Welcome and opening remarks
Alastair Ramsay opened the meeting with an acknowledgment to country and welcomed new members, Sean Fannin, GBST, Aine English, SS&C Administration Services and Kirsten Samuels, Financial Services Council.
Member expectations were discussed, for example not to disseminate papers outside of the group and members were advised to refer to the recently distributed charter for more information.
Payday super
Industry members were encouraged to respond to the recent Treasury consultation paper. We are keen to obtain industry views and concerns.
In June and July of 2023 stakeholder consultation workshops were held.
Focus of these groups was primarily ATO administration of the announced policy, challenges, and options for policy implementation. The key topics discussed were:
- data quality, accuracy and timelines of information provided by employees
- existing issues regarding choice of fund (stapling) processes
- inconsistency around Single Touch Payroll (STP) and SuperStream data, leading to validation issues
- speed of payments
- time frames for error response messages and adjustments
- increase of data volume (up to 12 times more often than current)
- current penalty regime
- employers still having issues regarding calculation of Ordinary Time Earnings (OTE)
- support for more frequent payments and information flows
- how to minimise associated costs for end users
- what is achievable up to the commencement date of June 2026
- how do we monitor the compliance component of employers meeting their super guarantee (SG) obligations
- how can we improve the employer experience
- how can the employer extract the relevant information from ATO systems
- some items may also need policy changes to be progressed to Treasury.
Feedback and member discussion
- The stapling service and election of Choice.
- Choice paper forms and hierarchy.
- Integrated service improvements
- can we integrate the employer and employee service
- ideas and options are being explored with industry.
- Returned data – raises issues with member identifiers. Tracie Crowden reiterated this is an opportunity to reset and clean up held data.
- OTE calculations – ATO are considering whether any options are available to reduce complexity.
- STP reporting – adjustment solutions and mechanisms were discussed. It was agreed that more detailed design is required.
- SuperStream and potential updates to guidance notes and Binding Implementation Practice (BIP)s.
- Is now the right time to reversion the contribution message and make necessary changes.
- Reconciliation processes discussed – what’s required to avoid superfluous data input.
- Registration process should be different to contribution process.
- New Payments Platform (NPP) – consideration of making this an approved payment method.
- Bulk Electronic Clearing System (BECS) retirement timelines.
- Member Account Attribute Service (MAAS) and Member Account Transaction Service (MATS). Is there an appetite from industry to change/review?
- Delta utilisation to be reviewed.
- Superannuation Industry (Supervision) Regulations 1994 (SISR) – allocation timeline requirements. Legislative/policy change may be needed through Treasury. Payday Super applies to SG only – however we are unable to comment further at present.
Next steps
The ATO is planning a deeper dive with industry – what changes are feasible, achievable and viable.
Industry consultation will continue into November. There is still a substantial amount of work to be done, the aim is to provide the government decision makers the requisite information to seek wide ranging improvements.
Industry members can email PaydaySuper@ato.gov.au to be involved in the consultation process.
Expanding the use of STP data, managing SG non-compliance
The data build bringing together STP and super fund data is progressing well and on schedule.
A new nudge correspondence has been developed which will replay back to the employer information they have reported via STP.
The nudge correspondence was extensively user tested with feedback incorporated from internal and external stakeholders including:
- Small Business Stewardship Group
- Superannuation industry
- Communications Content Working Group
- Small Business Ombudsman and the ATO Small Business Consultative forum.
The letter outlines what an employer needs to do. Most importantly to check their records and confirm the data they reported to the ATO is correct.
We have been working with our internal data stewards to refine the process. We will not take any automated actions, for example automated assessments.
We will always take steps to engage an employer directly before any further actions are taken if there is no response to our correspondence.
We will be conducting a small-scale pilot process, and the correspondence will not start being issued until we have fully tested the data set. The aim is to have the new nudges issuing towards the end of 2024.
Data Quality
The increasing importance of data quality reported to and held by the ATO is fundamental to the efficient operation of the superannuation system.
The data reported is utilised by over 20 products within the ATO, such as correctly calculating individual’s contributions caps, employer superannuation guarantee compliance, and the display of member information on ATO online.
Quality data and the reliance on reported data is essential to the successful operation of the 20 products across the ATO. The PayDay Super and the Better Targeted Superannuation Concession proposed measures highlight the importance of continuing to work to improve the quality of data.
We recognise that the superannuation reporting system is interdependent and working together with industry is paramount. As such we will be providing a webinar early in 2024 on the use of data within the ATO and its links to the various calculations.
We are currently developing a data quality improvement strategy which we will seek stakeholder input. The strategy will include:
- reducing the number of unlinked and unmatched transactions
- accounts correctly open or closed in ATO systems
- identified data quality issues from data matching for superannuation guarantee.
Shane Moore explained the role of the data stewardship teams within the ATO and reiterated the interconnected nature of this work making it crucial that all areas work together.
The ethical use of this data was discussed, and how we will use it for our nudge campaign.
Member discussion
- Correct opening and closing of accounts is vital.
- A webinar is planned for February 2024 to explain the downstream use and impacts of member reported data.
- Release authorities and MAAS/MATS interaction.
- Better Targeted Super Concessions was touched on regarding Division 293 interaction
- Successor Fund Transfers (SFT) and defined benefit member impacts. There is a lot of complexity around this issue. We will engage further with industry when policy and legislation has been finalised.
Better Targeted Super Concessions
The Better Targeted Superannuation Concessions measure was announced in the 2023–24 Federal Budget on 9 May 2023.
The intent of this change is to improve the equity and sustainability of the super system by reducing the tax concessions available to individuals with a total super balance exceeding $3 million at the end of the financial year.
It is likely to impact around 80,000 individuals in 2025–26, or approximately 0.5% of individuals with a superannuation account.
99.5% of people with superannuation will not be impacted by this change.
Treasury consulted with industry on the measure post announcement and recently released Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 which ran for public consultation from 3 to 18 October 2023.
This change will impact members of large funds, SMSFs and Defined Benefit Funds.
The measure will be called Division 296, will start on 1 July 2025, and will apply from the 2025–26 financial year onwards.
It will apply to individuals with a total super balance over $3 million at the end of the 2025–26 financial year onwards.
These individuals will be subject to a tax of 15% on the proportion of earnings attributable to the balance over $3 million.
Individuals with a total superannuation balance of less than $3 million will not be affected.
The change does not place a limit on the amount of money an individual can hold in super and the current contribution rules still apply.
Member discussion
- The irritants industry presently has around Division 293.
- We do not want to exacerbate issues regarding Division 293 following on to Division 296.
- The use of the Division 293 release authority. This issue has not yet been determined; the aim is for minimum impact to funds.
- As soon as we have greater intent and policy direction, there will be wide ranging industry consultation. The co design process is paramount for this measure.
- We are currently working through the design of Division 296 tax and its impacts on individuals, funds, and tax professions. Once policy parameters are finalised, we will consult with key industry stakeholders and this group.
- For any further information or to contact the project team, email BetterTargetedSuperConcessions@ato.gov.au
First home super saver scheme – Technical changes
The technical changes to the first home super saver scheme (FHSSS) received Royal Assent on 20 September 2023, with a commencement date of 20 September 2024.
The ATO is currently consulting on the administrative approach to law implementation which will require:
- individuals to contact the ATO to amend or revoke their FHSS release request
- if eligible, released amounts held by the ATO will need to be returned to a superannuation fund
- communication between the ATO and funds in relation to these payments.
The anticipated volume of amended or revoked FHSS release requests is low. As such the ATO’s proposed policy approach is to minimise impacts on superannuation funds when returning FHSSS amounts, and to only seek the component details where the originating superannuation fund is unable to accept the money being returned.
The components of amounts released will be required to ensure the correct treatment of released funds when returned to an alternative superannuation fund.
Member discussion
- Release authority refund process – what is the default position.
- Hierarchy of returns – components of the following released amounts
- Eligible Service Period
- Tax components
- Tax-free component
- KiwiSaver tax-free component
- Taxable component – taxed element
- Taxable component – untaxed element
- Preservation amounts
- Preserved amount
- KiwiSaver preserved amount
- Restricted non-preserved amount
- Unrestricted non-preserved amount
- We are forecasting several hundred requests per year
- Payment reference number, traceability, revocations and recontribution issues were raised.
- Technical issues will be discussed further between industry and the ATO.
Fraud and security
Superannuation Industry Stewardship Group (SISG) Fraud and Security Working group update:
- Following large scale data breaches involving Optus and Medibank, the SISG established a Fraud and Security Working Group.
- This working group was tasked with understanding the impact these data breaches present across a members superannuation lifecycle and how they could be addressed.
- In the initial phase of the working group, members identified several opportunities that could be considered to address increasing vulnerabilities across the super lifecycle from compromised identity information and documents.
- The working group identified those priority opportunities to complete a more detailed assessment of what would be required to implement
- proof of identity for key transactions – account opening and rollovers
- multi-factor authentication for key transactions – changing details and significant transactions, such as rollovers or benefits
- improved information sharing across industry and regulators.
The SISG recommend funds consider introducing Know Your Client (KYC) for accounts opened through online channels and that funds consider introducing Multi-Factor Authentication (MFA) in line with the principles set out in the letter issued by Australian Prudential Regulation Authority (APRA) to all their regulated entities on 26 May 2023
The ATO is considering if, how, when existing services could be extended to sharing additional information with funds and administrators to help identity and protect their member accounts from potential harm.
Member discussion
- Continuing staging account activity and subsequent SuperMatch Alerts (43 so far this year).
- Intelligence indicating new online account creation has been seen with automated/bot like activity.
- In response, the ATO issued SuperMatch Alert 39/2023 recommending web-application firewalls and fund controls are up to date.
- Funds were encouraged to heighten monitoring of their online channels for this type of activity and advise the ATO if any of this activity was identified.
- APRA has issued a letter to Trustees and their risk officers around system vulnerabilities identified in the SISG fraud working group.
Funds are encouraged to email sprenablingservices@ato.gov.au for any super fraud related issues.