• SASG minutes March 2014

    Meeting details

    Venue:

    Rooms 719 & 720, Level 12, ATO Latitude East, 52 Goulburn Street, Sydney NSW 2000

     

     

    Date:  

    Wednesday 12 March 2014

     

     

    Start:  

    10.00 am

    Finish:  

    2:00 pm

    Chair:  

    Mary Arrowsmith

     

     

    Contact and Secretariat:  

    Phil McDonald

    Contact phone:  

    13 28 69

    Attendees

    Amanda Gunn

    Mercer

    Andrea Cooper

    Financial Synergy

    Anne Dixon

    Precision Administrative Services

    Garry Powell

    Super SA

    George Strilakos

    UniSuper

    Graeme Colley

    SPAA

    Heide Stewart

    James Barnwell

    IOOF

    Russell Investments

    Jayne O'Ryan

    Jun Tang

    Karen Downes

    QSuper

    Onepath

    Superpartners

    Karen-Anne Herald

    NAB / MLC

    Kelly Kerr

    BT

    Maria Anislag

    Martin Mikulicin

    Zurich

    Bravura Solutions

    May Low

    CBA (Colonial First State)

    Neil McMillian

    Pillar

    Sam Bubulj

    Sarah Bell

    Scott James

    Superpartners

    Perpetual Investments

    Comsuper

    Sue Pearce

    FuturePlus Financial Services

    Suresh Soppa

    CBA (Comminsure)

    Tina Cifelli

    Beverley Easton

    Colleen Gibson

    AMP

    ATO – CAS, Superannuation

    ATO – Superannuation

    David Jordan

    ATO – CAS, Superannuation

    Mary Arrowsmith

    ATO – CAS, Superannuation

    Paul Brunton

    ATO – Superannuation

    Phillip McDonald

    ATO – CAS, Superannuation

    Tania McFaul

    ATO – Superannuation

    Apologies

    Alan Harvey

    AAS

    Ian Stirling

    Comsuper

    Rebecca Scott

    Perpetual Investments

    Robert Hodge

    ASFA

    Simone Sluchniak

    GESB

    John Shepherd

    ATO – Superannuation

    Linda Cheesman

    ATO – CAS, Superannuation

    Sally Druhan

    ATO – CAS, Superannuation

    Next Meeting

    Wednesday 28 May 2014

     

    Please note: SASG agendas, minutes and related papers are not binding on the ATO or any of the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    Agenda Items

    1 Opening

    Mary Arrowsmith (Acting Assistant Commissioner, Superannuation and Accounting, Client Account Services) opened the meeting welcoming all in attendance.

    Declaration of Conflicts of Interest  

    The Chair advised members of the requirement to declare any conflict of interest or conflict of role. No declarations of conflict were advised.

    4 December 2013 SFWG Minutes endorsed  

    Draft minutes of the meeting held Wednesday 4 December 2013, sent by SASG Secretariat email 21 January 2014 were accepted without change.

    2 Outstanding action items discussed from 4 December 2013

    Action item

    04122013/08 – ATO to confirm no plan to introduce a limit on the number of Unclaimed Superannuation Money (USM) Rollover Payment Variation Advice (PVA) from funds not able to accept the rollover.

    Status  

    Closed 12/03/2014 – The Commissioner’s direction is for the ATO to move existing paper based processes to electronic as quickly as possible across all of our business. The ATO strongly recommend that if you lodge more than 100 members (or more than 20 fund PVA lodgments) that you do so electronically.

    Action item  

    04122013/09 – Provide advice on a number of technical issues being considered in relation to USM Recoveries.

    Status  

    Closed – 12/03/2014 Beverley Easton directed members to the distributed handout outlining the process for recovering rollovers. Essentially in recovering an ATO Rollover from a fund that was not the original recipient of the ATO rollover, the ATO will provide that fund with a copy of the original rollover (by paper) identifying the breakdown of tax components in the recovery.

    Action item  

    04122013/10 – ATO to confirm that Rollover Benefit Statements (RBS) will issue in accordance with the correspondence hierarchy applicable to similar superannuation paper based correspondence (eg Statement of Accounts (SoA)).

    Status  

    Closed – 12/03/2014 Beverley Easton reflected feedback from some funds that USM Weekly remittance SoA and associated RBS are being sent to different addresses.

    Currently, the RBS is being issued in accordance with the address hierarchy without taking into account the fund link and channel preference, resulting in some funds RBS being issued to a (non-preferred) Superannuation account postal address. The ATO is working through this issue urgently and will implement a fix at the earliest opportunity.

    Action item  

    04122013/11 – Review member feedback on covering letter and Rollover Benefit Statement (RBS) and amend where possible to improve fund process of rollovers:

    • single member RBS per page
    • total amount of payment and payment reference number to be included on the cover letter
    • CRT email to funds advising payment process has been completed indicating which fund, total payment amount, number of members, payment reference number, anticipated payment date and delivery of paper based Statement of Account and RBS
     

    Status  

    Closed – 04/03/2014 Beverley Easton confirmed:

    • RBS issued to funds on basis of single member per page
    • Covering letter to RBS:
      • includes PVA due date
      • does not include fund’s total remittance information
       
    • SuperCRT email issued to funds for weekly remittance processes includes additional information as requested.
     

    Action item  

    04122013/13 – ATO to confirm obligations to populate “Amounts transfer-out data record” for SG payment variation advices in relation to a Recovery Notice issued for a member whose entitlement has been rolled over to another fund.

    Status  

    Closed – 12/03/2014 - The ATO confirmed there is no requirement for funds to complete the “Amounts transfer-out data record” of a SG PVA, for accounts rolled over to another provider.

    Action item  

    04122013/16 – Investigate and advise members on required treatment on individual entitlement paid by the ATO to a non-compliant MySuper employer default fund.

    Status  

    In Progress –12/03/2014 Issue is being progressed (including liaison with APRA). Response expected to be provided in March 2014.

    Action item  

    04122013/21 – Email SASGSecretarat@ato.gov.au with question regarding XBLR software sub-licensing arrangements.

    Status  

    In progress – 20/12/2013 Email escalated to SuperStream Standard Team for response through SILU. An update on progress is pending.

    Action item  

    04122013/22 – Provide advice to funds on the timeline and impact on the changes to the PAYG Payment Summary specifications.

    Status  

    Closed – 12/03/2014 ATO advised members no change to PAYG specifications for 2014-15 year.

    3 Changes to ATO Systems

    3.1 USM2ICP update

    Beverley Easton provided a comprehensive update on a range of issues following deployment of Unclaimed Superannuation Money (USM) to our enterprise system (ICP) and deliverables.

    Funds shared feedback on a variety of process issues and frustrations impacting their capability to comply with processing and reporting obligations. A number of issues requiring ATO action have been taken from the meeting for action.

    Key issues discussed included:

    1. ATO held USM Rollover remittance process:

    Action item

    12032014/01

    Funds impacted by large RBS correspondence delay will be notified by SuperCRT@ato.gov.au email when the delayed RBS are issued.

    Responsibility  

    Beverley Easton

    • the ATO undertook to review the use of ad-hoc daily ATO held USM rollover remittances to reduce combination of the remittance with another superannuation product remittance adding to the poor experience funds already endure with delayed RBS. Occasions may arise where this is still required.

    Action item

    12032014/02

    ATO to review superannuation product payment calendar to avoid sending ATO held USM rollover remittances in combination with another product remittance payment.

    Responsibility  

    Beverley Easton

    • RBS with $0.00 rollover value are incorrect

    Action item

    12032014/03

    Report cases where RBS received with $0.00 to SuperCRT@ato.gov.au with “RBS” or “Rollover Benefit Statement” in the subject line, for replacement RBS to be issued.

    Responsibility  

    SASG Members

    1. Monthly USM Recovery Notice Schedule.

    Recovery Notices will be issued based on funds preference (electronic or paper) to the preferred address:

    • the first process ran in February 2014, identifying one member
    • next scheduled recovery process, week commencing Monday 10 March.
    1. Processing of backlogged USM statements has commenced.
    2. Fund USM Statement reporting and consequences. There are significant differences between ICP treatment of USM Statement compared with Legacy.

    Key issues highlighted included:

    • amendments:
      • Funds may experience some unintended results when lodging an amendment to a statement processed in Legacy, and now converted and migrated to ICP. Work is underway to resolve the known data conversion issues.
       
    • the ATO emphasised that amendments must relate to one single period:
      • determined by unclaimed money day and the scheduled statement day;
      • mirror your original report with the period, account number and client identifier.
       

    Karen-Anne Herald raised an issue with USM statement lodged with an incorrect TFN, for which attempts to amend have not been successful.

    Action item

    12032014/04

    Email SuperCRT@ato.gov.au with details of live example of USM statement amendment to change an incorrectly reported member TFN has not been successful

    Responsibility  

    Karen-Anne Herald

    • Other issues of note included:
      • recycled account numbers may be treated by ICP as the same membership
      • multiple USM statement reports for the same period need to be lodged in statement creation date sequence
      • ensure dates input are valid (eg 01/01/1900 compared to invalid date 00/01/1900).
       

    3.1 SG2ICP update

    David Jordan (Senior Director, CAS Super Product Management) provided a brief on the deployment of Superannuation Guarantee to ICP.

    New SG statements are now being keyed into ICP; this will increase the volume of individuals and funds included in ICP Superannuation Guarantee Monthly Remittance Advice process.

    Recovery functionality is operational within ICP but due to the low number of entitlements paid through ICP, there have not yet been any recoveries to be undertaken. It is expected this may occur from May 2014.

    Action item

    12032014/05

    ATO will liaise with a small number of funds at the commencement of Superannuation Guarantee Recovery Notice processing to assure the process from an end to end perspective

    Responsibility  

    David Jordan

    It is expected that we will continue to undertake limited processing in the Legacy system through until 2015.

    4 Division 293 Tax Update

    Tania McFaul (Director, Division 293 Tax Project Team, Superannuation) discussed the following key issues:

    1. A number of Regulations and Legislative instruments have been made during December 2013 and February 2014 enabling:

    Members highlighted the critical and immediate need for ATO guidance on how to best meet 2013-14 MCS lodgment obligations, given:

    • the absence of regulations for the calculation and reporting of ‘defined benefit contributions’ in MCS for the 2013-14 year
    • lead time requirements for industry to develop, test and implement software program updates for MCS reporting (for 2013-14 year) due 31 October 2014.

    Funds reiterated that an extension of time to lodge 2013-14 year MCS is not the solution required.

    Action item

    12032014/06

    ATO to provide advice to industry stakeholders on 2013-14 MCS reporting requirements in relation to Defined Benefit Contributions for Div 293 tax calculation purposes.

    Responsibility  

    Paul Brunton

    1. Backlogs of Assessments including Defined Benefit Assessments are being progressively cleared in March. Routine business as usual weekly processing should commence from early April.

    Action item

    12032014/07

    Feedback on the draft version of the Notice of Div 293 tax deferred debt account creation should be directed to SASGsecretariat@ato.gov.au

    Responsibility  

    SASG Members

    5 Reuniting Super

    Mary Arrowsmith reported progress on a number of ATO strategies to reunite individuals with their super.

    6 Lost Member Register (LMR) – Provision of Address (PoA)

    Key points discussed:

    1. January 2014 process - 814,000 accounts (reported value of $5.7M) provided to funds, including over 65’s and deceased individuals.
    2. March 2014 - over 65s and deceased clients.

    As a separate strategy from the biannual process, address data (including data from our Client Register) for all lost over 65 and deceased individuals is being provided to funds. Members were encouraged to influence this information being utilised.

    The ATO is considering providing date of death (DoD) details, trustees, etc, for future processes.

    Member discussion highlighted current concerns and confusion with reporting deceased individuals where DoD, trustees or beneficiaries, etc., are not available.

    Action item

    12032014/08

    ATO to review existing date of death (DoD) guidance for deceased lost member to be reported for unclaimed super money purposes where DoD is not known

    Responsibility  

    John George

    The ATO:

    • Encouraged funds not currently participating in the PoA program to seriously consider future processes. Funds seeking interest in the next scheduled run in August 2014 should email fund details to SuperCRT@ato.gov.au.
    • Confirmed future PoA process will include member email and mobile telephone information (when available) sourced from latest income tax returns.

    6.1 Lost Member Register (LMR) - SMS/Email campaign

    The ATO reported on outcomes of follow-up on a recent contemporary services campaign targeting approx. 30,000 lost member clients:

    • results achieved included 3,658 viewed accounts online, 798 portability forms lodged resulting in $8.1 million transferred or consolidated
    • further campaigns will be run from May 2014, including members with ATO held money.

    7 Other strategies for 2014

    A number of other discretionary strategies are planned to help with reunification, including:

    1. Fund member with ATO Held USM.

      Provide funds with details of current members with ATO held USM amounts to promote contact with member to transfer the USM to their active fund account.
    2. Fund member with other ATO held amounts but no valid destination.

      SMS/email campaigns targeting individuals with current fund membership to promote consolidation of ATO held amounts to existing fund account (by way of ATO Individuals Portal or fund nomination form).

    The ATO acknowledged new payment destination information from payment variation advice (PVA) transfer out detail data record is not currently included in the destination hierarchy. MCS account information is included but does not automatically become the default.

    Action item

    12032014/09

    ATO to consider streamlining the redirection of rejected member entitlements to a new fund account destination through the inclusion of relevant PVA “Transfer out data record” in the payment destination hierarchy.

    Responsibility  

    Mary Arrowsmith

    8 Review of MCS

    Paul Brunton (Director, Individual and Funds Segment, Superannuation) discussed the outcomes of expanded 2012-13 MCS reporting through the File Transfer Functionality of the ATO Business Portal, and main changes introduced in MCS v10 effective from the end of June 2014.

    Key points discussed:

    1. ATO and industry successfully implemented expanded MCS reporting for 2012-13 and change of lodgment channel to the ATO Business Portal

    Prompt feedback from funds contributed to the ATO in addressing several challenges for industry with system functionality and performance standards of the new File Transfer Functionality for MCS lodgment.

    Members sought an update on progress with a review of the MCS Protocol document.

    Action item

    12032014/10

    Provide advice in relation to the timeline to amend MCS protocol document in light of the expanded reporting obligations and other recent legislative changes

    Responsibility  

    Paul Brunton

    1. Members highlighted various issues impacting the effectiveness of SuperMatch including:

    Action item

    12032014/11

    Provide feedback (including opportunities for improvement) in relation to:

    • fund experience with SuperMatch
    • individual’s experience with ATO online
     

    Responsibility  

    SASG members

    1. funds sought clarification around the timetable for MCS V10 (effective form 1 July 2014) testing.

    Action item

    12032014/12

    Provide advice on the availability of testing MCSV10.

    Responsibility  

    Paul Brunton

    9 Product Update

    Mary Arrowsmith updated members in respect of the following products:

    10 Low Income Superannuation Contribution (LISC)

    The Repealing legislation, contained within the Repeal of the Mining Resource and Rent Tax (MRRT) Bill was negatived in the Senate on 25 March 2014.

    Should the legislation be re-introduced and pass in the current form, LISC payments will be payable in respect of one year of contributions only (ie 2012-13) and new or amended LISC payments will cease to be determined after 30 June 2015.

    This means the following:

    • original determinations and amendments will continue to be processed between 30 June 2014 and 30 June 2015, but only for the 2012-13 year
    • if the taxpayer has not lodged their 2012-13 ITR by 1 July 2014 they will be processed as a non-lodger with their estimated income based upon 3rd party data held by the ATO
    • if they later lodge their ITR for 2012-13 their eligibility for LISC will be re-determined and amended as required
    • amended ITRs or MCSs will also trigger the re-determination process
    • by Law no determinations or amendments can be processed after 30 June 2015. Existing credits (determinations, PVAs and direct claims) can continue to be paid out after this date but are expected to all be finalised by December 2015

    Since commencing LISC payments in September 2013:

    • we estimate two thirds of eligible payments (to individuals that have lodged 2012-13 ITR) have been made
    • payments to eligible clients who do not lodge an Income Tax Return will commence sometime after 1 July 2014, so Funds can expect a slight peak in LISC remittances after this date.

    General discussion highlighted several scenarios’ requiring clarification of the LISC payment hierarchy, including:

    1. Funds have received a LISC payment:
    1. Fund specifically created to accept individuals’ LISC entitlements (due to limitations of existing fund to accept LISC) has not received LISC remittances; individual entitlement has been paid to another fund (perhaps in line with co-contributions payment hierarchy.

    Action item

    12032014/14

    ATO to review LISC entitlement scenarios raised and outline application of LISC payment hierarchy.

    Responsibility  

    Carmel Nasta

    11 Tax File Number Notifications

    Funds were advised on progress with system functionality to allow the ATO to issue these Notifications in relation to 2012-13 MCS lodgments and expected volumes.

    Key messages included:

    1. Deployment of functionality to generate the notifications is scheduled for the weekend of Saturday 15 March. Successful implementation will allow the ATO to commence issuing Notification from week beginning Monday 6 April 2014.
    1. Changes have been made to the ECI Transmission File Name to identify the type of Notification.
    2. Work is underway on resolving 2.6M unmatched Member Contribution Statements (of 34M MCS lodgments) which may vary the notification volumes advised as these forms are matched.
    3. Funds are expected to update their records:

    11.1 Outcome of Lodgment reports (OOLR)

    The ATO has reviewed the delay Funds have been experiencing with the release of OOLRs. The primary reason is that all of the individual member forms within that fund report have not been processed by ATO systems. Until this occurs, our systems will not generate the OOLR.

    Funds are advised where this occurs.

    • Processed member records are updated to ATO systems and any co-contribution or other superannuation remittance (or assessment) for that member will be processed.
    • To manage this issue, the ATO’s systems area looks for the remaining member’s form and attempts to process the form and generate the OOLR.

    The ATO undertook to review a number of OOLR for lodgments where the number reported as being accepted was one, whereas the lodgment was for thousands of members.

    Action item

    12032014/15

    ATO to review and provide advice in relation to OOLR received by funds citing that one member was accepted whereas the lodgment was for thousands of members

    Responsibility  

    SASG Secretariat

    12 Compliance Update

    Paul Brunton provided members with an update of recent Compliance activities. Key issues discussed included:

    1. Large fund Risk Differentiation Framework (RDF) pilot update:

    Action item

    12032014/16

    ATO to confirm appropriate channel for industry to make voluntary disclosures issues direct

    Responsibility  

    Paul Brunton

    13 Update on Data Standards Contributions Implementation

    Colleen Gibson (Director, Data Standards and e-Commerce) updated members on progress with the implementation of the Contributions Data Standard.

    Key points discussed included:

    1. New forums have been established
    2. Deliverables and Release notices
    3. SMSF Update
    4. Enabling Services

    Members were stepped through the Contribution Induction Process:

    1. Prepare an induction Schedule
    2. Attend pre-induction Briefing
    3. Check Entry Criteria including:

    Nerve Centre Process

    • Send live contributions (first cycle)
    • Send live contributions (second cycle)
    • Exit Criteria and Cross Certification, including:
      • Successful completion of induction check points
      • Data and payment reconciled successfully
      • Choice and default message has processed successfully
       

    14 Update from other forums

    14.1 Superannuation Industry Relationship Network (SIRN)

    Kelly Kerr and Graeme Colley provided an update on the inaugural SIRN meeting (held 18 February) from an external attendee’s perspective. Information about the forum including purpose, membership, etc., can be found at ATO Consultation.

    The inaugural meeting held in Canberra on 18 February 2014 was attended by:

    • government representatives (13), including the ATO, Treasury, APRA and ASIC; and
    • industry representatives (18).

    Given the Government’s commitment to a $250m target reduction in red & green tape per year for the Treasury portfolio (including ATO, ASIC, APRA, Treasury) the objective of the meeting was:

    • to discuss proposals for change that the ATO can raise with Treasury; and
    • provide a quick assessment of the impacts, current burden and potential cost savings, as well as difficulties that might be encountered when progressing a solution and to establish a prioritised list of issues from a list of 30 issues that were raised in advance of the meeting.

    Key issues discussed by the Employers subgroup included:

    • removal of the work test for contributions
    • remove the 10% test for claiming tax deductions for superannuation contributions
    • require the SG employer contribution for Temporary Residents to be paid as salary
    • remove the obligation for employers to provide employees with a “choice” form where the default fund has merged
    • ASFA submission that the LMR definition should be revamped.

    The SMSF subgroup discussed the following issues:

    • inconsistencies in record keeping requirements between Income Tax legislation and Superannuation Industry (Supervision) law
    • actuarial certificates
    • review the definition of Australian Super funds to make unnecessary the practice of residents working overseas having to contribute to APRA regulated funds and then transfer account to their SMSF upon their return.

    Graeme Colley advised that many of the suggestions raised on SMSFs were not supported by the group for further action. In addition, there was agreement that no action be taken in relation to changing the SMSF investment strategy development processes.

    Minutes of the SIRN will be made available through ATO Consultation at the earliest opportunity.

    15 Other Business

    15.1 Stronger Super Reform: Superannuation Interactions and Channels 2012–17 – APRA Fund Perspective

    Mary Arrowsmith recommended members take the time to review (and promote within their organisation) the latest revised version of the Superannuation Interactions and Channels 2012–17 webpage.

    16 RECC releases from Pension funds

    Guidance was sought in relation whether a RECC amount can be released (by way of a Release Authority) from a pension account. Legal research (external) indicates that the release can be made but recent telephone contact from the ATO provided contrary advice.

    Action item

    12032014/17

    Provide SASGSecretrait@ato.gov.au with details of the RECC Release Authority request that the ATO has advised should not be made from a Pension Account

    Responsibility  

    Sue Pearce

    •  

    Action item

    12032014/18

    ATO to review decision to advise that a RECC Release Authority should not be used to release funds from a Pension Account

    Responsibility  

    Carmel Nasta

    17 Issues with paper based Funds claim form

    A number of funds reported increased workflows from individuals requesting the fund to claim a payment on their behalf through the use of the Fund claim form. Individuals are making the request based on receipt of ATO correspondence (Fund Nomination Form) advising the individual has an entitlement held by the ATO.

    Funds that don’t utilise SuperMatch are seeking some form of relief by way of an xls version or other alternatives to provide the required member data) to expedite the paper only form process which is limited to 10 members per application.

    Action item

    12032014/19

    ATO to review fund claim process and procedure to determine process improvements that expedite the Fund Claim process

    Responsibility  

    Carmel Nasta

    18 Correspondence addressing

    In response to Fund concerns about the variety of addresses used by the ATO in issuing correspondence, the ATO undertook to review the addressing of correspondence, but only as resourcing and competing priorities permit.

    ATO system changes planned late in 2014 (Major Release (MR) 4) and then again in 2015 (MR 5) provide some scope for system enhancement to improve the address preference.

    Action item

    12032014/20

    Undertake a review of the addressing of correspondence to identify shortfalls in processes that contribute to the inconsistency of correspondence being delivered to a non-preferred address.

    Responsibility  

    Mary Arrowsmith

    Action item

    12032014/21

    Members to provide SASGSecretariat@ato.gov.au scanned examples of correspondence issued to non-preferred addresses.

    Responsibility  

    SASG Members

    19 Close

    Mary Arrowsmith thanked all attendees for their contribution to a very successful meeting. The next meeting is scheduled for Wednesday 28 May 2014.

      Last modified: 04 Aug 2014QC 41684