SFWG minutes, September 2011

11. Other business

MCS reporting - member discussion of Industry treatment of workers compensation payments for more than 52 weeks

Suresh Soppa sought industry comment on their treatment of superannuation payments received for injured workers following 52 consecutive weeks of workers' compensation (under changes to the Victoria Accident Compensation Act)

As background, SFWG email issued Thursday 26 May 2011, advised the ATO requirement for member contribution statements (MCS) purposes is that payments made by:

• Worksafe Victoria - are to be reported at the label "Other family and friends contributions; while
• Self insuring employers - are to be reported as 'Employer contributed amounts".

Note - For income tax purposes payments made by Worksafe Victoria are not deductible as a superannuation contribution for the payer (under the provisions of Division 290 of the Income Tax Assessment Act 1997) and are assessable income for the receiving superannuation fund.

So funds are faced with capturing:

• payment data as it comes in;
• How the contribution is to be applied income tax wise; and
• How the report the contribution for MCS reporting purposes

Members were asked about how they were dealing with the issue, given that:

• the number of cases are quite small,
• no automated means of capturing the data and populating the relevant reports; and
• as a manual process (not the preferred process), how are funds tracking payments received.

General discussion highlighted:

• little support from the ATO, APRA or industry on how funds should proceed.
• no example documentation has been provided by Worksafe Victoria of what payment advice details have been / will be provided in support of a payment.
• Robert Hodge advised ASFA has been liaising with Worksafe Victoria highlighting the need for superannuation funds to be able to clearly identify the compensation payment and its purpose.
• most funds appeared to be confronted with the same issues.

Key issue identified is 'are other state authorities going to change compensation acts in line with the changes in Victoria, which will increase the number of these types of payments that will necessitate system development?"

One fund advised these payments can be manually processed as "a transfer in", in a similar manner to the incorrectly identified Sec20C former temporary resident compensation payments.

Funds highlighted this particular issue as one where further consultation with industry by the ATO may have resulted in a more workable solution for funds.

Suresh thanked funds for their input, noting that all funds appeared to be confronted with the same issues with no immediate remedy available.

Sections within Agenda items

• 1. Opening
• 2. Review of action items from 1 June 2011 meeting
• 3. Review of Action items from 30 March 2011 Meeting
• 4. Group discussion -Interactive session to discuss fund's experience in their interactions with the ATO and prioritise any required action
• 5. Lost Member Register (LMR) re-report proposal
• 6. Feedback from members on Lost Member Register (LMR) - provision of updated addresses program
• 7. Stronger Super update
• 8. Feedback from members on Sec 299TA / Please resolve activities
• 9. Compliance Update
• 10. Product update
• 11. Other business
• 11.2 Scheduling
• 11.3 Other
• 12. Meeting close
• Summary of action items from this meeting