Superannuation Administration Group key messages 28 May 2024

Key topics discussed at the Superannuation Administration Group meeting 28 May 2024.

Published 16 July 2024

Budget 2024–25 overview

Chair, Larissa Evans provided a brief overview of the Budget announcements. There were 2 items of note relevant to the large fund sector:

super contributions on government paid parental leave
funding arrangements for the Gateway Network Governance Body (GNGB).

Super on parental leave pay

The measure is for babies born or adopted on or after 1 July 2025.

Eligible individuals will receive an additional 12% (the legislated superannuation guarantee rate at the time) of their government funded parental leave payment as a contribution to their superannuation fund.

The ATO will administer the payments, commencing 1 July 2026.

We will direct the payments to the individual’s nominated super fund or will determine the super account based on a legislated hierarchy.

Further details about the intended hierarchy will be available when consultation on the draft law is available.

They will be treated as concessional contributions – no changes at this stage for Member Account Attribute Service (MAAS) or Member Account Transaction Service (MATS) reporting.

Monies will flow through as per normal contribution payments using existing SuperStream channels. As such, funds should not have to build any new systems to support the measure.

The payment will be taxed in the fund at 15% consistent with super guarantee payments.

The payment will be reported as concessional contributions and count towards an individual’s concessional contributions cap in the year in which they are received.

Questions and discussion from the group included:

General Interest Charge – specific details are still being determined.
Individuals will receive notification from Services Australia that they will be receiving the payment from the ATO. We will also communicate with recipients about the payment, including the amount.
Earnings – detailed design still being worked on around policy parameters. Project groups are being formed and more information will be communicated when available.
Consideration is being made regarding fund reporting and recovery mechanisms.

Payday Super

Super on payday is a once-in-a-generation reform requiring a whole new approach not only to how super is paid, but to the infrastructure that underpins the superannuation system, as well as the way employees and employers think about and engage with super.

The government is working through the detailed design of payday super after consultation late last year and we await a further announcement.

We are unable to comment about specific elements at this time, however we will share any information to industry as soon as it is available.

Rebecca Krautz was introduced as joining the ATO Payday Super team.

Better targeted super concessions

The Senate Economics Legislation Committee report on the Bills was released 10 May. Treasury has consulted on the regulations, and we are waiting on the outcome.

We have issued an expression of interest to be part of the Better Targeted Super Concessions special purpose working group to various existing consultation groups, Tax Practitioner Stewardship Group, Superannuation Industry Stewardship Group, Superannuation Administration Group and the Digital Service Provider Groups.

The working group is expected to be established in the coming weeks and will assist in the co-design and implementation of the measure.

Consultation will be based on the existing draft law, with requisite changes to the law being incorporated.

We have held consultation sessions with several external stakeholders to seek feedback on public advice and guidance priorities for the measure.

We are working on web content in preparation of the Bills receiving Royal Assent.

The content will provide general information on the Total Super Balance definition change, as well as the Division 296 tax.

We are working with the Attorney Generals Department to issue relevant communications.

Gateway Network Governance Body

Gateway Network Governance Body (GNGB) were pleased to advise that the 2024–25 Federal budget included some positive news for the Superannuation Transaction Network (STN).

GNGB secured an increase to their funding for the forthcoming 4-year period and an ongoing commitment to a new funding baseline.

This will result in ensuring the continued security, efficiency, and reliability of the STN.

Over the next financial year, the funding will be allocated to key initiatives including:

Working with Gateway Operators to expand the program of resilience testing within the STN.
Building on superannuation ecosystem collaboration and cooperation.
Modernisation of GNGB risk management processes.
Establishment of a dedicated cyber security capability within GNGB.
Collaborating with Gateway Operators on transparency initiatives to support industry preparation for the payday measure.

An update was provided on Operation Honey Bee:

On 23 April, GNGB conducted an Incident response simulation across the superannuation ecosystem. The project was named Operation Honey Bee representing the significance of the honey bee to maintaining a healthy ecosystem.
Participants included Super Funds, Gateway Operators, service providers, regulators and other government agencies.
The objective being to explore the ecosystem’s response to a significant cyber incident impacting multiple organisations.

Key successes and learnings are currently being documented and a summary of these findings will be shared with the group.

First Home Super Saver Scheme

Legislation is in place for the technical changes to commence as per proclamation on 15 September 2024. This includes:

The updated ATO online system will support the new legislation and allow individuals to:

make new First Home Super Saver Scheme (FHSSS) requests
cancel or amend FHSSS determinations
notify the ATO that they want to make changes to a FHSSS request after the request has been made

The ATO will publish web content for Australian Prudential Regulation Authority (APRA) funds to provide supporting information in relation to the repayment of FHSSS amounts to funds.

Mid-year Economic and Fiscal Outlook

Access to Offenders Super for victims and survivors of child sexual abuse:

The project has been formally established.
A high-level solution concept has been costed, and internal funding is pending.
There has been no receipt of draft law at this stage.
Design is continuing on the policy parameters that we currently have.
Due to the government’s current legislative agenda, we don’t yet have certainty on timing, but are working towards the original timeframes for a start late in 2025.
We are limited to what we can advise to industry at present but further details will be shared when we have more clarity.

Superannuation portability arrangements with the Cook Islands:

The project has formally commenced and a project manager has been appointed.
There has been no receipt of draft law at this stage.
We are looking at mapping potential problems so we can understand the relevant impacts.
It is important to note that the MOU arrangements between the Cook Islands National Super Fund and Australia will not commence until law is passed in both jurisdictions.
There is still a level of uncertainty on when this will occur, which may impact the intended start time.
We are limited to what we can advise to industry at present but we will share further details when we have more clarity.

Capped defined benefit income stream. Transfer Balance Cap technical changes for a Successor Fund Transfer (SFT):

Regulations are still in draft and public consultation concluded 24 April.
A reminder to the group that funds should continue to report on the basis of the current law where an SFT event is occurring prior to the law change.
We understand that successor funds may not be in a position to re-report, particularly where there have been multiple SFTs, and we are working through these implications.
Our objective for retrospectively impacted clients is to implement the changes as quickly as feasible, keeping the client experience in firm view, and making the process as seamless as possible.
We are working to identify impacted funds and clients to refine our understanding of the affected population.
We anticipate working directly with funds that have retrospectively impacted clients to ensure that funds and individual clients are made aware of the impacts and are advised when updates have been applied to their account.
We continue to work with Treasury on the draft changes and when the law is confirmed, web content and fund guidance will be updated.

Reporting and data focus areas

Data integrity support:

As we focus on data quality issues, we are working to increase the precision with which we talk about data quality.
We use this focus and greater precision to better downstream data users to identify, understand and treat data integrity issues.
Not all issues which impede our optimal use of data in our products, programs, models and services are ‘data quality’ issues.
As such we will work with data users to understand in what category their issues are and then deliver or support the appropriate action or treatment.
Workshops are planned over the coming months to work through data anomalies.
The table below summarises particular issues and the action, support stakeholders can expect from the ATO Data and Services team.

Item Number	Issue	Potential action / support from ATO Data and Services
1	Reporting is incorrect and not in accordance with reporting requirements.	Strategies to improve entity reporting including communication to direct assurance activity.
2	Reporting is correct and in accordance with reporting requirement but is not achieving business case objective.	As reporting requirements changes can be significant change impost on reporting entities, we first consider if there is any feasible way the ATO can adapt use cases to the data that is available or can change our processes or systems to best utilise the data that we have. If no ATO action is possible, we consider what reporting requirements need to change and advise on what size and scale this change would be for reporting entities, advise on how it can be managed and likely industry impact/response.
3	Data issues that will present in data (whether from correct or incorrect reporting) that should be controlled/addressed in our use case/system design.	Support understanding and identification of these issues and help to design appropriate controls.

Item Number

Issue

Potential action / support from ATO Data and Services

Reporting is incorrect and not in accordance with reporting requirements.

Strategies to improve entity reporting including communication to direct assurance activity.

Reporting is correct and in accordance with reporting requirement but is not achieving business case objective.

As reporting requirements changes can be significant change impost on reporting entities, we first consider if there is any feasible way the ATO can adapt use cases to the data that is available or can change our processes or systems to best utilise the data that we have.

If no ATO action is possible, we consider what reporting requirements need to change and advise on what size and scale this change would be for reporting entities, advise on how it can be managed and likely industry impact/response.

Data issues that will present in data (whether from correct or incorrect reporting) that should be controlled/addressed in our use case/system design.

Support understanding and identification of these issues and help to design appropriate controls.

Fund administration – Intel, insights and communication

Members are reminded of the new SFT form available online and embedded within the SFT protocol.

Many funds are still using the old form which does not provide the level of detail the new form does.

When considering an SFT or an IFT, funds are encouraged to engage with us as early as possible; ideally at least 28 days’ notice of your event.

In late April online content was updated regarding Release authorities and included a new problem-solving page to help funds avoid lodgment errors when responding to release authorities.

The updated Release Authority content includes information on:

timing of responses and negative consequences that could occur for fund members if inaccurate information is reported
the different types of release authorities and tax treatments
determinations and notices of assessment, including what can't be disclosed due to privacy restrictions.

Funds are encouraged to review the new content and incorporate it into their business processes.

Client Account Services

Work that is coming through to client account services for action:

Div293 / RAS issues
Suspended payments
Departing Australia superannuation payment online issues for some administrators. – working through these, will need manual intervention until fixed.

There are presently on average 150 activities per day that require intervention:

The most common error is that there is no Payment Reference Number (PRN) on a payment or the PRN doesn’t match what’s on the message.
On occasion the PRN does not transpose correctly – however we have a process to manually correct.

Discussion then centred on whether funds use the original PRN or the refund PRN. The advice is as long as the PRNs match, it does not matter which PRN is used.

PRN anomalies create work for the ATO, and human error is a contributing factor. However, the ATO will continue to contact funds as soon as possible to address issues.

The Chair confirmed the ATO will conduct more in-depth analysis of this issue to manage and mitigate the impacts and understand the root causes. The group will be kept informed of progress and findings.

APRA-regulated fund survey results

There was insufficient time to discuss – called over to next meeting.

Other business

The ATO will be holding the annual Superannuation Industry Simulation event in late June.

Chair, Larissa Evans advised that this will be her last Superannuation Administration Group meeting as she is changing roles and moving to the ATO’s Policy and Legislation branch. She has been in this Assistant Commissioner role for the past 5 years and noted that it has been a very rewarding and fulfilling role, and that it has been a pleasure working with such a professional and engaged group of professionals.

Members thanked Larissa for her time and dedication to assisting the superannuation industry during her tenure as Chair.

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