This update covers new legislation and regulatory developments for the second quarter of the 2021 calendar year.
Key developments included the passage of the Your Future, Your Super Act and legislation to give effect to increased flexibility for contributing to super as well as the continued reduction in the pension minimum payment for a further year. The scheduled increase to the superannuation guarantee rate to 10% became effective 1 July 2021.
The government also released the 2021 Intergenerational Report in late June.
For highlights on the 2021-2022 Federal Budget handed down on 11 May, refer to the summary on our website: sunsuper.com.au/newsroom/budget/federal-budget-2021-22
Your Future, Your Super
The Your Future, Your Super Act received Royal Assent on 22 June 2021. This means measures announced in the 2020–21 Budget are now law. We await final accompanying regulations to support these changes. ‘Stapling’ will now apply from 1 November 2021 – where a new employee does not choose a super fund, employers will have to check with the ATO if their employee has an existing super account, known as a 'stapled super fund', to pay the employee's superannuation guarantee into.
Other key measures in this legislation include:
- The Australian Prudential Regulation Authority (APRA) will undertake the first annual ‘performance test’ (initially applying to MySuper products only) with Trustees expecting to be notified of the outcome by September 2021.
- Trustees of any products that ‘fail’ the performance test must notify their members of the failure within 28 days.
You can read more at legislation.gov.au/Details/C2021B00008
Greater superannuation flexibility
Increased cut off age for bring-forward non-concessional contributions
The passage of the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 means that the cut-off age for accessing the bring-forward non-concessional contributions cap will increase from 65 to 67 years. This means that Australians up to the age of 67 will now be able to make non-concessional contributions up to three times the annual non-concessional contributions cap (currently $110,000 p.a.) in a single financial year.
This change will apply to non-concessional contributions made on or after 1 July 2020.
Re-contribution of COVID-19 early release superannuation amounts
An amendment was also made to the More Flexible Super legislation so that individuals who received a COVID-19 early release of super amount will be able to re-contribute up to the amount they received without this counting toward their non-concessional cap.
These ‘COVID-19 re-contributions’:
- can be made between 1 July 2021 and 30 June 2030
- cannot exceed the total amount of super accessed under the COVID -19 early release, and
- cannot be claimed as a personal superannuation deduction.
Individuals choosing to re-contribute must notify their super fund in the approved form, either before or at the time of making the re-contribution. The ATO is working through details of this process with super funds and is aiming for the approved form to be available by the end of August.
Excess contributions charge removed
Individuals who make contributions on or after 1 July 2021 that exceed their excess concessional contributions cap, will no longer be liable to pay the excess concessional contributions charge.
They will still be issued with a determination and taxed at their marginal tax rate on any excess concessional contribution amount (with a 15% tax offset to account for the contributions tax already paid by their super fund).
ATO guidance will be updated to reflect these changes.
This change was also made through amendment to the More Flexible Super legislation when it passed through Parliament: ato.gov.au/General/New-legislation/In-detail/Super/More-Flexible-Superannuation/
Minimum pension payment reduction extended
In recognition of financial market impacts resulting from the COVID-19 pandemic, the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities, and market-linked pensions and annuities was reduced by 50% for the 2019–20 and 2020–21 financial years.
This reduction was extended to 2021–22 following an announcement by the Prime Minister on 29 May 2021.
Sunsuper members who set up a Sunsuper Income account (including those members who re-start their pension) from 2 April 2020 and elected to receive the minimum payment had the reduction automatically applied for 2019-20. This reduction was automatically applied for members who elected to receive the minimum payment for the 2020-21 financial year and again on 1 July 2021 for those electing the minimum payment for the 2021-22 financial year.
More information can be found at:
Clarification - excess low super balance fee refunds
Regulations have been made to clarify that a fee refund paid by a trustee to a member’s superannuation account is not a concessional contribution. This amends an unintended outcome of the original legislation that meant such refunds were counted towards the cap.
A fee must be refunded to the member under the Superannuation Industry (Supervision) Act 1993 if the account is a low balance account, and the total fees for the year are above the maximum level.
More information can be found at legislation.gov.au/Details/F2021L00848
Ransomware Payments Bill
Introduced to Parliament in June 2021, this stand-alone Bill will establish a mandatory reporting requirement for Commonwealth entities, State or Territory agencies, corporations (including super trustees), and partnerships who make ransomware payments in response to a ransomware attack.
The Bill will require entities who make a ransomware payment to notify the Australian Cyber Security Centre (ACSC) of key details of the attack, the attacker, and the payment. This information will be held by the ACSC and used to:
- share de-identified information to the private sector through the ACSC threat-sharing platform.
- collect and share information that may be used by law enforcement.
- collect and share information to inform policy making and to track the effectiveness of policy responses.
More information can be found at aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6730
Making super easier in family law
In keeping with its commitment to improving the visibility of superannuation assets in family law proceedings, the federal Government is consulting on legislative amendments that will facilitate the identification of super assets by parties to family law proceedings, leveraging information held by the Australian Tax Office (ATO).
Proposed new information-sharing process will make it harder for parties to hide or under-disclose super assets in family law proceedings, and will reduce the time, cost and complexity for parties seeking accurate super information.
More information is available at treasury.gov.au/consultation/c2021-177055
Mutual recognition changes
Since its introduction in 1992, the arrangements for Mutual Recognition (MR) of occupational registrations have helped to reduce barriers to occupational mobility for a broad range of occupations.
The Productivity Commission recommended governments expand the use of automatic mutual recognition (AMR) to improve the efficiency of MR arrangements. In response to this, the Mutual Recognition Amendment Bill 2021 became law on 22 June 2021, amending the Mutual Recognition Act 1992.
AMR allows a person who is licenced or registered for an occupation in one jurisdiction to be considered registered to perform the same activities in another jurisdiction, without the need to go through further application processes or pay additional registration fees.
The new, national Automatic Mutual Recognition of Occupational Registrations (AMR) scheme commenced in New South Wales, Victoria, the Australian Capital Territory and the Northern Territory on 1 July 2021. The scheme will progressively commence in other states. The new scheme will apply for a limited number of occupations initially and include more occupations as Australia transitions to the new scheme.
- be required to comply with the laws of the second State, including public protection requirements regarding insurance and the like and satisfying a working with vulnerable people character test. Any conditions a person has on their home State registration will also apply, unless waived by the local registration authority.
- be subject to any applicable disciplinary actions in the second State and, for some registrations, may need to notify the regulator they intend to work in their state.
- be excluded from automatic mutual recognition if subject to disciplinary actions or have conditions on their registration as a result of disciplinary, civil or criminal action.
Information on cancelled or suspended registrations and disciplinary actions for people in the new scheme will be available to regulators and recorded on registers (where required by state laws).
More information is available at dese.gov.au/skills-support-individuals/mutual-recognition
Sex Discrimination Act Amendment
Tabled in Parliament in June, the main purpose of this legislation is to address gaps in the Sex Discrimination Act 1984 to ensure that the act of sexual harassment is prohibited in all situations, rather than exclusively those named in the Act.
The Australian Human Rights Commission raised concerns last year in their Respect@Work: Sexual Harassment National Inquiry Report (2020), highlighting the need for a range of amendments to the Sex Discrimination Act, including that sex-based harassment be expressly prohibited and that the exemption of State based government employees be removed.
The Bill also clarifies that those in positions not previously conceived of (such as gig economy workers) and those who were historically overlooked (such as statutory appointees including judges and members of parliament) are adequately protected, as well as personally liable.
Amendments to section 105 of the Act expand the provisions which prohibit the ‘aiding and abetting’ of sexual discrimination to also include a prohibition of ‘aiding and abetting’ sexual harassment.
More information is available at aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6682
YourSuper comparison tool
The ATO launched its YourSuper comparison tool on 1 July 2021.
The YourSuper comparison tool displays a table of 80 MySuper products ranked by fees and net returns and will be updated quarterly. Information displayed in the comparison tool is collated and supplied by APRA, and from September will display the performance test outcome.
A personalised version of the tool is available for individuals through myGov.
The Sunsuper product featured in the tool is our public offer Sunsuper for life product only.
The tool can be accessed at ato.gov.au/Calculators-and-tools/YourSuper-comparison-tool/
Data matching program
The ATO will access data from the Department of Home Affairs on passenger movements from 2016–17 to 2022–23.
The data will be electronically matched with certain sections of ATO data holdings to identify taxpayers that can be provided with tailored information to help them meet their tax and superannuation obligations, or to ensure taxation and superannuation compliance.
More information is available at ato.gov.au/General/Gen/Department-of-Home-Affairs-visa---October-2015-to-2022-23-financial-years/
Administrative Appeals Tribunal – employee / employer relationship
The Administrative Appeals Tribunal (AAT) has affirmed the Tax Commissioner’s view on appeal that a relationship between a music school franchise and one of its music teachers was that of employer and employee.
After conducting an audit of the taxpayer’s superannuation guarantee obligations, the Commissioner formed the view that the relationship between the taxpayer and Mr R (a music teacher) was one of employer and employee under both common law and the Superannuation Guarantee (Administration) Act 1992.
The conclusion drawn by the AAT was that the relationship between Mr R and the taxpayer during the relevant period was one of employment. Factors (some leaning more heavily than others) that suggested the relationship was one of employment included the terms of engagement, remuneration, tax and regulatory arrangements, control, integration, delegation, risk, and tools and equipment.
As a consequence of the finding that Mr R was an employee of the taxpayer during the relevant period, superannuation guarantee payments were payable by the taxpayer on Mr R’s behalf.
Details on the case can be found at austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/AATA/2021/1524.html?context=1;query=%5b2021%5d%20AATA%201524;mask_path=
Intergenerational Report reinforces super’s role in supporting ageing population
The Australian Government released the 2021 edition of the Intergenerational Report. These are published around every 5 years and project outlooks for the economy and the Australian Government’s budget over the next 40 years.
They examine the long-term sustainability of current policies and how demographic, technological and other structural trends may affect the economy and the budget.
Key Superannuation Take Outs
- Over the next 40 years, spending on the Age and Service Pension is projected to fall from around 2.7 per cent of GDP in 2020-21 to 2.1 per cent of GDP in 2060-61, reflecting the maturation of the superannuation system.
- The proportion of older Australian receiving the Age Pension is expected to decline and the trend towards more people receiving a part-rate pension is expected to continue.
- Total superannuation assets under management are currently valued at around 157% of GDP and this expected to grow to around 244% by 2061.
- the maturing superannuation system will see most Australians retire with higher balances. The median balance at retirement will increase from $125,000 now to around $460,000 in 2061.
Key Demographic and Economic Take Outs
- Expected population growth over the next 40 years is forecast to be slower than that predicted in 2015.
- Australia’s large ageing population will continue to put stresses and strains on welfare and health services (particularly in light of slower population growth estimates).
- COVID-19 will have lasting effects on the economy and the budget.
- The budget will improve as the economy recovers, but is projected to remain in deficit.
- Australia’s economy is forecast to grow more slowly over the next 40 years.
A copy of the report can be access at treasury.gov.au/publication/2021-intergenerational-report