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  • What is a material MCS change?

    As mentioned, section 390–115 governs your obligation to amend an MCS. It states:


    390–115(1) If a *superannuation provider in relation to a *superannuation plan becomes aware of a material change or material omission in any information given to the Commissioner in relation to the plan under this Division, the provider must:

    (a) tell the Commissioner of the change in the *approved form; or

    (b) give the omitted information to the Commissioner in the approved form.

    390–115(2) Information required by subsection (1) must be given no later than 30 days after the *superannuation provider becomes aware of the change or omission.

    But what does material really mean? I am often asked:

    • Is everything over $100 material and everything else not?, and
    • Can you tell me in this situation what the ATO’s opinion is on when this will be material?

    But it is so hard to be prescriptive. The meaning of material is not given in the law and the only formal ATO discussion talks about how it is by its very nature something that depends upon the particular set of circumstances that apply in a particular case.

    But there are probably some things that you should always consider with each materiality issue you come across.

    Time – the longer ago an error or omission occurs the less likely it is to be material.

    Consequences of the error – this is best illustrated by the example of significant under-reported employer contributions for a large group of members between 2001 and 2009 discovered in 2014.

    Amount or quantum of change – small amounts are clearly less material than large amounts. But again what we mean precisely by small and large is the whole problem all over again – it depends on the circumstances. We may say that a $100 change in personal contributions for a particular member in a particular set of clearly understood circumstances is not a material change for that member. And yet the same $100 change across all members in a product or fund clearly amounts to a material change as it can impact member entitlement to co-contributions, for example.

    The final observation we can make about materiality is that it’s a matter of judgment for the provider affected, not necessarily for the ATO. However the ATO may, of course, review and challenge materiality decisions you make that we decide are unreasonable and are not supported by the evidence.


    As an administrator you may identify an error in the reporting of employer contributions used to pay insurance premiums extending back a number of years. You might write a report that analyses the amounts per member, the numbers of members affected, the consequences for different classes of member in different years. The report might recommend differentiated approaches to amendment – amending to correct every error over $10 in the most recent years, and only errors over $500 that occurred many years ago. The approach might be considered and endorsed by the various affected trustees and you may even have approaches differing between funds because of different consequences for the membership before then commencing amendment activity.

    End of example

    Sometimes you may decide to involve the ATO and sometimes you may not. But if we do visit you we at least hope to see this sort of well-considered and justifiable approach documented freely available for scrutiny. Some of the behaviour we don’t want to see is these sorts of things only driven by cost and by practical IT considerations – clearly they are going to come into any decision making of this sort but they should not alone be determining how you react to the discovery of reporting errors.

    Materiality – would amendments relating to prior to 2007–08 financial year be considered immaterial based on time?

    There is no absolute rule to apply. They are far less likely to be material, but it does depend on the circumstances. For example, $2,000 employer contributions not reported for 2006–07 is not material (neither surcharge nor ECT applied). As it would rarely arise you may, for example, decide that for pre 2007–08 all re-reporting should not occur without being approved on an ad hoc basis by a few specialised people in your organisation.

    If you think of materiality in the following way:

    A material change for a statement will be in respect of a 'material particular' where it:

    • is made for a purpose connected with a tax or super law
    • is relevant to a decision, power or function for which the statement is made and the statement is not immaterial, inconsequential or trivial.
    • For super matters, generally these will be statements:
    • where a taxation or super law provides for the making of the statement, or
    • that concern an issue relevant to the entity's taxation or super affairs or the entity's regulation under super laws.

    A particular is material if it affects the ATO’s ability to perform its functions effectively and efficiently. All data required in approved and prescribed forms and statements is considered material. It also depends on the year – what was material for 2006 may not be material for 2014. You need to look at the implications for the ATO and also for the member to decide if an item is in fact material.

    If a matter is important enough to affect a decision relevant to determining a fund/member liability the matter is to be regarded as material and must be disclosed correctly.

      Last modified: 05 Apr 2018QC 42279