This week’s Super Alert considers four Bills currently before Parliament, including passage of the amended PMIF Bill, as well as draft regulations related to the new product ‘Design and Distribution Obligations’ Act.
Bill to amend SG Act passes both Houses
On 19 September 2019, the Treasury Laws Amendment (2018) Superannuation Measures No.1) Bill 2019 (Bill) passed both Houses of Parliament and now awaits Royal Assent.
As referred to in our Super Alert of 26 July 2019, the original Bill lapsed upon the calling of the Federal Election earlier this year but was re-introduced.
Among other measures, it amends the Superannuation Guarantee (Administration) Act 1992 to “allow individuals to avoid unintentionally breaching their concessional contributions cap when they receive superannuation contributions from multiple employers. Instead of receiving contributions into superannuation, an employee may apply to the [ATO] to opt out of the SG regime in respect of an employer and negotiate with the employer to receive additional cash or non-cash remuneration”.
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SG amnesty Bill re-introduced
On 18 September 2019, the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 (Bill) was introduced into the House of Representatives. The Bill re-introduces the superannuation guarantee amnesty for employers to encourage self-correction of historical superannuation guarantee non-compliance (originally part of a 2018 version of the Bill with a different name that lapsed when the Federal Election was called).
The Bill proposes a retrospective date of effect of 24 May 2018 and the amnesty period will lapse 6 months after the Bill receives Royal Assent. It has been referred to the Senate Economics Legislation Committee for report by 7 November 2019.
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Bill introduced to amend superannuation tax treatment and prescribe interest on ATO inactive low-balance account payments
On 18 September 2019, the Treasury Laws Amendment (2019 Measures No. 2) Bill 2019 (Bill) was introduced into the House of Representatives.
According to the Explanatory Memorandum, the Bill proposes to amend:
- “the tax law to extend the concessional taxation treatment for genuine redundancy and early retirement scheme payments to amounts paid to individuals who are 65 or more years of age provided the dismissal or retirement occurs before they reach pension age” [Date of effect: Will apply to payments made on or after 1 July 2019];
- “the Superannuation (Unclaimed Money and Lost Members) Act 1999 to correctly allow for regulations to be made to prescribe a rate of interest which is payable on amounts held by the [ATO] which are proactively reunified into a person’s superannuation account” [Date of effect: Day after Royal Assent]; and
- “the Superannuation (Unclaimed Money and Lost Members) Regulations 1999 to prescribe a rate of interest payable on inactive low balance accounts and amounts proactively reunified by the [ATO]” [Date of effect: Day after Royal Assent].
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Amendments made by Senate to PMIF Bill
On 18 September 2019, the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 (Bill) was considered and amended by the Senate. As referred to in earlier Super Alerts, the Bill proposes to make insurance in superannuation opt-in only for under 25s and low account balance members.
The following last-minute amendments to the Bill were made in the Senate:
- Defer the start date to 1 April 2020 and require trustees to identify impacted members by 1 November 2019 and notify them by 1 December 2019; and
- Introduce a new dangerous occupation exception to allow the trustee to elect for members to receive insurance cover if they are employed as emergency service workers or in the “riskiest quintile of Australian occupations” (as certified by an actuary).
Those amendments were sent back to the House of Representatives, and they were agreed to late on 19 September 2019.
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Draft Regulations to Design and Distribution
On 12 September 2019, the Treasury released for public consultation an exposure draft of the Corporations Amendment (Design and Distribution Obligations) Regulations 2019 (Regulations) which will support the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019.
According to the Explanatory Statement, the “purpose of the Regulations is to enhance the [Design and Distribution Obligations] regime by altering the products and persons in relation to which the [Design and Distribution Obligations] regime applies”. The Regulations propose to exclude interests such as defined benefit interests and interests in eligible rollover funds.
Submissions to the exposure draft are due by 11 October 2019.
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This alert was written by Natalie Cambrell, Partner, Damian Tarulli, Special Counsel and Sanela Osmanovic, Associate.