Super Alert – 8 February 2019

08 February 2019

Welcome to this weeks edition of HWL Ebsworth’s Super Alert. It has been a big week with the release of the Royal Commission’s final report.

SCT Quarterly publication

In late January 2019, the Superannuation Complaints Tribunal released its ‘SCT Quarterly – Q4 2018’ publication which contains information on the activities of the SCT for the quarter, including three case studies. Also, it notes that ‘[t]he Tribunal accepted its last complaint on 31 October 2018, after the biggest month of complaints received in our history (a 47% increase on the month prior, and a 76% increase on October 2017).’

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Case law – Mistaken employer contributions

On 30 January 2019, a decision of the Supreme Court of South Australia was handed down involving the determination of a preliminary issue concerning whether an employer had a prima facie entitlement to recover mistaken superannuation contributions in restitution: North Adelaide Service Partnership v Retail Employees Superannuation Pty Ltd [2019] SASC 5.

The employer ran retail grocery stores, and its policy was not to pay contributions for its employees who either earned less than $450 per month or who were under 18 and employed to work less than 30 hours per week (because such an approach would not give rise to a Superannuation Guarantee shortfall). In fact however, until 2014 the payroll systems and processes were configured in such a way that superannuation contributions were made for the exempt employees. The employer took action against the trustee to recover payments in respect of the exempt employees on the ground that the payments were made ‘due to operative mistake’. The trustee refunded the contributions made in 2014, but not for any earlier years.

Blue J found in favour of the employer on the preliminary issue – that is, it has a prima facie entitlement to recover the superannuation contributions from the trustee, subject to any defences and an assessment of quantum to be decided separately.

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Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry – Final Report

On 1 February 2019, the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was presented to the Governor-General, and it was publicly released by Treasury on 4 February 2019.

There were nine recommendations made specifically in relation to superannuation (which were perhaps not as far-reaching as some may have anticipated) as well as a number of relevant recommendations in relation to group life insurance and financial advice.

Although without associated recommendations, some interesting comments were made by the Commissioner in relation to key trustee covenants – in particular the best interests duty and conflicts – and governance.
Although the entire Final Report including case studies is voluminous, the superannuation chapter itself is less than 50 pages and is certainly recommended reading for those in the industry.

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Royal Commission – Government Response

On 4 February 2019, the Hon Josh Frydenberg released the Government’s Response to the Royal Commission, stating that: ‘[t]he Government is taking action on all 76 recommendations contained within the Royal Commission’s Final Report and in a number of important areas is going further.’

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ATO – updated rates and thresholds

On 5 February 2019, the Australian Taxation Office released updated rates and thresholds which apply to contributions and benefits, employment termination payments, superannuation guarantee and co-contributions.

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Treasury Consultation – Superannuation Contributions Tax Regulations

On 5 February 2019, Treasury released for consultation draft Superannuation Contributions Tax (Assessment and Collection) Regulations 2019 and Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Regulations 2019. They are being made to ensure the ongoing operation of the Superannuation Contributions Tax, as a result of the sunsetting of the existing regulations on 1 April 2019.

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This alert was written by Natalie Cambrell, Partner, Damian Tarulli, Special Counsel and Sanela Osmanovic, Associate.

Natalie Cambrell

P: +61 3 8644 3754


Damian Tarulli

P: +61 7 3169 4832


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