Superannuation Alert 21.06.18

Financial Services - 21 June 2018

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Welcome to Super Alert!

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

Find our round-up of the developments as at 21 June 2018 here.

Federal Parliament - Senate Economics Legislation Committee recommends passage of Treasury Laws Amendment (2018 Measures No. 4) Bill 2018


On 13 June 2018, the Senate Economics Legislation Committee (Committee) published a report recommending the passage of the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 (Bill).

According to the Explanatory Memorandum, the Bill "implements several recommendations contained in the Superannuation Guarantee Cross-Agency Working Group’s report to strengthen compliance with taxation and superannuation guarantee obligations". The Committee recommended that the Bill be passed and provided its view that "the [Bill's] measures will provide the necessary support to address [superannuation guarantee] non-compliance".


Treasury - Transfer of responsibility for early release of superannuation benefits on compassionate grounds

Source: Media release: Early release of superannuation on compassionate grounds

On 12 June 2018, the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer, issued a media release confirming that "[f]rom 1 July 2018, responsibility for the administration of the early release of superannuation benefits on compassionate grounds will be transferred from the Department of Human Services to the Australian Taxation Office".

According to Minister O'Dwyer, these "changes will expedite the assessment of early release applications [on compassionate grounds], improve the integrity of the process and allow the funds to be released more quickly to successful applicants".


Productivity Commission - Productivity Commission publishes speech by Deputy Chairperson regarding its inquiry

Source: Speech - Superannuation: Performing for all members?

On 6 June 2018, the Productivity Commission's Deputy Chair, Karen Chester, gave a speech to the McKell Institute Executive Policy Forum in relation to the release of the Commission's draft report earlier this month.

According to Ms Chester, the Australian superannuation system is an "unlucky lottery" for some due to:

  • "members accumulating unintended multiple accounts, and paying billions of dollars each year in unnecessary fees and insurance premiums"; and
  • "entrenched underperformance" in both choice and MySuper products.

Ms Chester said the odds of a "member with these two problems is both too high and highly regressive in impact". The Commission's draft report "calls for some fundamental changes to the super system", however the Commission is "open to feedback on their merit".

Public hearings are being held this week in relation to the draft report and submissions are due by 13 July 2018.


Case law update - Excess super contributions tax upheld despite "special circumstances"

Source: Ward and Commissioner of Taxation (Taxation) [2018] AATA 1519 (7 June 2018)

On 7 June 2018, the Administrative Appeals Tribunal (AAT) upheld the ATO's decision to refuse to reallocate a taxpayer's excess non-concessional contributions to another financial year. This determination was made on the basis that the taxpayer, Mr Ward, did not satisfy the "special circumstances" test contained in section 292-465(3) of the Income Tax Assessment Act 1997 (Cth) (ITAA) which would enliven the ATO's discretion to make a reallocation.

In 2015, the AAT at first instance considered the ATO's assessment to be consistent with the provisions of the ITAA. On appeal, the Federal Court set aside the decision, remitting it to the AAT for reconsideration.

On remittal, the AAT held that despite Mr Ward's special circumstances, the second precondition governing the exercise of the ATO's discretion, being consistency with the objects of the Division, had not been established. This was because only parts of Mr Ward's contribution met the objects of the Division when all of the contributions were required to meet it. However the AAT acknowledged the harshness of the outcome, urging the ATO "to reconsider the fairness of enforcing this penalty on Mr Ward".


Further information

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