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  • Journey through reform for ATO and APRA superannuation funds

    James O'Halloran, Deputy Commissioner, Superannuation, ATO

    Speech to the Australian Institute of Superannuation Trustees (AIST) Conference of Major Superannuation Funds

    Wednesday 14 March, Brisbane Convention and Exhibition Centre

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    Introduction

    Thank you for the opportunity to participate in the 2018 AIST Conference of Major Superannuation Funds (CMSF).

    The AIST and its members have been central to the ATO’s engagement with the superannuation industry in implementing various reforms in the past 12 months. The ability to discuss and plan together to ensure we achieve our goals is the result of our positive and ongoing relationship.

    It is important to acknowledge the breadth of expertise and understanding that we needed to harness in order to manage the challenges of the past years. This combined expertise across industry and the ATO, came from those with an appreciation of the law, the administration of the super system and those with the IT system knowledge and skills required to design and build the reporting and account monitoring arrangements.

    Be assured that along with the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), the ATO and I do appreciate the importance of super and the need for our strong relationship with the industry to continue.

    Of course, whether we are in a period involving major reform or a period of broad ongoing change, we must all deal with the present while simultaneously planning for and seeking to shape and influence the future.

    As an agency, the ATO has been through our own reform in the past few years. We have moved, with purpose, to become an agency built around improving the client experience.

    Of course, we also see the importance of engendering trust and confidence in the tax and super system. We believe this is best achieved by reducing complexity, providing certainty and of course encouraging willing participation.

    I firmly believe these aspirations closely align with your objectives in the ‘profit-to-member’ super funds industry.

    As an administrator and a regulator, we have already shown that we can and want to work with you. I also believe we have more in common than you may think. We too focus on fund members and know success is most assured when we work together.

    Perhaps the most practical demonstration of our common interest is the actions we all take every day, to ensure people are informed and engaged, to reunite them with their unclaimed and lost super and support informed decision making.

    The journey of reform

    As we all know reform doesn’t just happen and then stop. Reforms often overlap, perhaps compete and even create the opportunity for further reform.

    Indeed this has been the case in super for many years. Reform is not new to super, and the current phase of reform started with the Cooper Review in 2010.

    Generally, reforms arise from many quarters and in many ways. Some arise from changes to commercial or business arrangements, some from technological opportunities or even as a response to a ‘disruptor’ and others of course from the policy or regulatory environment.

    If I go back to the Cooper Review, some of the recommendations directly involved the ATO. In particular the recommendation to improve the efficiency of the so called ‘back-office process’ and the management of data and rollovers, now known as SuperStream.

    For those of us who have been on the journey for some time now, it has of course resulted in much more than a ‘back-office’ tidy up. Rather, it has laid, and continues to lay, the basis for significant efficiencies in the overall administration of the industry across ‘fund-to-fund’ transactions and increasingly, ‘government-to-fund’ transactions and services.

    It has also given the ATO the ability to provide better data flow services and enhanced visibility of account information. Indeed it has progressively brought better transparency to the operation of the super system.

    Given the importance of these reforms, the way we work together and how we look ahead from SuperStream and beyond is critical for the super industry as a whole and for your members.

    Recent super reforms have of course included the 2016 and 2017 Federal Budget changes as well as concurrent policy initiatives such as SuperStream, Single Touch Payroll, event-based reporting and super guarantee (SG) compliance.

    It became clear during 2016-17, that many of the features arising from these reforms converged. Stakeholders recognised the need to co-develop standard approaches to improve efficiency and meet anticipated greater demands for transparency to help prevent potential regulatory breaches.

    It was important for all of us to find ways to design and build any new reporting or account systems, ideally once only, to reduce costs and improve efficiency, but also with an eye on the need to incorporate future agility.

    From our perspective, managing the implementation of these reforms required us to develop some underpinning principles.

    We therefore designed our implementation strategy on principles including ensuring early ATO engagement with industry; providing certainty on the Commissioner’s view of the application of the law and a detailed and practical exercise of discretion to recognise the nature of some transitional issues confronted by industry.

    In the lead up to 1 July 2017, we received 13,820 written requests for assistance about the application or administration of super.

    Of interest perhaps is our estimate that about twice as many men as women contacted us and over 80% of queries were related to employers and employees.

    In February, we released our first ATO podcast Superannuation: the road ahead on our new podcast channel Tax inVoice. I discussed our assessment of how we worked with industry to implement reforms and how we were placed for the future.

    I discussed the reform journey with Dr David Knox from Mercer. I concluded then and reaffirm today, that on balance, in terms of the task we all had leading into 1 July  2017, we are in a good place.

    I therefore again would like to thank the funds, their boards, trustees, senior executives and their staff, without whose support we could not have achieved what we have today.

    The ATO recognises the super reforms are only one aspect of a range of reforms and challenges industry is dealing with. However, we also acknowledge that we are all emerging from 2017, where much foundational work was done to get across the reforms, while recognising there is much left to do in normalising these changes.

    Of course, the reforms are now law and the majority will directly impact the current financial year, including the housing measures announced by the government in the 2017 Federal Budget.

    To continue our successful dialogue with APRA funds we have established an APRA Fund Communications Reference Group chaired by the ATO, which is designed to share communication products and plans in advance.

    This group meets regularly and includes representatives from a wide selection of funds and of course has an AIST representative. Feedback on the value of the group has been positive to date and we appreciate the cooperation.

    Where to from here

    As I mentioned earlier, reforms often overlap or intersect.

    While to some, the 2016 Budget reforms have been a challenge, one cannot forget the estimated investment by industry and the ATO of over $1.5 billion over the 2012 to 2018 financial years on SuperStream.

    In July 2017, the ATO released the SuperStream program benefits report for the period to 31 December 2016. It detailed the SuperStream efficiencies were approximately $800 million per year, comprising about $400 million per year for employers and a $400 million per year for funds. More significantly, the estimated savings for members from this investment is estimated at $2.4 billion savings per annum.

    I want to take this opportunity to acknowledge the unwavering support of AIST and its members, not only for your support through SuperStream but also during the emerging reforms arising from Single Touch Payroll and the SG reforms ahead.

    Throughout the past few years, a common challenge for the ATO and your industry has been to find space to build foundational services and systems which can be reused or adapted to meet future needs. So it is important to remember what has changed over time and how it has positioned us for the future.

    Working with industry, we have remained committed to the SuperStream program of work but perhaps over time, some of the achievements have been overshadowed.

    The range of services and systems in place have included introducing the use of the Tax File Number (TFN) as an identifier and validation service for super funds; the introduction of the ATO SuperTICK service, which gives funds the ability to check and correct TFNs close to real-time and SuperMatch, which allows super funds to proactively search on behalf of their members for all lost and unclaimed accounts the member holds.

    In terms of the volume of transactions now running thorough these services, there have been approximately 10 million successful SuperTICK validations over the past 12 months, almost double that for the previous year.

    The recent addition of reporting open and closed accounts in SuperTICK has also led to the more accurate and timely display of super membership. This work is actively supporting good outcomes for members and more efficiency in the super industry.

    SuperMatch2 volumes have significantly increased from about 1 million to 2.5 million successful results, over the past 12 months. This means consolidation requests can be sent to funds on behalf of members, again a good outcome for members.

    We have also been working with funds to prepare your systems to receive notifications of former temporary residents (section 20C notices) from the ATO via SuperStream.

    Funds can now also transfer their unclaimed super money (USM) and make some adjustments via this channel. The majority of funds are working to submit all unclaimed accounts to the ATO by the unclaimed super money legislative date of 30 April 2018.

    We have come a long way and together we’ve been able to turn concepts into reality.

    Future environment

    Of course, our environment and yours never stands still.

    Changes don’t operate in isolation and therefore decisions about super are not isolated from investment choices, income tax consequences or trustees’ and fund regulatory or prudential obligations.

    I am sure in all our minds is the need to be prepared for any new round of reforms or outcomes from reviews involving our industry. Of course many of these reviews are still playing out, but from the ATO’s perspective, we’ve learnt some most useful lessons in how to engage with you, which I think lay a strong framework for future engagement.

    There is no doubt recent super changes have introduced new considerations and risk judgments for funds and members. I would suggest that active involvement by members’ super funds is even more important than ever. So it is also essential that we as administrators actively plan for super as it is today, but also in preparation for the future.

    At the ATO we are striving to develop and improve initiatives that help funds and members make informed decisions. We will do this through providing greater transparency and finding effective ways to warn of and prevent breaches.

    Imagine

    We share a common desire to provide trusted services and information to super fund members and the community through innovation and technology that improves the member or client experience.

    It is not too long ago that many would have doubted rollovers would be processed in three instead of thirty days, or that we would match members TFNs with funds to ensure integrity in the system. While this has been at a significant cost it has achieved real dollar savings.

    More recently, who would have imagined that we would shift from annual reporting through the Super member contributions statement (MCS).

    We are now moving towards the reality of event-based reporting and since December 2017, the ATO has received reports from most APRA funds providing reports on members in pension phase who are drawing an income stream and their transfer balance cap.

    To be clear, it was only a year ago that the ATO came together with industry to talk about transforming the reporting of member account information, essentially shifting from an annual, aggregated report to transactional level, event-based reporting.

    We recently wrote to all trustees and you have told us your plans for onboarding with new transaction services to support event-based reporting (ie the Member Account Transaction Service and the Member Account Attribute Service).

    Based on this commitment, we are expecting 42% of APRA funds will have completed their member account transaction service onboarding by November 2018.

    From an SG perspective this also begins to provide visibility of employer contributions payments to fund members. Potentially this will surface SG payment data for approximately 64% of APRA member accounts.

    To support industry we have published the Member Account Attribute Service Foundation Data Handbook. It guides how to best manage the onboarding stage and has been well received.

    More broadly the shift to event-based reporting provides unprecedented opportunities to reinvent how we use the data and how we support industry and members. Through shared insights, it is our objective to change behaviour and prevent breaches.

    At the same time, from 1 July 2018 employers with 20 or more employees will be required to report through Single Touch Payroll. This will provide payment information such as salaries and wages, pay as you go (PAYG) withholding and SG liability information to the ATO at the same time as the employee pay event.

    Combined with event-based reporting from funds it will create visibility of non-payment or late payment of super entitlements and enable the ATO to take prompt action.

    Much done and much to do

    Our common goal is to have engaged members, making informed decisions who value the importance of super and what industry often refers to as enhancing ‘member engagement’.

    We frame this in our ‘membership base’ that is, the taxpayers of Australia, as striving to ensure willing participation by the community in the tax and super system.

    In a practical sense, information we provide through our online services to encourage members to participate in managing their super includes:

    • account balance and insurance indicators
    • total balance cap
    • total super balance
    • the status of bring-forward arrangements relating to non-concessional contributions.

    We also provide information on ATO-held super and the ability for individuals to consolidate super accounts.

    On 28 February, as part of improving the member experience, we announced that from 1 July 2018, a number of Release authority products will move to a common release process, aligning the various systems into one, streamlining the process for members and funds. For more information, see our webinar Changes to the release authority process.

     

    Therefore from 1 July 2018, the release authority legislation for excess contributions and Division 293 liabilities will be consistent and streamlined including the payment timeframe; the timeframe to return the release authority statement to the ATO; the destination for paying released amounts and the requirement to notify individuals of successful releases.

    Transfer balance cap

    To my mind it is useful to give some context on reporting activities, be they voluntary or due to regulatory obligations.

    Any reporting to the ATO of course brings to light decisions already made by trustees or fund members.

    In looking at the data since event-based reporting to the ATO by APRA funds started in December 2017, through the Transfer Balance Account Report (TBAR) form, nearly all large APRA funds have lodged transfer balance account reports for about 1.3 million members who are drawing an income stream.

    From this we have begun to issue a relatively small number of excess transfer balance cap determinations. However, just because an individual doesn’t hear from the ATO or receive an excess transfer balance cap determination from us, doesn’t mean they don’t have an issue.

    While noting that a fund is only aware of their own members’ account information, your role in providing reports has been and remains a critical step in ensuring transparency for individual members and assisting them to effectively manage their super.

    Based on information we have to date, we expect the incidence of excess transfer balance determinations to be quite low. The numbers are within expectations and indicate that many individuals took steps before 1 July 2017 and up to 31 December 2017 to avoid exceeding their cap.

    Specifically, between 3 and 31 January 2018 we have issued about 3,000 ETB determinations. This includes 1,000 determinations sent to individuals who were covered by the transitional rules who did not fully rectify by 31 December 2017.

    A further 7,000 individuals have exceeded the cap because of income streams with commutation restrictions, such as lifetime pensions, known as ‘capped defined-benefit income streams’.

    As you would be aware, individuals who exceed the transfer balance cap only because of capped defined-benefit income streams do not need to remove the excess capital and excess transfer balance earnings and pay excess transfer balance tax.

    These individuals were not sent a determination as they were limited in the steps they could take to reduce the value of their income streams before 1 July 2017.

    However, in May this year we will write to every individual whose fund has advised they are receiving a capped defined- benefit income stream to inform them the tax rules have changed and they will likely need to include more of their pension income in their assessable income.

    We are also developing a calculator to be incorporated in myTax and as a standalone tool to help people understand:

    • if they have a reduced defined-benefit income cap
    • what their defined-benefit income cap is
    • what they need to include in their return.

    A new label in the income tax return form will facilitate individuals to report this additional income.

    Of the transfer balance account reports we have received, we have also observed in the small number of individuals who exceeded the $1.6 million total balance cap, some 80% had total balances between $1.6 million and $2 million. Only a very small number reported balances upwards of $3 to $4 million.

    We did identify some fund reporting issues which we are working through. One was associated with the software solution provided to a small number of funds by a software developer.

    We have worked with affected funds to manage the consequences for members who have been sent an ETB determination and to support them to quickly correct their reporting. We will continue to proactively engage with funds where we identify reporting concerns.

    To be clear, the low number of determinations is a result of the efforts of funds and the ATO to give people information and time to consider their circumstances and therefore make the best decision for themselves.

    One fund advised they worked with their financial planning arm to identify members at risk of exceeding the transfer balance cap and of the approximately 1,000 individuals identified, roughly 90% took some form of action before 1 July 2017.

    Total super balance

    We have identified some reporting issues where an individual’s account information is not identical on both the MCS and TBAR forms. This issue affects individuals when they view their total super balance.

    We are working with funds to resolve these issues and have notified affected individuals via myGov that their total super balance may be incorrect.

    However, I can assure you that this incorrect data won’t be used for compliance purposes or affect means testing for any government pension.

    Super guarantee

    It is fair to say that there has been great interest in the community and on the public record about the level of non-payment of SG. The ATO is committed to improve the prevention and detection of SG non-payment.

    It was pleasing to see the government support many of the recommendations in the SG Cross Agency Working Group Report provided to the Minister in March 2017.

    In August 2017, the ATO released an estimate of the SG tax gap and reported that it is estimated to be $2.85 billion, equivalent to 5.2% of the total theoretical SG liability for 2014-15. We use gap estimates to enhance our understanding of the size and trend of the overall tax and super systems.

    In the past few months, the government has announced a proposed suite of legislative reform for SG. While the proposed Superannuation Guarantee Integrity Package legislation is still to complete parliamentary processes, it is evident there is broad support for many of the proposals. Of course this process will have to run its course and may be subject to change.

    However, looking ahead and assuming the proposed integrity measures proceed in their current form, they will provide the ATO with new capability to recover unpaid super; permit disclosure of relevant information to affected employees and allow us to seek court-ordered penalties in the most serious cases of non-payment of SG liabilities.

    Within the current legal framework, we have focused on finding ways to improve our processes and case work to progressively improve the level of SG compliance.

    The actions we have taken in the past financial year were designed to focus on improved and better targeted intervention and responsiveness to non-payment of SG.

    As outlined in the ATO Submission to the Senate Hearing on SG (published February 2017) managing an SG charge system which has annual reporting lags and some process issues, contributes to difficulty in collecting outstanding payments.

    However during 2017–18 we have undertaken a range of activities focusing on SG non-compliance. We are reviewing the current SG Charge Statement and creating a short version of this form. Where possible we will simplify and digitise the lodgment process for employers, including the instructional material. This action will be ongoing.

    In June 2017, we also established the Employer Regulator Forum with senior representatives from the ATO, APRA, ASIC and the Fair Work Ombudsman (FWO). This forum meets quarterly to work on employer obligations compliance activities with a focus on SG and information exchange with the ultimate aim of protecting employee entitlements.

    In an effort to improve the timely collection of information, since July 2017 we have moved from a six monthly to a quarterly cycle of referrals to the ATO from the Fair Work Ombudsman. This has enabled us to include information from these referrals in new cases. We received 268 referrals in the last quarter.

    We also set out to increase the number of ATO-initiated cases and to progressively reduce our reliance on dealing with complaints from employees in identifying cases for attention.

    • Since July 2017 YTD, we have completed 8,100 ATO-initiated cases compared with 3,238 ATO-initiated cases for the same period last year. This is an increase of 150%.
    • We have raised a total of $110 million from ATO-initiated cases compared with $73 million for the same period last year. This is a 50% increase.
    • Overall we have completed some 19,547 compliance cases for the period 1 July 2017–31 January 2018 compared with 9, 837 cases for the same period last year. This is an increase of 98.7%.
    • In doing this work, we have contacted some 12,000 employers as a result of reviews or audits compared with about 16,000 employers for all of 2016–17.
    • We have also increased the relative percentage of ATO-initiated cases from 30% to 41% of total SG review and audit cases.
    • From July 2017 to January 2018, we have raised approximately $509 million from all our SG case work compared with $481 million for all of 2016–17.

    We have now also developed and tested a new case selection analytic model which is based on a ‘comparative nearest neighbour’ concept. This model compares like characteristics for employers and identifies those with an increased likelihood of non-compliance. These are then selected for ATO-initiated cases which will assist in enabling a more targeted, timely and proactive approach to SG compliance. Results from these sample case are currently being reviewed. The early indications are positive in that they are identifying high levels of outstanding SG.

    We have also been in discussions with some super funds to find ways to improve the level of fund referrals in instances where they see apparent non-payment of SG.

    Of course, our future work will build on any additional data that becomes available, including when Single Touch Payroll and increased fund reporting is operational during 2018-19 and beyond.

    In the coming financial year, a proposed Superannuation Guarantee Taskforce will extend the ATO’s current compliance activities. It will provide greater scrutiny of employers based on more sophisticated data and analytics and will operate for three years from 1 July 2018.

    The focus of the taskforce will be on ATO-initiated audit activity with employers who have not met their SG obligations and increased attention to debt collection. The taskforce will not action business-as-usual employee notifications.

    A key measure, which has been facilitated by the pending requirement and agreement by funds to report SG payments received for a fund member, will significantly improve visibility of the SG system. Importantly, we will all see when SG amounts are paid on behalf of fund members.

    These actions, coupled with the introduction of Single Touch Payroll reporting by employers, will place us all in a better position to monitor and respond to concerns and allow earlier identification and engagement with employers at risk of underpaying SG.

    2017 APRA Fund Diagnostic Report

    The fourth annual ATO APRA Fund Diagnostic Report will be released soon, drawn from 2017 super reporting data.

    The risk differentiation framework (RDF) forms the cornerstone of our fund engagement strategy. We produce tailored diagnostic reports to help funds assess how well they are meeting their super reporting obligations to the ATO, in particular their reporting of member contributions, lost members, unclaimed monies and payment variation advices.

    In this fourth year of producing detailed diagnostic reports, we are able, for the first time, to provide a medium-term comparison of funds’ performance. The ability to look back over the past four years’ results will add another level of richness to the 2018 RDF process, over and above the usual detailed information across 13 performance areas.

    In 2017, we identified 237 funds as part of the overall RDF population compared with 251 funds in 2016 with the difference largely due to mergers and the winding up of some funds. These funds represent some 26.9 million members and about $1.7 trillion in account balances.

    Overall, funds have continued to perform well despite a slight slippage in comparison with last year. This could be attributed to the change in funds’ focus and resources to on-boarding to the new event-based reporting platform. A number of funds were also in the process of winding up and this has affected their results. But these matters will be discussed with individual funds.

    Overall, the percentage of funds meeting the benchmark has increased for eight out of 13 indicators, mainly across TFN and timeliness reporting.

    The results also indicate that for 2017 there are now 16 key clients. A fund’s classification as a ‘key client’ means that the fund has significant membership and contribution levels and is meeting its lodgment obligations. However, for these reasons, any non-compliance has greater consequences from poor reporting and we therefore take a particularly close interest in these funds’ risk management and governance frameworks to mitigate reporting risks.

    Pleasingly, there are no higher-risk funds. In addition, there are three medium-risk funds and 212 low-risk funds.

    We will encourage funds to review their results, assess their reporting performance trends over the past four years and identify priorities for improvement.

    In any event, we will hold a webinar in mid-April with fund trustees and administrators to discuss the diagnostic report and overall results for the industry.

    To provide detailed information to funds, from April to June this year, we will also conduct executive-level led meetings with key clients’ fund executives. At these meetings we will discuss the specific results of their individual diagnostic reports and offer assistance to improve reporting where required.

    We are however, planning a small number of information systems risk assessments (ISRAs) and specific issue reviews. These reviews will be to assist funds that have not met benchmarks over several years or may have systemic issues in meeting their reporting obligations in a satisfactory manner. We are keen to help these funds improve their systems and processes.

    The 2016-17 Budget changes to super, and the move to event-based reporting of member attributes in 2018, have given us the opportunity to redesign the risk differentiation diagnostic framework. The redesign is underway and we will seek industry feedback before finalising the new design.

    Overall our intent is to continue to provide large APRA funds with a relevant and contemporary report that will help them assess their performance under the new reporting standards.

    Follow-on initiatives affecting funds

    Successor fund transfers (SFTs) present a significant risk to the integrity of super fund data.

    SFT activity is increasing as many small funds have already undergone an SFT. As a consequence, the relative number of SFTs is rising and will continue to do so.

    A high priority this year is to support funds going through not only a successor fund transfer, but also a change in administrator or a change in IT platforms.

    We are currently assisting eleven successor fund transfers across multiple funds. Funds are strongly encouraged to contact our Client Relationship Team for help and support.

    Of course we are also working on updating the Involuntary Superannuation Accounts Transfer (ISAT) protocol to provide guidance on SFTs. We’ve developed a new content structure that captures all reporting requirements in a single protocol with multiple chapters.

    We will make the protocol content available in a single place on our website to allow easy navigation through the material. We will consult with you as we make these changes.

    In late March, we intend to provide a draft protocol for industry review by sharing the updated document on the ATO’s Let's TalkExternal Link consultation page. This should enable us to publish a new version of the protocol by the end of April 2018.

    We will continue to help resolve voluntary disclosures and provide comprehensive support as part of our early engagement campaign work.

    I also want to draw your attention to ATO Taxpayer Alert 2018/1 released in February, concerning structured arrangements that provide imputation benefits on shares acquired on a limited risk basis around ex-dividend dates.

    We will review arrangements intended to provide imputation benefits to Australian taxpayers who are not the true economic owners of the shares. We therefore encourage any fund or their advisers to contact us if they have any concerns.

    Reuniting people with their super

    It is and always has been in all our interests to reunite people with their super, whether lost or unclaimed. Indeed, I think we have a great partnership with industry which, while not a new arrangement, is ongoing and continually improving.

    As you know, we provide data held by the ATO to participating super funds twice a year. This data sharing may include updated members’ addresses and contact details so lost members can be reunited with their super and stop these from becoming unclaimed super money.

    Over the past four financial years (1 July 2013 – 30 June 2017) about 1.68 million accounts to the value of $8.12 billion have been consolidated, transferred or claimed by fund members as a result of the system reforms introduced and implemented by the ATO and the super industry.

    When a super fund loses contact with an individual, and their account has not received contributions for a number of years, the fund is required to send that account to the ATO as ‘unclaimed super’.

    From 1 July 2017 to 31 January 2018, we observed that 189,798 individuals were reunited with 310,139 lost, unclaimed and active super accounts to the value of $1.8 billion.

    Close to 60% of individuals who took action were aged 25 to 40, with more women (57,152) than men (53,233) acting to find lost and unclaimed super and either consolidating or transferring this to their preferred account.

    With respect to some more detailed analysis for this period, we issued a media release on 8 March titled Young women leading the way in finding lost super

    In that release we advised that women aged between 25 and 35 have been the most active so far this financial year in finding their lost and unclaimed super, accounting for more than one in five of all Australians who took action to manage their super.

    In the past seven months we have remained focused on reuniting people with their ATO-held super. As at 31 January 2018, the ATO held 5.38 million unclaimed super money accounts with a value of $3.83 billion. We also held 313,000 super holding accounts (SHA) worth $111 million.

    During TaxTime 2017 we included a notification on the ATO Online landing page of our website, alerting people who had unclaimed super. It linked them to the page to consolidate their accounts should they wish and the notification reached about 300,000 individuals.

    Results from our campaign last year alerting 20,000 individuals they had unclaimed super held by the ATO show 33% acted within the first three months of our notification, claiming just over $15 million of ATO-held super.

    Looking ahead, in April, we will contact 100,000 people via multiple channels (email, SMS and paper) focusing on those with unclaimed ATO-held super. We are asking individuals to register and use myGov and link to the ATO to either claim if they are eligible or transfer their unclaimed super to their preferred account.

    In September 2017, we raised awareness of unclaimed super in the community by publishing lost and unclaimed super postcode data.

    The number of super searches by individuals on ATO Online increased 2.8 times, from 300,000 in October 2016 to 845,000 in October 2017.

    Interestingly, in October 2017 close to 50,000 super accounts worth $315 million were consolidated – an increase of $41 million compared with October 2016 when $274 million worth of accounts were consolidated.

    However, whilst the number of people with multiple accounts has been falling, there are still almost 2.3 million Australians with three or more super accounts.

    As a reminder for individuals who may be considering consolidating accounts: the ATO Online display in MyGov lists all accounts held by an individual and enables them to consolidate these easily.

    Helping the Indigenous community

    Given the nature of this conference, I’d like to update you on activities we are undertaking outside of reform to promote access to super.

    In recent months, we have begun changing procedures so we can improve Indigenous access to super accounts, and any related insurance, for relatives of deceased estates.

    We know that the process of finding and claiming super for deceased estates can be very difficult, particularly for those living in remote areas and for disadvantaged Australians; this has been highlighted several times as a particular issue for the remote Indigenous community.

    The changes to procedure, aimed to be in place by mid-year, will take a more fair and reasonable approach to dealing with authorised contacts and protecting information, preventing the unjust outcome where relatives of deceased estates can’t claim their rightful super and insurance.

    Specifically, the procedure will allow Indigenous relatives who can provide a copy of the death certificate, and who can verify their own identity to the satisfaction of the ATO, to get information from us as to whether their deceased relative has any super accounts. This will allow them to make enquiries with the relevant super fund/s, potentially accessing super monies and available insurance.

    It should be appreciated that the client will still need to prove they are a beneficiary when claiming the account through the fund or the ATO. This adjustment will however, provide that crucial first information about whether super exists and where they can follow up to claim it.

    Community engagement

    We continue to work with a number of not-for profit organisations, helping them to assist their clients searching for lost and unclaimed super.

    Being ‘on the ground’ where possible means we can connect with people and their circumstances. We seek to help them understand, manage and access their super entitlements.

    For these reasons, we are actively working to better engage with our youth and new migrants, assisting them to understand the tax and super system.

    For youth, we have partnered with the ASIC MoneySmart Teaching Program and the Australian Curriculum, Assessment and Reporting Authority to deliver financial literacy in tax and super to year 7-12 students. Education about the tax and super system is crucial to ensure students develop the knowledge and skills to make sound financial decisions now and into the future.

    Similarly, we are supporting new arrivals by forming partnerships with support organisations to ensure they help migrants understand and value the tax and super system.

    We are doing this by developing information, such as multi-language videos, tailored to new arrivals to build confidence, knowledge and capabilities around tax and super.

    During TaxTime 2017, we brought the ATO to the people, visiting some 35 shopping centres around the country (20 regional and 15 metropolitan). Every state and every capital city was represented, with a very good spread of regional areas. Of interest perhaps is that approximately 700 super-related questions were asked, representing about 15% of overall enquiries.

    We also placed ‘pop-up’ booths in shopping centres with super a key focus. We ensured we had a presence in areas with a large number of lost and unclaimed super, including Toowoomba in North Queensland and Werribee in Victoria. We were able to help people find their lost and unclaimed super and advise on non-payment of SG.

    Conclusion

    We cannot have further success without working together and by recognising we share a common goal: improved and informed member engagement and outcomes.

    Recent reforms have proved we can achieve our aims and that we have some useful shared approaches.

    As an agency, the ATO has been through our own reform in the past few years. We have moved, with purpose, to become an agency built around improving the client experience. We also see the importance of engendering trust and confidence in the tax and super system.

    A lot of SuperStream services have progressed by working with the strong support of industry and there have been approximately 10 million successful SuperTICK validations over the past 12 months, almost double that of the previous year.

    Together we now have to plan for Single Touch Payroll, event- based reporting and SG compliance. We remain confident that preparation is well underway.

    Reducing the level of non-payment of SG is important to the ATO and remains a priority.

    For this financial year to date:

    • we have increased the number of SG cases completed by 98% from 19,547 compliance cases compared with 9,837 for the same period last year.
    • we have raised approximately $509 million from all our SG case work compared with $481 million for the same period last year.
    • we have increased by150% our ATO-initiated SG casework
    • we have increased by 50% the amount raised from ATO-initiated reviews and audits, from $110 million compared with $73 million for the same period last year.
    • we have contacted some 12,000 employers as a result of reviews or audits compared with about 16,000 employers for all of 2016–17.

    From an SG perspective event-based reporting from APRA funds begins to provide visibility of employer contributions made to fund members.

    Based on formal advice from trustees we are expecting 42% of APRA funds will have completed their attribution service onboarding by November 2018 with the balance by April 2019. This potentially will surface SG payment data for approximately 64% of APRA members.

    In the coming weeks we will be releasing the fourth annual ATO APRA Fund Diagnostic Report.

    We have come a long way together in turning concepts into reality and to plan for reforms.

    Thank you.

      Last modified: 15 Mar 2018QC 54790