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Superannuation Administration Group key messages 28 February 2023

Key messages from the Superannuation Administration Group meeting 28 February 2023.

Last updated 18 July 2023

Welcome and opening remarks

Larissa Evans opened the meeting with an acknowledgment to country, welcomed those in attendance and introduced ATO Assistant Commissioners Naomi Westwood and Michelle Allen.

  • Lauren Doel is leaving BT Financial, and Larissa thanked her for her contribution to the group and welcomed Nick Mensforth who will be BT’s replacement.
  • Ian Roberts from ART will be leaving the SAG, to join the Large Business Stewardship Group. Thank you to Ian for his input to the group over the years.
  • Bill Korras to speak who announced one of the long-standing ATO CRT team members had sadly passed away. The group acknowledged this and offered condolences to team members and family.

Update on changes impacting funds

Cyclical changes upcoming for the 2023-24 financial year include:

  • SG contribution rate increasing to 11%
  • defined benefits income cap
  • transfer balance cap
  • total super balance for non-concessional contributions and co contributions
  • CGT lifetime cap.

Plus, anticipated rate changes upcoming over the next few months regarding:

  • surcharge
  • Division 293
  • unclaimed money credit interest
  • excess non concessional associated earnings.

1 July 2023 is a key date for changes to occur.

Expanding the use of STP data to address SG non-compliance

The introduction of a corporate initiative that aims to expand the use of STP data to create a transparent view of employees’ superannuation guarantee for all funds and all employers in one place which allows the ATO to follow up employer non-compliance more proactively.

The ATO is enhancing the matching of data received from STP and Member Account Transaction Service (MATS) reporting from 1 July 2018. The ATO uses this data today, however this work will enhance it and store the data set differently, so that it can support future improvements and address pain points.

The improvements have been designed to allow the ATO to follow up on employer non-compliance more proactively. The ATO will also be better positioned to help and support employers, however we will continue to maintain a low tolerance for employers who are not doing the right thing.

Tax time health check

The ATO is undertaking a tax time health check process this year. Tax time is seen as a natural touch point and a good opportunity to encourage individuals to do a quick review regarding:

  • are their contact details correct?
  • does their balance seem accurate?
  • do they have any lost super accounts?
  • how many super accounts do they have?
  • do they want to consolidate multiple accounts to save on fees?
  • do they have a nominated death benefit beneficiary for their super fund?

The ATO will be targeting self-preparers and agents, by utilising various marketing and communications strategies. This will be a step-by-step process. Communication products and materials will be shared with industry before deployment. This is the first time the ATO has tried such an initiative and we look forward to further interaction and seeking feedback from industry. Messaging could be tested with this group initially in an out of session meeting.

Transfer balance cap indexation

On 1 July 2023, indexation of the general transfer balance cap (TBC) is due to occur. This is based on the consumer price index rate for December 2022 and the TBC will index from $1.7 million to $1.9 million.

The defined benefit income cap (DBIC) will also index from $106,250 to $118,750 and will apply from the 2023-24 financial year. The tax offset will change from $10,625 to $11,875.

An individual’s highest ever account balance in retirement phase and available cap space will be used to calculate their entitlement to the increment.

We recommend that funds ensure all transfer balance account reports for the 2022-23 financial year are lodged by 30 June 2023, as any delays in reporting will impact the calculation of individual’s personal transfer balance cap increments.

Indexation of the general TBC will have flow through consequences to total superannuation balance (TSB) that then flow to non-concessional cap, non-concessional bring forward arrangement, spouse tax offset and co-contributions.

An individual’s transfer balance account will be displayed from mid-July on ATO online services on MyGov.

Calculating entitlements to indexation

ATO will calculate an individual’s entitlement to indexation based on information reported to us by funds in the transfer balance account report (TBAR).

Articles have been published in Super News and SMSF News to communicate these changes.

Fund engagement updates

The Super Enquiry Service continues to work well.

There have been over 400 enquiries in the last 30 days with the majority relating to MATS and SMSF Manual Verifications.

We are currently looking at the outbound feature and ATO internal security and will advise the group when it is up and running.

ATO will continue to monitor use of the SuperMatch service and engage with funds when any concerns are identified. Recent activity gives us the opportunity to remind members they have requirements in the terms and conditions of use to ensure adequate monitoring of their ongoing compliance. Trustees were reminded that any change to their solution or the way in which it is offered requires notification to the ATO and possibly a further application process.

Additionally, failure to provide the annual statement of compliance is a breach of the service terms and conditions. If a trustee identifies any breach of these terms and conditions, they must:

  • immediately advise us of that breach in writing to
  • immediately stop using the SuperMatch service
  • not use the service again until we advise otherwise.

We encourage trustees to continually review their approach to SuperMatch monitoring by actively testing the effectiveness of controls and identifying opportunities to strengthen processes. This will ensure compliance with all aspects of the terms and conditions of use and the user guide is maintained.

In 2022 we discussed opportunities to work more closely with industry to develop a set of monitoring principles for the service. This work was delayed due to other emerging issues across the sector. We are reviewing our approach and updates of progress will be provided at future SAG meetings.

Other business

Agenda items that were addressed through papers for this meeting.

  • member reporting
  • campaign update
  • Your Future, Your Super update
  • update on SISG Fraud Security working group
  • focus areas for 2023 SAG meetings.

Other business raised:

  • The choice form is scheduled for publishing in April.
  • MATS balance reporting, inaccurate data and closed accounts. We have teams working with impacted funds on these issues as an ongoing programme of work.
  • Incomplete release authorities revoked and not actioned. Larissa advised this is good intel and our teams will look into these issues.
  • Forward focus areas for 2023 SAG meetings. Members agreed this was a good initiative. Tracy Holloway will contact the group and ask for each members top 3 topics in order. Responses will help shape forward meetings.
  • Scheduling of the large APRA regulated super fund client experience survey in May.
  • Possibility of conducting an upcoming SAG meeting face to face. We are considering conducting this for the June SAG. More detail and placeholder to follow in due course.