Super news for October 2023

The Government has also released draft legislation on its proposed superannuation amendments that would tax the super earnings of individuals with total super balances of $3 million or more at a higher rate.

The changes – which will tax the portion of earnings on members balances above $3 million at 30% instead of 15% – are due to start on 1 July 2025.

“This modest adjustment to apply after the next election will affect only a handful of people. The 0.5% of people with superannuation balances above $3 million will still receive tax breaks, just slightly less generous,” Treasurer Jim Chalmers and Assistant Treasurer and Minister for Financial Services Stephen Jones said in a joint press release.

But a report by the International Centre for Financial Services (ICFS) at the University of Adelaide, commissioned by the SMSF Association, says the proposed new tax could have a negative impact on up to 50,000 SMSF members.

The report used data provided from more than 722,000 SMSF members (two thirds of the SMSF member population) for the 2021 and 2022 financial years and found the mean additional tax liability exceeded $80,000 in 2020–21 and 2021–22.

It also found an estimated 13.5 per cent of affected SMSF members would have experienced liquidity stress in meeting the new tax obligations.

ATO SMSF trustee disqualifications triple

During the 2023 income year, the ATO says it identified an increasing number of self-managed super fund trustees who did not comply with their legal obligations as trustees, resulting in a more than tripling in disqualifications.

In 2022–23, the ATO issued an additional $29 million in income tax liabilities, administrative and tax shortfall penalties, and interest on SMSF trustees and/or members, as well as disqualifying a total of 753 trustees.

The amount of tax and penalties imposed was more than double that of the 2021–22 financial year.

“By far the most common reason for applying these sanctions was to deal with SMSF members identified as having illegally accessed their superannuation benefits before meeting a condition of release,” the ATO says.

The ATO said it would continue to take firm action against trustees who persistently fail to comply with their obligations and seriously breach the super laws.

Beware scams by ATO imposters

The ATO also reports that there was an increase of 25% in ATO impersonation scams in 2022–23 but that Australians were becoming more aware of how to identify scams, with the amount of money actually paid to scammers falling by 75%.

Despite the 25,609 impersonation scams reported to the ATO, only 28 people actually paid money to a scammer and 346 people divulged personal identifying information (PII), a decrease of 71%.

The way scammers are contacting people is changing, with email impersonations increasing by 179% and SMS contact increasing by 414%. These types of scams often lead people to fraudulent websites and the ATO has initiated 4,836 take downs of websites with AusCERT.

The age group most likely to pay money to a scammer was the 35 to 44-year-old age bracket, while 25 to 34-year-olds divulged the most PII to scammers.

ASIC takes action against 11 SMSF auditors

The Australian Securities and Investments Commission (ASIC) disqualified three SMSF auditors in the September quarter for breaching their obligations.

It also imposed additional conditions on five SMSF auditors and cancelled the registration of another three. ASIC said obligations breached included auditing and assurance standards, independence requirements and registration conditions.

“SMSF auditors have a critical role in upholding the integrity of the SMSF sector through annual audits. They oversee over 610,000 SMSFs, representing more than $875 billion in funds. SMSF auditors play an essential role in supporting confidence in the SMSF sector, and ASIC will continue to take action where their conduct is inadequate,” ASIC deputy chair Sarah Court said.

APRA pushes for greater transparency from super funds on their use of members’ money

The Australian Prudential Regulation Authority (APRA) has announced consultations with super fund trustees on proposals designed to increase transparency around the way their members’ money is spent and invested.

APRA has written to superannuation trustees inviting their feedback on its plans to publish total fund expenditure and expanded asset allocation data by mid-2024.

In a letter sent to registrable superannuation entities (RSEs), APRA outlines its plans to publish total expenses with the name of each payee/service provider for:

• Promotion, marketing and sponsorship expenses
• All expenses with industrial bodies
• All expenses with related parties
• Total director and other executive remuneration expenses
• Political donations. 

“Due to the strong public interest in marketing-related expense, APRA has also included separately identified internal marketing expenses in the proposed publication,” the letter said.

The regulator said it welcomed both formal submissions and the opportunity to meet with RSE licensees and other stakeholders during the consultation period, which will close on 1 December 2023.