which made further amendments to regulations relevant to the breach reporting provisions enacted by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020. This includes:

  • prescribing a number of civil penalty provisions in the Corporations Act 2001 where a breach would not automatically be taken to be deemed significant under the breach reporting regime; and
  • prescribing a number of civil penalty provisions and key requirements in the and the National Consumer Credit Protection Act 2009 (Credit Act) where a contravention would not automatically be required to be reported to ASIC under the breach reporting regime. The Credit Act currently requires licensees to report breaches of all other laws related to credit activities, and this is inconsistent with the Corporations Act 2001 which limits financial services law breaches to the law listed in Corporations Regulations – REG 7.6.02A.

These additional provisions help to ensure that minor and technical breaches of the provisions are not within the scope of the relevant breach reporting, thereby reducing the reporting burden on the industry.


Your Future, Your Super finalised

On 5 August 2021, the Government announced that it had released the following regulations to finalise the Your Future, Your Super reforms:

These regulations:

  • further strengthen the annual performance test methodology to incentivise underperforming products to reduce fees as soon as possible;
  • prescribe the definition of a ‘stapled fund’, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where multiple superannuation funds exist;
  • specify how products are compared on the YourSuper Comparison Tool;
  • prescribe the information that must be included in the Annual Member’s meeting; and
  • further strengthen the prohibition of funds offering inducements to employers.

Exposure drafts

Your Future, Your Super portfolio disclosure

On 17 August 2021, Treasury released exposure draft regulations and explanatory statement to undertake further consultation on the regulations for portfolio holding disclosure by superannuation funds.

Following feedback from stakeholders, the draft regulations and explanatory statement was amended to:

  • establish a requirement that the holdings to be easily downloadable from the fund’s website in a delimited file format;
  • allow cash and bank bill investments to be aggregated by the relevant institution;
  • sub-divide infrastructure and property into directly held and unitised, and require percentage ownership for directly held investments;
  • remove the requirement to disclose maturity dates and counterparty name for derivatives; and
  • make it clear that in addition to the mandatory disclosures, registrable superannuation entities (RSEs) are free to provide supplementary information regarding the portfolio holdings of the RSE’s products in a separate public disclosure.

Consultation closed on 31 August 2021.

Policy Paper

Consultation - single disciplinary body

On 6 August 2021, the Government announced that it had released for consultation a Policy Paper which supports the establishment of the single disciplinary body for financial advisers.

The government is seeking feedback on two matters which will be included in the regulations to support the single disciplinary body. These matters include:

  • the circumstances when ASIC must convene the single disciplinary body to determine a disciplinary matter; and
  • the type of administrative sanctions made against a financial adviser that must be included on the Financial Advisers’ Register.

The Government aims to have the regulations come into force on 1 January 2021, subject to passage of the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021.

Consultation closed on 20 August 2021.

Government announcements

Update on the Design and Distribution Obligations (DDO) regime

Treasury announced on 9 August 2021 that it had received feedback from stakeholders as the industry works towards implementing the requirements prior to the DDO regime’s commencement.  In light of the feedback, the Government intends to make a number of amendments to achieve the intended operations of these reforms.

The proposed changes will seek to:

  • clarify that margin lending to corporates is exempt from DDO, consistent with the intention that all margin lending is to be exempt from DDO;
  • clarify employees of licensees are not subject to their own separate set of DDO;
  • ensure 31-day term deposits fall within the DDO regime, which is consistent with the Government’s intention to capture all basic deposit products;
  • provide consistency in the application of retail and wholesale investor definitions across the Corporations Act by ensuring it extends to the DDO regime;
  • exempt foreign cash settled immediately from the DDO regime; and
  • exempt non-cash payment facilities from the DDO regime except for certain facilities, specifically credit and debit card facilities and stored value facilities.


ASIC levy to be restored to 2018/19 levels

On 31 August 2021, the Government announced that the ASIC levy charged for personal advice to retail clients will be restored to the 2018/19 level of $1,142 per adviser for the 2020/21 and 2021/22 financial years. Additionally, the flat fee charged per licensee charge will remain at $1,500.  

Treasury will also review the ASIC Industry Funding Model in 2022 to ensure it remains fit for purpose over the long term, given the structural changes in the advice industry.

Regulator views


ASIC’s approach to new laws in October

On 12 August 2021, ASIC issued a media release in relation to its approach to six reforms arising out of recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) and other inquiries which will commence in October 2021.

The reforms include:


Commencement date

Reference checking and information sharing requirements

1 October 2021

Breach reporting and the ‘notify, investigate and remediate’ obligations

1 October 2021

Design and distribution obligations (DDO)

5 October 2021


5 October 2021

Deferred sales model for add-on insurance products

5 October 2021

Internal dispute resolution (RG 271)

5 October 2021

ASIC recognises that businesses require time to change their systems and processes, whilst taking into account other challenges such as renewed lockdowns. As such, ASIC have stated that there will be a period of transition as the industry finalises the implementation of the additional compliance measures, and that ASIC will take a reasonable approach in the early stages of these reforms, provided the industry participants are using their best efforts to comply.


ABR updated to add fifth and sixth SMSF members

On 13 August 2021 the ATO announced that the Australian Business Register (ABR) has now been updated and trustees are now able to add a fifth or sixth member to their self-managed super fund (SMSF) instead of using the ATO interim process.

This follows legislation that came into effect on 1 July 2021 which allows SMSFs to have up to six members.

The ATO also pointed out that before adding members to a SMSF, it is important to remember any State or Territory laws that restrict the number of trustees to less than six, and to consider flow on effects for other requirements, such as signing of financial statements.


Draft ruling on deductions for vacant land expenses

From 1 July 2019, deductions are limited for losses or outgoings relating to holding vacant land, although some exclusions may apply.

The ATO has since released draft ruling TR 2021/D5 Income tax: expenses associated with holding vacant land on 4 August 2021 which provides a more practical approach to how deductions for vacant land can operate.

The ATO is seeking comments from stakeholders and consultation is open until 17 September 2021. Once the ruling is finalised, the changes will be effective from 1 July 2019.


Compensation payments and super contribution caps

A super fund may receive compensation from a financial services provider due to the provision of inappropriate financial advice or where fees were paid but no advice was provided. The compensation may include an amount reflecting a refund or reimbursement of adviser fees and/or an amount to compensate for lost earnings. It may also include an interest component.

On 12 August the ATO released a Super contribution caps fact sheet that explains how receipt of these types of compensation payments by a super fund may impact contribution caps. It also explains how to apply to the ATO to request the Commissioner to exercise discretion to either disregard or reallocate the contribution in circumstances where caps are exceeded.

Whether the compensation is a contribution (and therefore counted towards a contribution cap) will depend on the circumstances in which the compensation is received. This includes:


Treatment of compensation

Where the super fund engaged the financial service provider and has a right to compensation

This is not considered to be a contribution and won’t affect contribution caps

Where the member personally engaged the financial services provider and has a right to compensation

If paid directly by the financial service provider to individual’s super fund (other than at the individual’s direction) this is considered a concessional contribution.

If the individual directed the financial service provider to pay the compensation to their fund, or it was paid to the individual who subsequently contributed it to super, it will be considered a non-concessional contribution

Where there is no right to seek compensation

This is considered a concessional contribution


Inaugural Your Future, Your Super performance test

On 31 August 2021, APRA released the results from the inaugural MySuper Product Performance Test, which was introduced as part of the Your Future, Your Super reforms.

Of the 80 MySuper products, APRA assessed 76 products with at least 5 years of performance history against the objective benchmark and found that a total of 13 products failed to meet their objective benchmarks.

As a result, the trustees of the 13 products that failed the test are required to write to their members by 27 September 2021 advising them of their Performance Test outcome and provide details of the ATO’s YourSuper comparison tool.

Where these products fail the performance test in two consecutive years, the products will be prohibited from accepting new members until the performance improves.



Life Insurance Code of Practice update

On 18 August 2021, the FSC released its second draft of the Life Insurance Code of Practice 2.0 for public consultation.

The FSC stated that the revised draft incorporates feedback from the first consultation draft as well as recommendations from the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the life insurance industry, ASIC reviews and other stakeholders.

The FSC also stated that the new draft is re-written in plain English to improve readability and is easier to navigate for everyday Australians.

Consultation remains open until 29 September 2021.


FASEA July Exam results

On 31 August, FASEA released the results from the July 2021 Exam. Of the 1,963 candidates who sat the exam, 60% 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 knowledge of when practitioners are required by law to provide a retail client with key documentation e.g. FSG/SOA etc;
  • demonstrating knowledge of the components of key advice documentation that is provided to the client;
  • evaluating case studies and identifying breaches of financial disclosure obligations;
  • applying relevant sections of the Corporations Act when identifying responsible provider obligations, including breaches of those obligations; and
  • applying Tax Agents Services Act 2009 requirements to scenarios and identifying compliance and non-compliance.

2.     Applied ethical and professional reasoning and communication:

  • demonstrating an understanding of the relationship of FASEA code to professionalism of entire industry;
  • applying best interests duty and associated obligations to clients in scenario based problems; and
  • identifying sources of judgement and biases and their influence on financial advice.

3.     Financial Advice Construction:

  • demonstrating an understanding of the context in which financial advice is given and requested and how this impacts decision making; and
  • identifying inappropriate advice and how to comply with the Code of Ethics.

Additional information

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