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  • SASG minutes March 22 2017

    Meeting details

    Venue:

    ATO Office, 52 Goulburn Street, Sydney

    Date:

    Wednesday 22 March 2017

    Start:

    10.00am

    Finish:

    3.00pm

    Chair:

    Cathy Cox

    Secretariat:

    Tracey Hughes

    Contact phone:

    07 3213 8837

    Note: SASG agendas, minutes and related papers are not binding on the ATO or any of the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    Attendees

    Industry

    Name

    Role / Organisation

    Ms Andrea Cooper

    Financial Synergy

    Mr Mark Edwards

    CBA CommInsure

    Ms Heide Stewart

    IOOF

    Mr Ian Roberts

    NAB

    Ms Jayne Pocock

    QSuper

    Mr Jun Tang

    OnePath

    Ms Louise Hemar

    Pillar Administration

    Mr Sam Finucan

    Bravura Solutions

    Ms Mary Gale

    Link Group – Syncsoft

    Mr Lex Dransfield

    Commonwealth Superannuation Corporation

    Ms Sue Pearce

    Link Group – AAS

    Ms Marcia Pitstock

    KPMG

    Ms Tina Cifelli

    AMP

    Ms Kelly Kerr

    BT

    Ms Maria Anislag

    Zurich Australia

    Mr Anthony Steele

    Super SA

    Ms Fiona Galbraith

    ASFA

    Mr Darren Cox

    SA.GOV.AU

    Mr David Delaney

    ANZ

    Ms Amanda Gunn

    Mercer Australia

    Mr George Strilakos

    Unisuper

    Mr John Hardas

    Link Group – AAS

    Ms Julia Horrocks

    CBA CommInsure

    Mr Tony Bishop

    CBA – Colonial First State

    Mr Matthew Pritchard

    Precision Administration

    Mr David Kerr

    NAB

    Ms Joanne Corbett

    Perpetual Investments

    Ms Kathy Calman

    Perpetual Investments

    ATO Attendees

    Name

    Role / Organisation

    Ms Cathy Cox

    Assistant Commissioner, Client Services

    Mr Shaun Ferabend

    Director, Client Relationships, Intermediaries and Assurance

    Ms Carolyn Harris

    Director, Individuals

    Ms Tracey Hughes

    Secretariat, Superannuation Administration Stakeholders Group

    Mr Jason Lucchese

    Assistant Commissioner, Industry & Government Engagement and Governance, Superannuation

    Mr Graham Whyte

    Assistant Commissioner, Technical Leadership and APRA Fund Engagement

    Mr John Shepherd

    Assistant Commissioner, Single Touch Payroll and Superstream Program

    Ms Helen Morgan

    Director, Superannuation Budget Measures and Change Implementation

    Ms Belinda Black

    Integration, Superannuation Budget Measures and Change Implementation

    Mr Ty Winmill

    Director, SuperStream Program

    Ms Shannon Grubb

    Director, Superannuation Industry Government Engagement and Governance

    Ms Larissa Evans

    Project Lead, Superannuation New Measures

    Mr John George

    Director, Superannuation Individuals New Measures

    Ms Annette Thurbon

    Director, SuperStream Delivery

    Mr Mark Stockwell

    Director, SuperStream

    Ms Kylie Smith

    Director, APRA Fund Client Experience and Fund Reporting

    Ms Anna Pace

    APRA Fund Client Experience and Fund Reporting

    Mr Shane Moore

    SuperStream Data Standards

    Apologies

    Name

    Role / Organisation

    Ms Sharan Panton

    Link Group – GESB

    Ms Rebecca Scott

    Perpetual Investments

    Mr Martin Mikulicin

    BT

    Mc Gemma Lipovski

    Precision Administration

    Ms May Low

    CBA – Colonial First State

    Mr Tim Coulter

    KPMG

    Mrs Narelle Telfer

    Mercer

    Ms Ari Gerasimou

    CBA CommInsure

    Agenda items

    1. Welcome

    Assistant Commissioner Cathy Cox opened the meeting:

    • Welcomed all in attendance including new representatives and guest attendees.
    • Accepted that no conflicts of interest were advised.
    • All action items from the previous minutes had been resolved or would be resolved in this meeting.

    2. SuperStream – Business to Government (B2G) reporting update

    Presented by Mark Stockwell

    2.1 Current B2G deliverables

    Updates were provided in relation to:

    • SuperTICKv3 – mandated reporting of opened and closed accounts
      • Members were advised some performance issues have been identified on the SBR2 platform and there is a need to create a steadier platform. Due to this some entities have decided to delay STICK3.
       
    • USM – testing and cutover
      • The new S20C commences the first quarter 2018 to receive S20C notices as Initiate Rollover Request (IRR).
       
    • Member Account Attribute Service (MAAS) – Technical documentation
      • MAAS – attributes that don’t change or don’t change often i.e. name, date of birth
      • MAST – event based, more transactional i.e. account balance
       

    Action item: The Draft MAAS specification to be released to Industry.

    2.2 Contribution reporting – MCS redesign

    An explanation was provided of the process (and reasoning) used to reach an agreed forward plan with industry to design a strategic solution for more regular transactional reporting. Discussed was the outcome of the review, proposed timeline of change and the delivery and consultation program.

    Action item: The ‘Reporting to Government (B2G) update’ document is to be updated, particularly slide 9 reference to legal confirmation pending.

    3. New Measures walkthrough and Integration plan

    3.1 Jason Lucchese

    Jason outlined the various industry consultation forums: APRA, SMSF and Marketing and Communications.

    Jason stated that he expected the final specifications to be released prior to Easter.

    George Strilakos voiced his concern about the short time-frame, however Jason advised that they had already been out with industry and undergone a consultation process.

    Kelly Kerr also sought and received confirmation that if there was going to be a significant change in the specifications then the Tax Office would notify industry.

    The finalisation of the law companion guidelines is ongoing, with three currently finalised and the remaining four expected to be finalised by the end of April 2017. Work has also commenced on the provision of supporting tools.

    3.2 Graham Whyte

    The group was advised that a document existed that contained approximately 300 questions from the community that have been documented and the answers provided. This document has not been refined or edited for repeated questions or similarities in questions raised but if the group thought it would be beneficial it could be supplied to them. The general consensus was interest in the document.

    In addition to this several webinars have been organised and scheduled up until June to provide information about super changes to support industry.

    A correspondence campaign is planned to ensure consistency in our messaging. It’s scheduled for late April and the approximate volume is 1,200.

    Action item: Provide details of the webinar schedule.

    Action item: Provide access to the Q and A document.

    3.3 Belinda Black

    • Proactive messaging
      • A number of proactive correspondence products are being developed and will issue to individuals who may be at risk of exceeding the new cap thresholds. These messages will be advising them of the change and how it may impact them from 1 July 2017.
       
    • Carry-forward of unused concessional contributions
      • From 1 July 2018, individuals can 'carry-forward' any unused amount of their concessional contributions cap. They can access their unused concessional contributions cap on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire. The first year the unused concessional contributions can be accessed is 2019–20. The unused concessional contributions cap can only be carried forward if the individual’s total superannuation balance at the end of 30 June of the year prior to when the contribution is less than $500,000.
       
    • Non-concessional contributions cap charge
      • Non-concessional (after-tax) contributions include personal contributions for which there is no claim of an income tax deduction, and spouse contributions. From 1 July 2017, the annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year. If eligible, individuals can also bring forward 3 years of their annual cap allowing contributions of $300,000 to be made without being in excess. Transitional provisions apply for those that have triggered a bring forward in the 2015–16 and 2016–17 financial years.
      • Also from 1 July 2017, the non-concessional cap will be nil for a financial year if an individual has a total superannuation balance greater than or equal to the general transfer balance cap ($1.6 million in 2017–18) at the end of 30 June of the previous financial year. If a non-concessional contribution is made in that year, there will be excess non-concessional contributions.
      • The Tax Office is utilising proactive messaging to disseminate this information and ATO online will display the total super balance from 1 July 2017.
       
    • Div 293 – from 1 July 2017
      • The Division 293 income threshold will be lowered to $250 000.
      • Superannuation providers won't be required to calculate an end benefit cap if their member does not have an outstanding amount on their Division 293 tax deferred debt account at the time the benefit becomes payable. We are currently drafting approved form. We are looking to meet the preferred channel of emailing requests through to the CRT mailbox. 
       
    • Streamlining – from 1 July 2018, individuals will make elections to the ATO. The ATO will then manage the issuing of release authorities to funds and the receipt of monies. The time-frame funds will need to comply with the release authorities is legislated at 10 days.
    • Personal super contribution – the existing form will not change just the instructions. A new form is being developed for eligible Funds to elect to be non-deductible.

    Action item: Distribute the correspondence to funds when it has been finalised as their front line staff will need to be familiar with the correspondence content.

    3.4 Helen Morgan – Transfer balance cap measure

    The transfer balance cap applies to the total amount of superannuation that has been transferred into the retirement phase. The number of accounts the balances are held in does not matter.

    The amount of the cap will start at $1.6 million, and will be indexed periodically in $100,000 increments in line with CPI. Indexation will be calculated proportionally based on the amount of available cap space. If the cap is exceeded, indexation will not be applied.

    Helen stated the updates to the withholding schedule would occur in May.

    Discussion

    The group were informed that the draft Schedule 13 – Tax table for superannuation for income streams was scheduled for additional industry feedback on Friday and once this feedback was incorporated could be distributed to the group. The group advised that the delay was not ideal and expressed their preference that the draft be distributed as soon as possible.

    Kelly Kerr questioned whether there would be a special meeting (deep dive) to discuss the MiG.

    Action item: Distribute the draft Schedule 13 – Tax table for superannuation for income streams as soon as possible.

    3.5 Larissa Evans

    • The removal of the anti-detriment provision in respect of death benefits
      • From 1 July 2017 the anti-detriment provision will be removed in respect of death benefits. The provision currently allows superannuation funds to claim a tax deduction for additional lump sum death benefits paid to beneficiaries who are dependents of the member. This additional lump sum effectively refunds the members lifetime contributions tax payments to the estate. The change does not impact TT17. If a member dies on or after 1 July 2017 they will not be entitled to the anti-detriment payment.
       
    • Innovative retirement income stream measure
      • Currently, there are rules restricting the development of new retirement income products. From 1 July 2017, the tax exemption on earnings in the retirement phase to innovative products, such as deferred lifetime annuities and group self-annuitisation products will be extended. The change is intended to provide greater choice and flexibility for retirees to manage the risk of outliving their retirement savings.
       
    • Transition to retirement income stream measure
      • Transition-to-retirement income streams (TRIS) are currently available to assist individuals to gradually move to retirement by accessing a limited amount of super. Currently, where a member receives a TRIS, the fund receives tax-free earnings on the super assets that support it.
      • From 1 July 2017, the government will remove the tax-exempt status of earnings from assets that support a TRIS. Earnings from assets supporting a TRIS will be taxed at 15% regardless of the date the TRIS commenced. Members will also no longer be able to treat super income stream payments as lump sums for taxation purposes. The intent of this change is to ensure that TRIS are not accessed primarily for tax purposes but to support individuals who remain in the workforce.
       

    4. Enhancements to the operations of Small Business Clearing House

    Presented by John George

    4.1 LISTO

    John George joined the meeting for this agenda item and provided members with the following overview of the LISTO measure that will take effect from 1 July 2017:

    • Essentially LISTO will replace the Low Income Superannuation Contribution (LISC) policy that has been repealed from 1 July 2017.
    • The criteria and thresholds for LISTO are unchanged from the existing LISC regime for eligible individuals.
    • Eligible recipients will continue to receive this LISTO contribution (capped at a maximum benefit of $500) into their super funds as they currently do for LISC.
    • The repeal of the existing LISC scheme is effective from 1 July 2017. However the legislation effecting the repeal mandates that the Commissioner of Taxation must continue to determine LISC eligibility until 30 June 2019 (in respect of contribution years up to and including 30 June 2017). This effectively means that there will be a small transitional period (during the 2018–19 financial year), the ATO will issue both LISC and LISTO benefits.  
      • John therefore outlined the following approach to assist funds identify and record Low Income Superannuation Tax Offset (LISTO) and Low Income Super Contribution (LISC) from 1 July 2017 onwards.  
        • The ATO will maintain and re-use the existing LISC taxonomy element field for LISTO within the Standard Business Reporting (SBR) messaging (Contributions MIG) with the ATO. Instead, the ATO will revise the associated business definition for this field to reflect the following update:
        • This is the value, during the relevant period, for the low income superannuation benefit. For financial years prior to 1 July 2017, this is the value for the low income superannuation contribution amount during the relevant period. For financial years from 1 July 2017 onwards, this is value for the low income superannuation tax offset.
        • For financial years 2016–17 and prior, this is the value for the low income superannuation contribution amount during the related period; for financial years 2017–18 and onward, this is the value for the low income superannuation tax offset during the related period.
         
      • APRA are also maintaining and re-using the existing LISC field within the APRA SRF 330.0 return for LISTO from 1 July 2017 onwards. Whilst APRA will endeavour to change the words of the instrument supporting this relevant SRF by 1 July 2017, as an interim guidance for funds, they expect to be able to supply advice to this effect either via a FAQ or letter.
      • In terms of funds classifying these benefits on their reporting statements to members, there are no changes required to the existing Corporations Regulations 2001 that govern this requirement. Funds may choose to report to members the different items separately, that is Super Co-contributions, LISC, LISTO or reporting as one item ‘Government co-contribution’.
       

    The LISC / LISTO guidance note is published on SIPO: http://softwaredevelopers.ato.gov.au/SSTC/GuidanceExternal Link

    Discussion

    Based on the above update, industry representatives agreed that this administrative approach is pragmatic and sensible in that it addresses any re-work required by funds. Members were comfortable that this approach to the transition from the existing LISC scheme to the new LISTO process is understood and straight-forward to implement.

    Sue Pearce reported that some trustees have expressed some confusion around the naming concept of LISTO and the potential for incorrect perception in industry that it has the characteristics or be in the form of a “claimable offset” by the fund as originally announced in the Budget. Despite having “tax offset” in its’ name label, LISTO will continue to be paid into funds as a contribution benefit like the existing LISC payment. Sue Pearce suggested that our ATO communications more prominently reflect this clarification.

    Action item: John George is to update the LISTO web content to ensure clarity and emphasise that the nature of this benefit will continue to be paid into funds as a contribution benefit like the existing LISC payment, rather than being a “tax offset” as suggested by the name.

    4.2 Enhancements to the operations of the Small Business Superannuation Clearing House

    John George spoke to this agenda item and the briefing paper that was circulated to members prior to the meeting. For some time now, the SBSCH service has been operated by Department of Human Services (DHS) on behalf of the ATO. DHS and ATO have recently agreed to transfer the SBSCH service to the ATO. It is expected that this will occur sometime in the 2017–18 financial year.

    John reported that whilst employers and their representatives are the key users of the service, funds are also able to register and access the SBSCH to download statements that match the deposits we have sent them. These statements contain all the relevant payment data needed by funds to process the payments into the members’ accounts. However, fund usage of the SBSCH has decreased since the introduction of SuperStream. Less than half of the APRA regulated funds are currently registered users of the service, of which a further half (around a quarter of the fund population) have logged in and actively used the service over the last 12 months.

    The purpose of this discussion is therefore to:

    • obtain feedback from funds using the SBSCH, on the current features available, and confirm whether these are still relevant in a post SuperStream environment
    • whether these services being used by funds can be obtained from other avenues/sources

    Discussion

    Some members indicated that they had not reviewed this paper prior to the meeting and were therefore unable to respond. John asked if these representatives could provide their responses either directly to his email address or the SASG mailbox after the meeting. However, the responses from other members indicated that their reasons for accessing the SBSCH could in fact be sourced from other alternatives. Additionally, other representatives agreed that funds do not need access to the SBCH any more as they get everything they need through SuperStream, and that usage of the SBSCH by funds is seen as non-conformant with SuperStream obligations.

    Action item: Members to email the SASG mailbox or John George with their responses to the focussing questions on the SBSCH.

    5. MIGV2 Readiness and Implementation update

    Presented by Annette Thurbon

    5.1 Rollover v2

    5.2 Contribution

    Members were provided with an update on the wash-up with Rollovers V2 implementation as well as an update on the readiness and change management approach to support the contributions release.

    An explanation of the scope of B2B and G2B changes for contributions was supplied as it was believed there may have been some uncertainty within industry about the scope of B2B, which is purely about completing error response messaging changes to conform with the standard.

    Discussion

    Heide Stewart provided a couple of different scenarios with SuperTick and sought clarification around the expected messaging and outcome.

    Sue Pearce questioned why funds that were data standards enabled were continuing to receive messages via other channels. Discussion ensued surrounding this issue and several other members confirmed this was occurring.

    Action item: Further investigation required regarding the issuing of messages via multiple channels with funds that are data standard enabled.

    6. Single Touch Payroll

    Presented by John Shepherd

    Members were advised that the legislation stipulates that payday reporting be in place for all employers with 20 or more employees from 1 July 2018 with the ATO able to accept STP reporting from employers with STP enabled software from 1 July 2017.

    Updates were also provided in relation to STP superannuation reporting, STP pay event design and employee commencement design.

    7. Changes to the DASP tax rate for working holiday makers

    Presented by Anna Pace

    SASG members were advised that currently all former temporary residents (FTR) that claim a DASP are taxed as:

    • Taxed component – 38%
    • Untaxed component – 48%

    These rates will change to 35% and 45% as the temporary budget repair levy no longer applies from 1 July 2017. Furthermore, in December 2016 the Australian government introduced a new DASP tax rate for working holiday makers (WHM), so from 1 July:

    • A new tax rate of 65% for WHM for both taxed and untaxed components will apply
    • The current tax rate remains the same for non WHM
    • The definition for WHM includes temporary residents with a 417 or 462 visa and related bridging visas.

    There are currently 541 applications in DASP and the group was reminded to download applications as soon as possible.

    Anna informed the group that FAQ’s and guidance note would be published and a DASP Protocol is also in development.

    Discussion

    Clarification was sought in relation to when the DASP online system would be turned off and if the processing of any backlogs or on hand applications had been factored into this decision. Anna advised that after further consultation we were unable to progress this idea as it would not be a favourable experience for the applicant. Options of updating the online application earlier then 1 July were under investigation. 

    Kelly Kerr questioned the requirement to add the H box on payment summary and requested that if this information is for a senate enquiry that it please be removed.

    Action item: Members to email the SASG mailbox to provide the projected volume of applications they will have on hand as at 31 June 2017 and the average processing / handling time per application. After some discussion it was determined that we would calculate this information if necessary, so it was not essential to provide the volumes on hand.

    8. Improving the client experience for Super Surcharge

    Presented by Anna Pace

    Anna advised the group we were looking at providing some enhancements in the surcharge space with the aim of improving the client experience.

    A workshop is planned to discuss this around the end of April and nominations are to be sent to the SASG mailbox.

    Action item: Members to email the SASG mailbox to express their interest in attending the workshop.

    9. RDF report

    Presented by Graham Whyte

    Graham advised the group the purpose and role of the Risk Differentiation Framework (RDF). Basically, it is the basis of Tax Office’s fund engagement strategy. The diagnostic reports provide us with the necessary information to allow us to streamline and tailor our interactions with industry.

    The report analyses fund performance utilising 13 criteria and is considered commercial in confidence. Based on feedback received last year from the community we have added the key client and administrators reports.

    The diagnostic reports are expected to be released to industry in late March to early April 2017.

    General discussion ensued.

    Action item: SASG members to be emailed the webinar schedule, specifically in relation to the diagnostic reports.

    10. Product update

    Presented by Shaun Ferabend

    10.1 DASP and ATO online results

    General discussion ensued.

    Action item: DASP and ATO online statistics to be emailed to the group via the SASG mailbox.

    10.2 USM statements April 2017

    Members were reminded that the USM statements are due for lodgment by 1 May 2017 and provided with some advice about how to avoid the more common errors and the process of how to lodge correctly.

    The content of the latest draft version of the USM statement specifications was raised. The draft specifications had listed the ‘eligible service period start date’ field mandatory in the USM statement, however this was then changed to allow time to implement our system changes.

    The group was advised that we encourage the population of the eligible service period date in the USM statement lodgment due by 30 April 2017, to ensure the receipt of USM remittance messages.

    Discussion

    Some concern was raised that the alterations to the specifications could cause confusion to industry and a recommendation was made to issue a CRT alert providing clarification of this issue.

    Various members within the group discussed the appearance and distribution of the CRT alerts since their transfer to campaign monitor. The general consensus of the group there were problems with the receipt and distribution of the alerts and some issues with the formatting.

    Action item: Issue a CRT alert regarding the draft USM Statement specifications.

    Action item: Issue an email providing additional information regarding CRT alerts and their distribution method and include links to where this information is contained on ato.gov.au.

    11. Other business

    • Heide Stewart identified that the eSOA does not contain a PRN.

    Action item: Heide Stewart to email a copy of the eSOA to the SASG mailbox to allow for further investigation.

    • John George was asked by members to provide any update on the November 2016 SASG agenda item where he previously spoke about the proposed move of some work from DHS to the ATO. John re-iterated that this proposal requires the appropriate approvals from the relevant Ministers, Prime Minister and Cabinet before any legislative authority can be trigged. The ATO are continuing to work with DHS and Treasury consult with stakeholders on a proposed design if this function was to transfer.

    At the November meeting, John asked for industry feedback on a specific design proposal that would provide funds with simultaneous details of ERSB approvals for their members. It was agreed by funds at this previous meeting that the existing channel for securely sending member information would be the most preferred interim solution, until such time that the ATO can exchange digitalised notices in the longer term. John used this discussion to confirm the:

    1) Member details required by funds in these proposed notices to process these payments are:

    • Member Name,
    • Member Account Number,
    • Amount of approved ERSB release, and
    • Bank/Financial Institution details where the member wants the benefit paid (if provided to the ATO in their application)

    Industry representatives agreed that these would be the only details needed.

    2) Preferred format of notice information being received.

    Industry representatives agreed that their preferred approach is to receive this information in either word, pdf, or other document format, with one member per file. This separation of one member per file allows funds to easily upload each file to the relevant member records separately without compromising privacy of other members.

    12. Close

    In closing Cathy Cox, thanked members for their contribution and reminded members the next meeting is scheduled for 17th May 2017.

    Action items

    Item number

    Agenda reference

    Action required

    1

    2.1

    The Draft MAAS specification to be released to Industry

    2

    2.2

    The ‘Reporting to Government (B2G) update’ document is to be updated, particularly slide 9 reference to legal confirmation pending

    3

    3.2

    Provide details of the webinar schedule.

    4

    3.2

    Provide access to the Q and A document.

    5

    3.3

    Distribute the correspondence to funds when it has been finalised as their front line staff will need to be familiar with the correspondence content.

    6

    3.4

    Distribute the draft Schedule 13 – Tax table for superannuation for income streams as soon as possible.

    7

    4.1

    John George is to update the LISTO web content to ensure clarity and emphasise that the nature of this benefit will continue to be paid into funds as a contribution benefit like the existing LISC payment, rather than being a “tax offset” as suggested by the name.

    8

    4.2

    Members to email the SASG mailbox or John George with their responses to the focussing questions on the SBSCH.

    9

    5.2

    Further investigation required regarding the issuing of messages via multiple channels with funds that are data standard enabled.

    10

    7

    Members to email the SASG mailbox to provide the projected volume of applications they will have on hand as at 31 June 2017 and the average processing / handling time per application. After some discussion it was determined that we would calculate this information if necessary, so it was not essential to provide the volumes on hand.

    11

    8

    Members to email the SASG mailbox to express their interest in attending the workshop.

    12

    9

    SASG members to be emailed the webinar schedule, specifically in relation to the diagnostic reports.

    13

    10.1

    DASP and ATO online statistics to be emailed to the group via the SASG mailbox.

    14

    10.2

    Issue a CRT alert regarding the draft USM Statement specifications.

    15

    10.2

    Issue an email providing additional information regarding CRT alerts and their distribution method and include links to where this information is contained on ato.gov.au.

    16

    11

    Heide Stewart to email a copy of the eSOA to the SASG mailbox to allow for further investigation.

      Last modified: 19 Jul 2017QC 52935