New ATO Co-chair
Australian Taxation Office (ATO) Assistant Commissioner Justin Micale will co-chair the Superannuation Administration Group (SAG) from 12 August 2024.
Payday Super
The ATO is awaiting an announcement from government on Payday Super, which is expected to commence on 1 July 2026. Engagement with industry will recommence once an announcement is made.
SuperStream workshop
A SuperStream workshop was held on 25 and 26 June and was attended by a broad range of stakeholders. The purpose of the workshop was to discuss the SuperStream contributions in operation, identifying existing irritants and potential improvements.
The ATO is consolidating the discussion and feedback from the workshop. This will help identify priority issues for further discussion with industry in more detail.
Workshop participants noted a key issue will be assisting employers and members to understand their call to action and highlighted the need for a review of SuperStream contributions independent of Payday Super.
Better Targeted Superannuation Concessions
A Better Targeted Superannuation Concessions Working Group (BTSCWG) has been established to help the ATO understand the industry impacts of the measure and assist in co-design and implementation.
To date the BTSCWG has met twice and has provided valuable insights that will assist in shaping how the proposed law will be administered.
Feedback relating to changes to the total super balance (TSB) definition included:
- The ATO needs to consider the changes required as an individual’s TSB, which is currently attributable to the accumulation phase values of super interests not in retirement phase and the transfer balance of any transfer balance accounts, will now be represented by the TSB value.
- Funds will not be ready to value their members benefits under the proposed regulations in time for the annual member balance reporting by 30 June 2025, a concern Treasury is aware of.
- The changes will impact a range of super calculations for affected individuals, including caps, beyond Division 296.
- The ATO recognises the need to work with defined benefit funds to communicate changes to affected individuals. This poses a challenge as the ATO won't know the TSB changes' impact on an individual until after funds lodge their annual balance reporting.
Feedback relating to Division 296 highlighted the need for additional work by the ATO on the contributions and withdrawals that make up the Division 296 tax calculation.
For Division 296 information requests, the general consensus for self-managed super funds (SMSFs) was to use the SMSF annual return. Non-SMSFs favoured a bulk data exchange through Online services for business, similar to the approach used for COVID-19 recontributions.
The timing and frequency of requests for further information, particularly during peak Australian Prudential Regulation Authority (APRA) regulated fund reporting periods, were raised as importance considerations.
Members also highlighted the need for a transitional approach in the first year and noted concerns have been raised regarding changes needed to SuperStream to accommodate the Division 296 tax release authority process.
The ATO will circulate workshop outcomes to the BTSCWG for review.
Over the coming months, the BTSCWG will hold meetings on specific topics including:
- Division 296 excluded earnings, deferred debts, and request for information reporting and amendments
- Successor Fund Transfers (SFT) and Division 296
- communicating TSB value and how to prepare individuals for this change
- communication products including web content, elections, notices of assessment
Feedback and discussion from the group included:
- The outcomes from the BTSC have been very successful.
- There is a need for tools and guidance to support the financial adviser network to adapt to changes.
- Further discussion on the impact on release authorities and rollovers, especially in-transit rollovers, are planned to determine a sensible solution.
- Technical advice is being sought on whether a variety of contributions and withdrawal types, such as insurance payments, should be included in the Division 296 calculation.
First Home Super Saver scheme
Changes are being made to the First Home Super Saver scheme that may impact some APRA funds from 15 September. The 15 September deployment, with all testing completed, and internal readiness activities being finalised.
New APRA fund specific web content was published on 17 July and included in the Super funds newsroom, see Changes to First Home Super Saver scheme for APRA funds.
Superannuation portability arrangements with the Cook Islands
Treasury is awaiting feedback from the Cook Islands regarding the draft Memorandum of Understanding. Once the agreement is close to being finalised, corresponding legislation is expected to be introduced, as laws must be enacted in both Australia and the Cook Islands for the measure to take effect.
Superannuation on Paid Parental Leave
The ATO is working with Services Australia to prepare the necessary infrastructure for the ATO to commence payments in July 2026. Payments will be made annually and include an interest component. Legislation is being worked through and further updates will be provided in due course.
Transfer balance cap changes for SFTs
Regulation changes to reform the treatment of the transfer balance cap for SFTs came into effect on 6 July 2024 and apply retrospectively from 1 July 2017.
The ATO is currently identifying disadvantaged members and will communicate directly with approximately 20 impacted funds to make the required updates. The remediation process will be worked through on a case-by-case basis. Where a member has been impacted by multiple SFTs, remediation will be done sequentially starting with the earliest SFT.
Members questioned what remediation means for Member account transaction service (MATS) reporting. The ATO took the question on notice and will update the group in due course.
The group noted several SFTs currently underway, with funds encouraged to work with their ATO Client Relationship Manager over the remediation period.
Fraud and security
Intelligence indicates an increase in the number of fraudulent activities impacting funds and their members. This includes accounts created using stolen personal identity information (staging accounts), updates made to existing accounts, and fraudulent rollover requests.
Funds should remain vigilant, enhance the detection of high-risk activities, and minimise their occurrence by:
- applying Know Your Client (KYC) checks for new account openings (especially when created online by an individual) noting the need for changes to anti-money laundering and counter-terrorism laws for KYC to be mandatory
- utilising Multi-Factor Authentication effectively when accessing online portals, making account changes, and requesting rollovers as endorsed in APRA's May 2023 letter
- sharing information with the ATO when suspicious behaviour, data points or fraud are identified to help the ATO assess member situations and take preventative action, information on how to report can be found in the SuperMatch user guide.
Due to privacy provisions, the ATO is limited in the member information it can share.
Data integrity
The ATO will hold a webinar for funds on data quality issues and their impact. Other initiatives to improve data quality include devoting time at SAG meetings to deeper discussion on technical topics. Members noted the amount of time needed for each topic may vary and some may warrant a separate out of session meeting.
The ATO is also trialling a new approach to remediating unlinked MATS, providing funds with a spreadsheet of unlinked MATS with information on why the MATS is unlinked. The process will enable funds to remediate more successfully. It has been trialled with one fund so far resulting in the remediation of approximated 4,500 unlinked MATS. The aim is to roll out this approach more broadly across funds, and more complex issues. Members were supportive of the initiative.
Fund administration
Articles and changes to published web content since the last SAG meeting include:
- Changes to First Home Super Saver scheme for APRA funds Super News, the ATO expressed appreciation for the co-design process which culminated in this article.
Client Account Services and Super Enquiry Service insights
Client Account Services (CAS) are piloting a new feature in the Super Enquiry Service that allows the ATO to email a fund’s team mailbox. The initiative is in its early stages and CAS are developing a user guide to support the change. The user guide will be available on ato.gov.au.
Approximately 85% of SuperStream payments are being processed successfully, however the remaining suspended payments require substantial remediation. CAS are trialling validation tests to provide funds better visibility of suspended payments, which are often caused by human error.
Suspended payments will be covered in an upcoming webinar and the SAG’s forward work program.
Other business
- Members received a paper with information about the results of the recent APRA fund survey.
- The ATO is considering restarting face-to-face SAG meetings and co-ordinating them with consultation and co-design workshops being undertaken by project teams.
- The group plans to include a technical discussion at the next SAG meeting.