• APRA-regulated funds - A regulator's perspective

    National Superannuation Conference Session 2A

    Presented by: James O'Halloran, Deputy Commissioner of Superannuation and Peter O'Reilly, Assistant Commissioner of Public Groups and International - ATO.

    Address to the Tax Institute, Crown Conference Centre,

    Melbourne 25-26 August 2016.

    (Check against delivery)

    CONTENTS

    1. Introduction
    2. Strategic partnerships and approach
    3. Superannuation focus areas and updates
      1. SuperStream
      2. Commencement of Government to Business Transactions
      3. SuperTICK
      4. Fund Validation Service (FVS)
      5. Diagnostics reports and voluntary disclosures
      6. Fund mergers
      7. Recent technical issues and irritants
       
    4. Income tax approach and focus areas
      1. Governance and quality assurance for third party data
      2. Foreign Income Tax Offset (FITO)
      3. Exempt current pension income (ECPI)
      4. Post-tax reporting
      5. Expenses
        1. Update on TR 93/17
        2. Fund mergers
        3. Administrators
        4. Death and disability insurance premiums
         
      6. Imputation
      7. International
      8. Capital gains
      9. PAYGI deferral
      10. Isolated and/or significant transactions
       
    5. Looking ahead
      1. Superannuation reforms
      2. Productivity Commission review
      3. Super and tax gap estimates
      4. Super services dashboard
      5. New reporting to government framework
      6. Working with tax professionals
       
    6. Conclusion

    1. Introduction

    I’m delighted to be here today at the National Superannuation Conference. It is a good opportunity to share with you our observations and shared challenges ahead.

    Today’s presentation outlines our perspective on the environment for large APRA-regulated superannuation funds, with a focus on current and emerging super and income tax issues.

    2. Strategic partnerships and approach

    To achieve a world-class superannuation system, we recognise the importance of developing strategic partnerships and alliances with key stakeholders in the industry.

    As large funds have over $1.3 trillion invested in about 28 million superannuation accounts, the ATO recognises the importance of strong partnerships with both APRA as a regulatory body and APRA-regulated funds and of course forums where industry comes together like today. I therefore would like to thank The Tax Institute for hosting this conference today.

    Through these partnerships we have developed a ‘guiding coalition of change’ to work together and in complimentary ways, to have a superannuation system which Australians can have confidence in and one which is healthy and prosperous.

    One clear example of an effective ‘coalition’ is the successful implementation of SuperStream which has ‘reformed’ the industry within a short period of time.

    Indeed, initial industry analysis suggests that savings in the order of $1 billion per year will be achieved in efficiency gains from its implementation, or alternatively, each rollover transaction estimated to save $40-65 equating to $100 million per annum.

    What is therefore evident is that the partnership with large funds has significantly evolved from traditional audit and risk review activities to advice, education and guidance, service and assistance, and knowledge exchange. In essence, you could say that the superannuation industry is an ‘ecosystem’ comprised of diverse and dynamic partnerships which can make a difference.

    In 2015 we introduced tailored diagnostic reports to 261 large funds, followed-up this year by an enhanced report based on industry feedback. The report details information across 13 performance areas.

    Each fund is given an overall risk categorisation on the consequence and likelihood of compliance reporting. The consequence rating is based on the fund's relative ranking on several key indicators, such as member numbers, contribution values, and the number and value of lost accounts. The likelihood rating is based on performance against a series of benchmarks against their obligations.

    The success of a more general move to sharing our data with funds is complemented by an early engagement approach.

    In this second year of the ATO’s release of these Diagnostic Reports to the large funds we found:

    • no high risk funds compared to two last year
    • 55 per cent of funds had improved their overall ranking compared to last year
    • we now have 18 key clients compared to 14 last year, and two medium risk funds compared to 8 last year
    • the performance of 10 funds improved while 6 funds declined
    • significant improvement in TFN quality reporting mainly around non-individual TFN reporting, which has reduced by 25 per cent, and ‘Correct TFN’ has increased by 7 per cent.

    As part of this engagement we also undertook 17 key client visits, with feedback overwhelmingly positive about the report’s benefits.

    I believe that the ATO Large Fund Diagnostic reports and voluntary disclosure processes highlight the importance of a partnership approach and the benefits in sharing data with you to promote early engagement and finding ways to problem solve.

    If you could sum-up this broad approach in a few words it would be 'Prevention before Correction'.

    3. Superannuation focus areas and updates

    SuperStream

    More specifically, we are extremely pleased with the benefits that SuperStream has delivered to so many stakeholders, such as the ability for employers to make easy electronic super guarantee payments to all funds.

    Some small businesses have told us they used to spend a day each quarter doing super. Business owners now using SuperStream have reportedly cut time spent on super processing on average by about 70 per cent each cycle. In regards to funds, they now have much greater automation and timely processing of transactions. For example, rollovers within 3 days, improved efficiency, fewer lost accounts, a more timely flow of money to accounts, greater real-time reporting, and a reduced exposure to internal fraud.

    Indeed a ‘snapshot’ of SuperStream benefits includes:

    • the consolidation of 1.02 million accounts valued at $4.7 billion
    • 4.5 million TFN’s submitted were validated supporting improved TRN quality
    • myGov has consolidated 529,285 accounts with a value of $2.53 billion during 2015-16.

    Employers, large and small, have been very receptive, and we estimate about 98 per cent of all medium to large employers are compliant. 70 per cent of small businesses have now implemented SuperStream and we continue to support the remainder who are yet to adopt. The deadline for SuperStream compliance was 30 June 2016; however, flexibility has been extended until 28 October 2016.

    Commencement of Government to Business Transactions

    By way of an update and building on what has already been delivered through SuperStream, we are bringing government transactions into the data standard.

    We plan to commence Government to Business transactions in November 2016 by bringing ‘ATO to Fund’ rollovers into the standard, allowing funds to do more real-time reporting.

    This will be followed by ‘ATO to Fund’ contributions in May 2017; and Business to Government transactions in late 2017 with ‘Fund to ATO’ rollovers.

    SuperTICK

    Looking ahead, funds should however, be making plans to migrate to SuperTICK version 3 in time for the decommissioning of versions 1 and 2 in January 2017, noting that Version 3 enables mandatory reporting of ‘open’ and ‘closed’ accounts.

    From the ATO’s perspective, SuperTICK and SuperTICK 2 are major initiatives that have provided funds with more timely access to account information to consolidate accounts, and improved data quality. Indeed, funds undertook around 6.5 million SuperTICK transactions in 2015-16.

    Notwithstanding its success there is always space for improvement. In SuperTICK2 the reporting of new members was optional; we found that approximately 50 per cent of funds provided this information. Going forward for SuperTICK3 the reporting of new members will become mandatory. This is important because it ensures members will have a complete view of their superannuation accounts via myGov.

    While the TFN is an optional field in versions 2 and 3 (mandatory in version 1), funds are legally obliged to include in their validation requests the TFN they hold for a given member.

    Indeed, it is expected that funds would obtain a TFN for new members so they can accept personal contributions and Government Co-contributions, and avoid ‘No TFN’ income tax on employer contributions.

    Another concern is that funds are using invalid TFNs to obtain a response from SuperTICK, for example, placing dummy numbers or a zero in the field. As stated in the SuperTICK user guide, funds should not use default or dummy TFNs when sending validation requests.

    Fund Validation Service (FVS)

    The ATO Fund Validation Service (FVS) allows funds to check other fund’s details prior to a rollover and to reconcile rollover data and allow payment within three days to member accounts services.

    I ask that you note, the ATO recommends that significant changes, such as gateway or bank account, should be communicated 28 days prior to the effective date. This is to ensure that SuperStream processes the information with minimal errors for employers and trustees.

    We do still find instances where trustees have not followed these requirements, leading to errors in both rollover and contribution transactions.

    Diagnostics reports and voluntary disclosures

    As I touched on earlier, a major advantage of our early engagement and evidence-based approach is increasing the level of voluntary disclosures, and this is expected to continue especially as funds update their systems and ‘old system’ errors surface.

    Of course we do appreciate that errors do occur and some examples include:

    • three funds did not calculate the minimum pension payment correctly at exit point, resulting in some members not meeting their minimum pension amount
    • one fund incorrectly paid an insurance premium refund directly to members in contravention of SISA payment standards impacting 16 members to a value of $16,000
    • two funds did not report on and pay Unpaid Super Monies (USM) affecting about 70,000 members with a value of approximately $51 million.

    In terms of reporting gaps that have been identified:

    • we have found that 36 per cent of funds were not meeting the expected standard for reporting lost members under $2,000 and over age 65 compared to 24 per cent last year.
    • we found that 15 per cent of funds this year did not satisfy the ‘duplicate TFN’ benchmark in their diagnostic report compared to 10 per cent from last year. To improve reporting, we have provided funds that obtained poor results with a list of incorrect TFNs.
    • finally we found that only 70 per cent of Low Income Super Contribution and Government Co-contributions Payment Variation Advices’ were lodged on-time last year, and therefore we plan to review about five funds to pinpoint the reasons behind this.

    Why these things matter are that in any regulatory system, the accuracy of data is an essential underlying requirement.

    Naturally I appreciate this is not as easy as it sounds in dealing with legacy systems and diverse platforms but it is important nevertheless.

    Regulatory reporting is an obligation and responsibility for trustees. Trustees and other accountable fund managers should not rely solely on vendor-developed software or a ‘set and forget’ approach. There is a need to conduct proper testing to assure the software complies with reporting obligations.

    Fund mergers

    More broadly, we hope we have provided the industry with greater certainty on reporting requirements for mergers and acquisitions by developing, with industry consultation, an Involuntary Superannuation Account Transfer (ISAT) Protocol. This has received much positive feedback and was updated in September 2015 due to new legislation.

    In 2015–16, the protocol assisted 17 funds and administrators with restructures, and administration and/or system platform changes impacting millions of members and costly assets.

    We also undertook three large Information Systems Risk Assessment reviews (ISRA) with multiple funds, 12 transaction reviews, and four separate reporting obligation reviews.

    Recent technical issues and irritants

    I would now like to share our approach to some technical issues and irritants from the past year:

    • with respect to Disability lump sum benefit modification: a concessional ATO view was published and our client relationship team issued an alert to funds on 12 May 2015. We advised that for the amount worked out under the modification formula in subsection 307-145(3) of the ITAA 1997, any days that are included in both ‘service days’ and ‘days to retirement’ in the denominator are to be counted only once.
    • in relation to Qualified Recognised Overseas Pension Scheme (QROPS) members (accounts with a UK component): if all assets, except those relating to the QROPS members, are transferred under a Successor Fund Transfer (SFT) (despite the fact that not all members are being transferred as is generally required for CGT and loss relief) the QROPS transfer restriction is beyond the trustee’s control. The exception in 310-10(5) can therefore be relied upon to gain access to the relief available for SFTs.
    • further to CGT exempt contributions: the new law passed earlier in the year enables funds to accept and report CGT exempt contributions on look-through ‘earn out’ rights that are created on or after 24 April 2016. The contributions may be accepted even if the member is over 65 and no longer working at contribution time.

    I now invite Assistant Commissioner, Peter O’Reilly from Public Groups and International (PG&I) to talk about our approach to income tax compliance and some present income tax issues.

    4. Income tax approach and focus areas

    As in previous years our approach to engagement with large funds on income tax obligations is directed towards the following objectives

    • we use an assurance and risk-based approach that tailors our engagement according to level of risk, and seek to obtain ‘justified trust’ that funds are complying with their income tax obligations and paying the correct amount of income tax
    • we look to understand overall fund revenue trends and assist Treasury revenue forecasts
    • We actively look to identify new or emerging issues and seek to provide assurance, assistance, and clarification of the law or its administration where there is uncertainty.

    As I covered in my speech to this conference in 2014, we use risk assessment approaches that combine quantitative data analysis with a review of specific focus areas to determine compliance resource allocation. We are increasingly looking to apply broader and more leveraged mitigation treatments and approaches to address systemic risks as identified.

    It is worth spending a moment on the concept of ‘justified trust’ that we, in Public Groups and International are working towards in our administration of large corporates and super funds. The concept relates to the level of assurance and confidence we have that a taxpayer has paid the right amount of tax on their business and economic activities. It also relates to whether the community or a “citizen jury” is satisfied that the ATO has sufficiently performed its role as administrator of the tax laws to ensure tax obligations are met.

    In practice, we aim to achieve justified trust from a more tailored assurance approach, which includes examining four primary criteria from each taxpayer’s profile:

    • understanding the tax governance framework and its effectiveness
    • identifying any specific risks flagged to the market such as through Taxpayer Alerts and guidance
    • understanding big abnormalities/transactions
    • understanding why the accounting and tax results vary.

    To help you assess your own tax profile we will now cover some of our compliance focus areas, concentrating on changes to those I mentioned at the 2014 Conference.

    Governance and quality assurance for third party data

    Although not previously identified as a specific focus area, seeking assurances on appropriate fund governance has formed a key element of our engagement activities. We have typically concentrated on risk assessment and assurance regarding the accuracy of third-party data used for income tax compliance. This is still a risk area so funds can expect that we will look at this in any reviews we undertake.

    The ATO has also published a Corporate Governance Framework. While the framework is not specific to super funds, it still provides a useful reference point on wide-ranging governance matters. We encourage trustees to review their own governance and assurance processes against the Corporate Governance Framework we have published.

    Foreign Income Tax Offset (FITO)

    The purpose of the FITO is to prevent double taxation on income that is taxable in Australia. The primary concern here is that some approaches to calculating the FITO limit produce outcomes in excess of that needed to prevent double taxation of income.

    TR 2014/7 (in conjunction with the related Practical Compliance Guidance issued) considers the foreign or domestic source of hedging foreign exchange gains, and whether the losses are reasonably related to foreign income when calculating the FITO limit. We are currently engaging with funds and their advisers to ensure that they are aware of our views, approaches, and to discuss any other potential issues. We are assessing whether funds are responding appropriately. Some funds have recently made voluntary disclosures correcting past under-payments to align themselves with our advice.

    We will also focus on accurate calculation of reasonably related deductions, other than FX losses. For example, allocation of investment expenses based on a ratio of foreign investment income to total investment income (excluding capital gains), or a ratio of foreign to total assets may be appropriate methodologies. Apportionment based on a ratio of foreign investment income to assessable income (including contributions) is not considered to be a reasonable methodology.

    Another area of concern is whether funds have documentation to substantiate foreign taxes paid. We are investigating distribution statements where it appears that incorrect amounts of foreign income and foreign taxes paid have been reported to funds.

    Exempt current pension income (ECPI)

    Emerging areas of interest are the increased adoption of segregation, and movement of assets into the pension phase, and the use of tax parcel selection and propagation methodologies by funds. This includes the potential application of Part IVA when the selection methodology appears to be to obtain tax benefits and whether the assets have truly been segregated for the purposes of the tax law. We are now considering what advice we can issue to give greater guidance on where the ‘risk flags’ are set and where compliance resources will be allocated for follow up with funds.

    Post-tax reporting

    Following on from the previous item on ECPI, we are determining a number of Private Binding Rulings (PBRs) lodged requests that have been lodged with us by funds who have had concerns in relation to tax parcel selection and propagation approaches. Once our views become clearer we envisage undertaking further targeted engagement before releasing general guidance.

    Expenses

    Update on TR 93/17

    In December 2013, we released draft tax ruling TR 2013/D7 on the apportionment of incurred expenses by a fund when it derives both assessable and non-assessable income. Extensive industry consultation has taken place since the draft’s publication and we anticipate finalisation in the near future. We are also planning to release some additional guidance on ato.gov.au.

    Our main concern is to ensure funds are aware of the Addendum to the Tax Ruling once published and to identify any emerging issues. The treatment of expenses is likely to be raised in any compliance reviews undertaken.

    Fund mergers

    We continue to look at issues such as: revenue or capital characterisation; implications of expenses paid directly by the fund or through a fee paid to an administrator; availability of the black-hole expenditure provisions under section 40 -880; and apportionment issues as outlined in TR 93/17. In regards to the latter, the key question is whether fair and reasonable outcomes have occurred when rollovers have been included as contributions when calculating the deductible portion of expenses.

    Administrators

    We have identified concerns about fee for service payments made to administrators (internal or external) in the following areas: structural changes; the development of new products; SuperStream improvements; and other changes in response to legislative or regulatory developments.

    It appears that a significant element of capital expenditure may need to be reflected when considering their deductibility either as in-house software under Division 40 of the ITAA 1997, or the black-hole provisions contained in section 40-880. We will continue to work with industry to ensure that these costs are treated correctly.

    We recently published a draft TR 2016/D1 about expenditure deductibility when acquiring, developing, maintaining or modifying a website for business use. It highlights the need to characterise whether expenditure, including amounts paid to an administrator, is of a revenue or capital nature.

    Death and disability insurance premiums

    An emerging area of uncertainty is the appropriate treatment of income protection insurance that includes the replacement of super guarantee (SG) payments. Questions include the correct classification and treatment of the contribution and deductibility of premiums by funds. We are engaging with industry to provide more clarification on these products.

    Imputation

    As in previous years we continue to monitor imputation claim levels and look for emerging issues.

    As part of this work and in relation to other issues, we are engaging more with custodians as key service providers of tax reporting to large funds. This will help us to better understand how custodian practices, systems and tax policies may potentially impact on funds’ obligations under the income tax law.

    International

    A general observation is that we are seeking to improve our understanding as to how funds are structuring their increasingly significant levels of offshore investment.

    We have identified 2 specific areas of uncertainty. The first is the tax treatment of offshore limited partnership treated as corporate limited partnerships, in particular the meaning of ‘credits’ for the purposes of section 94M; and the second is foreign hybrids. For the first area, we anticipate the publication of a draft ruling later in the year.

    There are two identified matters in relation to foreign hybrids: whether the vehicle in question has satisfied the definitional Division 830 conditions to be treated as a foreign hybrid; and the appropriate treatment of the sale of underlying assets where investment in a hybrid is owned by a wholly owned unit trust. The latter issue arises where the underlying investment is short to medium term and whether returns should be considered the outcome of ordinary business and therefore ordinary income. More industry consultation is required in this space.

    We are also aware that industry needs clarification around how the Country by Country (CbC) reporting regime will apply to funds, and we are working to answer several question raised during the consultation process. While the issues have proved to be more complex than initially thought, we expect to provide the necessary guidance shortly. In the meantime, funds can request exemptions from CbC reporting on a single entity basis.

    Capital gains

    In general our approach in this area remains similar to that described in 2014, but I would like to mention two specific developments.

    The first is our interim guidance published on 8 June 2016 to unit trust trustees for preparing 2016 unit trust distribution statements. The interim advice was issued ahead of a proposed Draft Tax Determination allowing trustees of unit trusts to consider their approach, under self-assessment principles, to determine distribution components, and capital gains and losses for income years ending on or after 30 June 2016. This advice specifically relates to determining the assessable, CGT Concessional and tax-deferred components of the distributed gains for appropriate cost-base adjustments of the unit holder’s trust interest under CGT Event E4.

    The second is that we are examining another CGT cost-base issue where managed investment trust investors, such as superannuation funds, are under-reporting capital gains under CGT Event E4 due to limitations in custodian reporting systems. Some reporting systems used by custodians incorrectly record a negative cost-base for specific unit trust parcels without recognising these amounts as assessable capital gains under the law when the tax-deferred amounts received exceed the cost-base of the unit holding parcel.

    PAYGI deferral

    We have identified inconsistencies in how funds approach their PAYG instalment obligations. Specifically, whether funds should lodge on a monthly or quarterly basis and on what basis statutory income can be attributed to a certain period. For example, assessable contributions and transferred tax liabilities, and which taxpayer should recognise the income.

    Isolated and/or significant transactions

    A general observation on this one is that we always look to understand the tax consequences of new, unusual and/or significant transactions. These are things that are difficult to pigeonhole, but examples would include a large infrastructure investment, fund mergers or restructure.

    That is the end of the income tax focus areas. Before handing back to James to cover off on key topical issues and upcoming initiatives, I would like to encourage trustees to self-review their own circumstances in relation to the income tax compliance focus areas I have covered this morning. To gain further certainty or to engage with the ATO on these matters, trustees can contact our PG&I superannuation team through Team Leader, Mr Sven Kabel (Sven.Kabel@ato.gov.au).

    5. Looking ahead

    Let’s now look at key topical matters for the industry.

    Superannuation reforms

    As you are well aware the Federal Government’s proposed reforms cover a range of proposed policy changes. As you can appreciate while the proposals are still under development through governmental, consultative and legislative processes there is some limitation on commentary that I can make today.

    What I do want to emphasise is that once laws are passed it will be a priority for the ATO to implement them. An early part of our focus will be engagement with all key stakeholders as we know that people will seek certainty and indeed it is critical that we provide that certainty as early as possible. We will support these efforts by providing communications that are clear and concise.

    It is clear that emerging administrative design principles for us will include a recognition and understanding of the expectations of early advice and ideally improved visibility on superannuation information and advice from which people can make informed decisions and ensure they can comply with any legislative changes or consequences for their individual investment decisions.

    To support the introduction of the new measures we will develop and release what we now refer to as Law Companion Guidelines. These guidelines, when finished, are public rulings and will provide our view of how the law applies.

    An outline of this approach is contained in Law Companion Guideline 2015/1 and such Guidelines are usually developed at the same time as the drafting of the Bill. A Law Companion Guideline will normally be published in draft form for comment when the Bill is introduced into Parliament and will be finalised soon after the Bill receives Royal Assent. It provides early certainty in relation to the application of the new law.

    Such guidelines provide insight into the practical implications or detail of recently enacted law in ways that may go beyond mere questions of interpretation. For example, a guideline might set out factors that the ATO will be looking at as indicating a high or low risk of non-compliance. Taxpayers that apply the guideline in good faith will be able to rely upon such material.

    Productivity Commission review

    Another common matter of interest across the Superannuation Industry is the Productivity Commission inquiry into the efficiency and competiveness of the superannuation system.

    On 3 August the Productivity Commission released its draft proposed frameworkExternal Link to assess the efficiency and competitiveness of Australia's $2 trillion superannuation system for community feedback.

    The draft report outlines a very comprehensive framework so this will be a most influential study.

    Super and tax gap estimates

    The ATO plans to publish later this year in its Annual Report for 2015-16 a number of direct and indirect tax gap estimates. These will include gap estimates for Super Guarantee (SG) contributions and APRA-regulated income tax.

    In relation to the SG gap estimate, this will not be a direct indicator of operational effectiveness, but a high level gauge and long term estimate of the difference between the amount of SG contributions required to be paid under the Superannuation Guarantee (Administration) Act 1992 and actual SG contributions made. The gap will consist of both non-payment and underpayment of SG obligations.

    The large funds income tax gap is the difference between the estimated amount of an income tax liability or obligation payable assuming full compliance with the law, and the amount actually reported to us (or collected by us) for a defined period. It does not include an estimate of the tax expenditures resulting from tax policy (that is, the policy gap).

    We have developed an illustrative estimate for the income tax gap for large superannuation funds. We anticipate media and community interest in this work and emphasise that gap estimates should be viewed in conjunction with our other performance measures.

    For the SG gap, we will continue to focus our efforts on employers to increase willing participation; and for the large fund income tax gap, we will continue to support willing participation by funds, their compliance with tax law, and paying the correct amount of income tax.

    Employer compliance underpins the operation of the SG system and I want to acknowledge that most employers pay the right amount of Super Guarantee for their employees and contribute on time without any direct intervention from the ATO or funds.

    However, we do need to identify and address the drivers that cause SG not to be paid. We need to work closely, and with employers directly as we all have a role to support the retirement savings of Australians. It is critical for community confidence in the system that employers do the right thing. Where we see employers struggle it is important that we assist and support them to meet their SG obligations in a timely and fulsome way. Ultimately this is for the benefit of employees and their retirement savings (as compulsory superannuation – through SG – is a significant proportion of the retirement savings of most Australians.

    I would encourage funds that where you see emerging trends, systemic issues or even isolated instances related to SG matters to share these concerns with us.

    Super services dashboard

    At a practical level, a new initiative, as part of our new online services, we are building the Super services dashboard to provide real-time, easy-to-understand information about SuperStream enabling services’ response rates and availability.

    The aim of the dashboard is to communicate service availability and performance in a timely way so as to maximise the number of service production hours available to funds.

    Service status and performance information will add value in situations where a fund experiences processing issues, for example where the service appears to be unavailable or response times are slow, by clarifying whether there is an ATO side issue or not; this clarity will allow users of the services to know, in near-real-time, whether they need to address issues in their own systems or wait for the ATO to resolve its issues.

    We are piloting a live version of the dashboard with SuperStream Technical Committee members from mid-day Friday 26 August with a view of release in coming weeks.

    New reporting to government framework

    The ATO is moving to adopt industry standards and improve reporting to more readily align with information collected and available from trustees.

    As you know trustees currently report lost member details bi-annually and member contribution data annually. To improve the efficiency of how government supports and interacts with members of funds, we are moving to capture account attributes in real time. This will also provide members timelier account information.

    To achieve this we are asking trustees to progressively improve the timing of account information provided to the ATO. They will use a new version of SuperTICK to send through account attributes such as open, closed, accumulation and lost statuses of a members account. While a trustee will still need to supply contribution data and the members balance on 30 June via the annual report, they will no longer need to provide the account attributes at this time. These improvements in reporting will assist in removing over 200,000 errors annually where the ATO attempts to interact with those accounts which have been closed or are unable to accept payments. In practical terms what this means is a reduction for funds in the time spent returning contributions to the ATO.

    In addition, we will no longer require funds to build ‘ATO-only’ systems and reporting frameworks. We will adopt the standard, trustees now use for around 1.5 million rollovers every year. This includes adopting the business-to-business rollover standard for both the payment of unclaimed super monies in Quarter 4 2016, and the collection of unclaimed monies in Quarter 4 2017.

    We are continuing to look for opportunities to leverage existing standards and services implemented by trustees to improve the efficiency of future reporting obligations.

    Working with tax professionals

    Another part of our change process is for registered tax professionals to have easier and timely access to information.

    We are currently working to deliver the commitments our Commissioner made to the tax profession in his speech to The Tax Institute in March this year.

    These commitments reflect the importance of the relationship between the tax profession and the ATO, how we work together to understand their needs, and improving online services for tax practitioners.

    6. Conclusion

    To conclude, it is necessary to refer to our exciting and continuing transformation as an organisation and regulator. Feedback indicated that people wanted us to provide certainty, tailor services to their needs and make things easier and better.

    Further and progressive delivery to large funds and other partners in the super ‘ecosystem’ is part of this journey and therefore an essential partnership.

    From these strong partnerships comes an increase in transparency and collaboration, which in turn raises voluntary compliance, and initiatives are implemented with greater understanding, cooperation and measures of shared success.

    I look forward to continuing these partnerships to promote and protect the retirement savings of all Australian’s.

    Thank you.

      Last modified: 29 Aug 2016QC 49970