Introduction
2.1
This chapter considers the views held by stakeholders on the provisions of the Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 (the bill).
2.2
As noted in Chapter 1 of this report, the committee received 18 submissions and held a public hearing in Canberra on 17 January 2022.
2.3
Submissions received by the committee either commented on the Corporate Collective Investment Vehicle (CCIV) regime (schedules 1-5) or on the retirement income covenant (schedule 9). As such, this chapter considers the evidence received by stakeholders on the CCIV regime, followed by evidence received on the retirement income covenant. It concludes with the committee view and recommendation.
The CCIV regime
Support for the CCIV regime
2.4
Evidence received by the committee supported the establishment of the regulatory framework for the CCIV regime. Submitters were supportive of the aim of the regime to enhance the international competitiveness of the Australian managed funds industry and attract greater levels of foreign investment into Australia's financial markets.
2.5
King & Wood Mallesons submitted that investment funds in Australia are almost exclusively structured as trusts. They noted that this is ‘primarily because trusts have “flow through” tax treatment and are not taxed at source as is the case for a trading company’.
2.6
Financial Services Council (FSC) stated that managed investment trusts (MITs) are the only flowthrough investment vehicles available to Australian fund managers to manage collective investment pools.
2.7
Submitters explained that Australian MIT structures are not well understood by foreign investors, and this unfamiliarity of Australia’s trust structure significantly impacts investor confidence and makes it more difficult for Australian fund managers to attract foreign capital.
2.8
FSC explained that the proposed CCIV is a collective investment vehicle subject to the same tax treatment as a MIT but with some of the features of a company. They highlighted that corporate investment vehicles are structures used around the world, and take many different forms depending on the legal structures available in each country.
2.9
Australian Services Roundtable (ASR) stated that as collective investment vehicles are recognised internationally, the proposed CCIV would create a more internationally familiar, simpler, and more certain structure for collective investment into Australian funds.
2.10
FSC submitted that Australia’s proposed new CCIV would increase the ability for local fund managers to compete globally. As a result, ‘the CCIV should help increase exports of Australian investment products, as foreign investors will have Australian investment products that are more familiar and more internationally acceptable’.
2.11
The Property Council of Australia highlighted the benefits that international investment brings to Australia, including ‘tangible benefits to different sectors and industries, including new infrastructure, higher productivity, greater employment opportunities and higher tax revenues for government’.
2.12
The Property Council of Australia noted as that Australia relies on significant amounts of international investment to build and grow the economy, the proposed CCIV would be particularly important as Australia looks for ‘opportunities to manage our way through the latest COVID-19 impacts and continue our economic recovery’.
Views relating to the CCIV regime
2.13
While supportive of the passage of the bill, submitters made suggestions to enhance the operation of the CCIV, as discussed below.
CCIV taxation framework
Taxation of sub-funds that fail widely held conditions
2.14
Submitters commented that an aspect of the bill that could be improved is the specific provisions that deal with the taxation of a CCIV sub-fund in the event widely held conditions are not satisfied.
2.15
King & Wood Mallesons noted that the policy aim of these provisions is to produce an equivalent tax outcome to the current trust regime, but stated that the ‘current drafting does not achieve this policy objective’.
2.16
Mr David Hawkins, Acting Assistant Director, Special Tax Regimes Unit, Corporate and International Tax Division, Treasury, explained that for the CCIV tax framework to provide equivalent tax outcomes, sub-funds of a CCIV would be taxed like an Attribution Managed Investment Trust (AMIT).
2.17
Mr D Hawkins noted that Treasury’s understanding of market practice ‘is that it's very, very rare for a fund that wants to operate as an AMIT to ever fall out of those tax rules’. He further outlined that a safe harbour exists in the law currently for temporary circumstances that are outside the influence of the trustee.
2.18
Noting that it is anticipated that the vast bulk of CCIV sub-funds would be taxed like an AMIT, Mr D Hawkins explained that for the cohort of funds that are described as non-AMIT, or in the event a sub-fund fails the requirements, the CCIV sub-funds would fall into existing division 6 tax principles, which currently occurs in the law.
2.19
Therefore, Mr D Hawkins stated that ‘enforcing the widely held rule for funds that aren't widely held does not take away from the policy intent of the CCIV’.
2.20
Mr Andrew Werbik, Assistant Commissioner, Policy Analysis and Legislation, Australian Taxation Office (ATO) told the committee that the ATO has not identified any specific issues should a CCIV fail and division 6 principles apply.
Accounting profits
2.21
FSC submitted that in the case of a MIT, the trust deed will determine the income to which relevant beneficiaries must be presently entitled. FSC explained that by contrast:
… the CCIV legislation introduces a requirement that the amount to which beneficiaries must be presently entitled is based on accounting profits. This is different from the way managed funds normally operate.
2.22
FSC argued that the reliance on accounting profits would introduce issues for CCIV members, and in some cases, would result in extra tax being imposed on the sub-fund.
2.23
FSC and King & Wood Mallesons believed that a solution to the problem would be to ‘remove reliance on a concept of accounting profits and rely on the definition of trust income as contained in the deed’.
2.24
Pitcher Partners submitted that a key concern was the use of ‘profits’ as a proxy for the ‘income of a trust estate’ for a non-AMIT sub-fund.
2.25
Pitcher Partners believed that the difference between this term and taxable income would likely result in many cases where a CCIV sub-fund would be taxed at 47 per cent. Pitcher Partners explained that this would mean that ATO resources would be diverted to resolving these issues, and would create a risk on uptake of the CCIV regime, as compared to the current use of unit trusts as the vehicle of choice for fund managers.
2.26
Pitcher Partners provided that in order for the CCIV regime to be a vehicle that meets its objectives of successfully attracting foreign investment, the bill could be amended by:
allowing a CCIV sub-fund the ability to make an irrevocable election to treat income of the trust estate as being its taxable income (with certain adjustments); or
allowing a CCIV sub-fund to be taxed on an attribution basis (rather than present entitlement basis).
2.27
Mr D Hawkins, Treasury, explained to the committee that the proposed CCIV structure would be a corporate entity and would have a regulatory framework that provides for that. Mr D Hawkins acknowledged that the reference to accounting profits is a different concept to what stakeholders would have to deal with currently. However, Mr D Hawkins told the committee ‘we have to look at that in the context of what we're dealing with; we're talking about a CCIV, which is a corporate entity’.
2.28
In response to concern about the prospect of a 47 per cent tax rate and whether a CCIV sub-fund would be worse off, Mr D Hawkins explained that Treasury does not think the CCIV ‘is doing anything different to give rise to that different tax outcome’.
2.29
Mr D Hawkins said ‘[o]ur deeming principle is seeking to make certain that the outcomes that funds can currently access carry over to the CCIV. We think the bill does that’.
2.30
Mr Werbik explained that as part of implementing the new measures of the CCIV, the ATO is actively working through what sort of public advice and guidance might be needed to set out more detail on how these provisions of the CCIV might work. The ATO has also established a CCIV Working Group to canvass industry perspectives around what support would be needed to implement the new CCIV.
Tax rules relying on concepts of dividend
2.31
FSC noted that tax rules for CCIVs do not apply based on entitlement to distributions, but instead rely on the tax definition of a ‘dividend’. FSC argued that the use of this expression would add complexity to the administration of a CCIV, and in in some instances could prevent distributions to investors.
2.32
FSC recommended that the reliance on dividend ‘should be replaced by reliance on entitlement’.
2.33
Mr D Hawkins, Treasury, reiterated that the CCIV would be a corporate entity, and as such would have a regulatory framework that includes corporate law concepts like dividends and solvency. Mr D Hawkins explained that ‘[a] high-level example is the CCIV will pay out a dividend; a trust will never need to do that. So there's already a difference there’.
2.34
Mr Werbik, ATO, further clarified that as the legislation takes the approach that it is a legal form company, the tax definition of a dividend would not be a particular issue for the ATO. However, Mr Werbik stated that to ‘the extent that there are things that need to be clarified: we [would] certainly take that on board in our public advice and guidance, subject to prioritisation’.
2.35
In relation to terms being clarified, Ms Kate Metz, Senior Executive Leader, Investment Managers, Australian Securities and Investments Commission (ASIC) also highlighted that ASIC would also ‘publish relevant regulatory guides before 1 July to ensure corporate directors understand their obligations and duties under the regime and can become appropriately licensed and operationally competent’. Ms Metz noted that ASIC plans to publicly consult on these regulatory guides before they are published.
A transitional regime
2.36
FSC noted that a key aspect to the success of the CCIV regime would be the introduction of transitional relief to allow existing funds to convert into CCIVs. FSC submitted that:
This relief will allow Australian fund managers to rationalise fund offerings through mergers and other structural changes without investors facing additional costs particularly relating to tax, stamp duty and investor meetings. A rationalisation of existing structures helps to remove unnecessary costs associated with maintaining outdated products and will likely help bring down the price of managed funds for consumers, and in the domestic market particularly.
2.37
FSC and King & Wood Mallesons noted that there is no transitional regime in the bill that would allow MISs to change their legal form into a CCIV without creating a tax event or requiring a members’ meeting.
2.38
However, Mr Tom Dickson, Assistant Secretary and Branch Head, Corporations Branch, Treasury, noted that appropriate forms of transitional relief are being looked at by the department.
The retirement income covenant
Support for the retirement income covenant
2.39
Most submitters were supportive of the introduction of the retirement income covenant into the Superannuation Industry (Supervision) Act 1993 (SIS Act) and were supportive of the intent of the covenant to better develop the retirement phase of superannuation.
2.40
FSC considered that the requirement for funds to develop, implement and regularly review a retirement income strategy for members ‘is an appropriate addition to the existing legislated covenants’. FSC highlighted that:
The three areas to be considered by trustees (income, risk, and access to savings) are also appropriate to reflect the key considerations when determining the best approach to retirement income for fund members.
2.41
The Australian Prudential Regulation Authority (APRA) submitted that the introduction of the retirement income covenant would be an important step in broadening industry focus beyond the accumulation phase to advance the retirement phase of superannuation.
2.42
Similarly, Challenger noted that it is essential that Australia’s superannuation system works as well for members in the retirement phase as it does for those in accumulation phase. Challenger submitted that the retirement income covenant is ‘supported across the superannuation industry, reflecting broad recognition of the importance of this legislation’.
Commencement
2.43
MLC Life Insurance submitted that as the proposed commencement of the retirement income covenant is 1 July 2022, it is critical for the bill to be passed quickly to provide ‘certainty for the industry and Australian's preparing for and in retirement as they consider the retirement options available, and enable the industry to implement the necessary changes’.
2.44
HESTA welcomed that trustees would not be required to give effect to all components of their strategy by 1 July 2022 as implementation of the strategy would be an ongoing process.
2.45
However, Australian Institute of Superannuation Trustees (AIST) submitted that the bill should be amended to provide a flexible implementation period, where the requirement for a retirement income strategy would be voluntary for the first 12 months from 1 July 2022 and become mandatory on
1 July 2023.
Views relating to the retirement income covenant
2.46
While many submitters supported the passage of the bill as soon as possible, the committee received evidence suggesting improvements to the retirement income covenant, as outlined below.
Relationship with financial advice and other laws
Boundaries between factual information and general advice
2.47
AIST submitted that establishing a principles-based covenant requires consideration of the interaction with, and role of, financial advice. AIST noted that there are practical concerns that relate to the overlap between what is expected from superannuation trustees regarding guidance and assistance and what is considered advice.
2.48
The Financial Planning Association of Australia (FPA) acknowledged the changes made to the Explanatory Memorandum (EM) of the bill to strengthen and make it clearer that superannuation trustees must comply with the financial advice laws in the Corporations Act 2001. The FPA highlighted the importance of this, stating:
It is essential that the Covenant includes a clear and ongoing legal obligation that the laws that govern the provision of financial advice must be adhered to by the trustee regarding the formulation, review and giving effect to the retirement income strategy, including in relation to the assistance the trustee will provide beneficiaries to achieve and balance the objectives of the strategy, as required under s52AA(2) of the Bill.
2.49
The FPA submitted that superannuation trustees have access to personal information about beneficiaries, which creates a very fine line between the provision of factual information and the provision of general or personal advice as the beneficiary may assume the trustee has considered the individual’s circumstances when ‘assisting’ them with their retirement income needs.
2.50
AIST noted that despite extensive guidance from ASIC, ‘there remains some confusion about the boundary between general and personal advice’. AIST submitted that ‘this lack of clarity needs to be addressed in order for advice to play an appropriate role in retirement income strategies.’ AIST stated that:
ASIC should update their guidance about the boundaries between the provision of factual information and general advice, including in relation to the Retirement Income Covenant, and the Explanatory Memorandum foreshadows this.
2.51
Ms Jane Eccleston, Senior Executive Leader, Superannuation, ASIC, noted the Treasury’s consultation process on the Review of the quality of financial advice will examine the regulatory framework for financial advice and have regard to the retirement income covenant. Ms Eccleston stated that ASIC will ‘support and engage with this review’.
Intra-fund advice
2.52
The committee heard from some submitters that intra-fund advice should be expanded to include advice about retirement products. Industry Super Australia (ISA) outlined that intra-fund advice is ‘advice that a superannuation trustee can provide to members where the cost of the advice is borne by all members of the fund’. ISA explained that the objective of intra-fund advice is to ‘allow super funds to give members simple, non-ongoing personal advice on the member’s interest in the fund. This advice can be collectively charged across the fund’s membership’.
2.53
ISA noted that ASIC has given guidance on the types of non-ongoing advice for which a superannuation trustee is likely to be allowed to collectively charge. ISA highlighted that the topics ‘are narrow and do not take account of a members wider financial and household situation, or access to Centrelink payments’.
2.54
In their submission to the Treasury consultation in July 2021, ISA recommended that intra-fund advice be expanded to include advice about retirement income products:
which takes into account Age Pension eligibility, Centrelink payments, non-super assets and non-super income, and
which covers the members household, i.e., spouse/partner of the member and, if applicable, dependant/s of the member.
2.55
AIST also submitted that the value of intra-fund advice has not been fully or consistently utilised and should be expanded to cover household retirement planning. AIST noted that people commonly seek pre-retirement advice as couples/household, and that ‘this (including consideration of a spouse’s super) should be allowable within an intra-fund advice topic on retirement and paid for via existing intra-fund advice models’. AIST stated that this is particularly pertinent given that other relevant retirement income such as the Age Pension is assessed based on whether someone is in a relationship.
2.56
AIST explained that AIST members report that one of the main advice strategies for members in the accumulation phase leading up to retirement is increasing contributions and managing contributions for a couple’s best interests, and therefore, intra-fund advice should be extended to include a household’s retirement adequacy, Age Pension eligibility, non-superannuation assets, and income.
2.57
Cbus noted the vital role intra-fund advice plays in providing advice to their members but submitted that it is ‘unrealistic to expect that a superannuation fund can deliver comprehensive financial advice to each member efficiently or cost effectively’. Cbus stated:
The ability to provide intra-fund advice is vital in providing cost efficient, limited advice to more members about their retirement at scale. Given the compulsory nature of superannuation, and the cost of holistic personal advice, intra-fund advice provides significant benefit to members who otherwise would not get advice.
2.58
However, Super Consumers Australia encouraged caution to broaden the scope of intra-fund advice. Super Consumers Australia argued that ‘there is an inherent conflict in allowing funds to provide guidance on their own products’. Super Consumers Australia highlighted this through the below example.
By way of a simple example, a fund in which the average member has a very low retirement balance may justify only providing an account based pension in the retirement phase on the grounds that this is the best solution for its members. This fund has no incentive to inform its customers about other types of products that may help them achieve their retirement goals. This would be a disservice to members in cohorts which the fund has decided aren’t significant enough to develop specific strategies. Without independent guidance these groups of consumers may not look beyond the products their fund has on offer, which may be totally inappropriate for their needs.
2.59
Ms Eccleston, ASIC, agreed that intra-fund advice is limited in scope and outlined that the Review of the quality of financial advice is likely to receive comment on whether expanding intra-fund advice with regard to the retirement income covenant is an appropriate decision to make.
Anti-hawking laws
2.60
In 2021 the Australia Government introduced reforms to the anti-hawking regime to prevent high pressure sales of financial products that are poor quality or inappropriate for the consumer. The EM states that the covenant obligations are consistent with anti-hawking laws:
… which permits a trustee to contact a beneficiary who is approaching retirement with information about different retirement income products offered by the fund, provided that the trustee does not make an offer, or request an invitation to a beneficiary during an unsolicited telephone call, face-to-face meeting or other real time interaction that creates an expectation of an immediate response.
2.61
AIST submitted that while the EM states that the covenant obligations are consistent with anti-hawking legislation, permitting super funds to contact their existing members with retirement product information is ‘a grey area that should be specifically addressed in the explanatory memorandum to the legislation’.
2.62
Cbus argued that the anti-hawking reforms ‘hamper Cbus’ ability to implement a retirement income strategy because it constrains our ability to communicate with existing members about our award winning pension product’. Cbus stated that refinements to the anti-hawking regime are required ‘to enable Cbus to communicate with existing members who are approaching retirement to help them to make well informed decisions that will maximise their retirement income’.
2.63
ISA also stated that the Australian Government should expand the exemption from the anti-hawking prohibition to ‘allow superannuation trustees to make offers to members about moving to the retirement phase to facilitate the take up of retirement income products’.
2.64
Ms Eccleston, ASIC, stated that trustees can fulfil the requirements of the covenant and create effective retirement income strategies without providing financial advice or breaching the anti-hawking laws. Ms Eccleston explained that the anti-hawking provisions in the retirement income covenant are designed to ‘stop people making a decision when they [are] under pressure in a real-time interaction’.
2.65
Ms Eccleston outlined to the committee that there are other ways trustees can bring products to people's attention without breaching the anti-hawking provisions:
For instance, you can communicate with them about the product in a way which isn't a real-time interaction by doing a mail-out. You can give them information rather than an offer or invitation in some sort of real-time setting. And you can also get their consent to be approached to have this discussion in a real-time communication.
Self-managed superannuation funds
2.66
As stated in the EM, the retirement income covenant would not apply to trustees of self-managed superannuation funds. Some submitters commented that the exclusion of self-managed super funds would undermine the objective of the covenant and that the bill should be amended to include self-managed super funds.
2.67
Super Consumers Australia explained that self-managed super funds have a significant portion of the funds under management in the retirement phase, totalling $334 billion of the $750 billion retirement pool. They noted that the self-managed super fund sector is also responsible for $35 billion in benefit payments per year.
2.68
Super Consumers Australia argued that with such a high percentage of self-managed super funds in the retirement phase, the proposal to exclude self-managed super funds from the covenant ‘would see a large number of people in and close to retirement miss out on important planning and assistance’.
2.69
Super Consumers Australia submitted that ‘if the intention of the retirement income covenant is to ensure all people are maximizing their savings, it must not leave behind the one million members in [self-managed super funds]’.
2.70
Industry Super Australia (ISA) submitted that given self-managed super funds are often used for wealth preservation and estate planning, ‘their exclusion from the covenant undermines the broader objective of the covenant, which is to improve retirement outcomes by focusing on increasing the use of super assets in retirement’.
2.71
ISA noted that the flexible principles-based approach to the covenant outlined in the bill could be broadly applied to self-managed super funds ‘as it allows each fund to comply with the obligations in a way that appropriately takes into account the nature, scale and complexity of the fund’.
2.72
Super Consumers Australia recommended that the principles of the retirement income covenant apply to self-managed super funds, as well as self-managed super funds to consider relevant retirement strategies, such as cognitive decline, exit strategies and death nominations. ISA reiterated ‘that the legislation should be amended so that self-managed super funds are subject to the covenant’.
2.73
Mr Adam Hawkins, Assistant Secretary, Tax and Transfers Branch, Treasury, outlined that the decision to not cover self-managed superannuation funds with a covenant was because the circumstances of a self-managed superannuation fund and an APRA regulated fund are ‘quite different’. Mr Hawkins said:
An APRA regulated fund has a very large membership, potentially millions of members, and will need to gather information in order to formulate their strategy; whereas a self-managed superannuation fund will intimately know their members, so the need to gather information and then develop a strategy on types of services or products that might be appropriate to them isn't as involved as it would be for an APRA regulated fund.
2.74
Mr A Hawkins, Treasury, therefore stated that as a self-managed superannuation fund and an APRA regulated fund can be thought of quite differently in terms of what set of regulations might apply, the retirement income covenant does not cover self-managed superannuation funds.
De-identified data
2.75
The committee heard that access to de-identified data, in addition to existing publicly available data, would assist trustees understand members and their needs to implement their strategy, and would help inform their cohort analysis.
2.76
HESTA outlined that under the proposed retirement income covenant, superannuation funds ‘will be expected to take reasonable steps to gather information about their members to inform the formulation and review of their strategy’.
2.77
In their submission to the Treasury Exposure Draft Legislation, Aware Super supported the use of data such as member surveys and publicly available data. However, Aware Super submitted that ‘it is unlikely that existing data sources will provide trustees with the desired level of appropriate, timely and cost-effective data to support their [s]trategies’.
2.78
HESTA noted that superannuation-related data on membership can be limited or outdated ‘given the voluntary nature of information provision from members and the limited information required to be provided by employers’. HESTA argued that:
Super funds do not automatically receive enough information to develop a retirement income strategy for beneficiaries who are retired or who are approaching retirement, to the extent that this includes non-superannuation income, e.g. information related to externally held investments or Centrelink eligibility.
2.79
AIST submitted that the Australian Government should establish a robust data-sharing framework for bodies like the ATO to release de-identified data that would assist trustees with their obligations. AIST argued that:
Having access to other de-deidentified data sets, including those from Services Australia (e.g., Centrelink payment statistics, Child Support statistics, etc.) would provide a clearer stream of information that will assist trustees determine their membership and any sub-classes within it.
2.80
Both Cbus and ISA highlighted that aggregate de-identified member data provided by government agencies to superannuation funds would assist funds to divide their members into appropriate subclasses for the purposes of the strategy (if the fund chooses to do so) and formulate a suitable strategy for each subclass.
2.81
APRA submitted that it would ‘consider expanding its data collection for retirement income products and the development of further tools that would give a sharper focus on the performance of these products’.
Other comments on the bill
Creation of the retirement income covenant is unnecessary
2.82
CPA Australia submitted that it does not support the proposed new retirement income covenant. CPA Australia stated that:
… the creation of a retirement income covenant for superannuation funds at this time is unnecessary, as this new covenant will add to the costs of running superannuation funds and will be of little or no practical benefit to fund members, trustees, regulators or the government.
2.83
CPA Australia noted that the ‘complexity of retirement planning results in a process which is convoluted and difficult for many to navigate’, and believed that it would ‘be more efficient for this process to be streamlined and simplified prior to subjecting trustees to increased compliance costs’. CPA Australia further explained that ‘the recommendations of the retirement income covenant requiring trustees to provide appropriate guidance to their members is likely to create a substantial additional compliance cost burden’.
2.84
CPA Australia also disagreed with the EM where it states that existing legal obligations of superannuation trustees focus primarily on the accumulation phase with no specific obligations to consider the needs of beneficiaries in retirement. CPA Australia argued that:
The proposed RIC requirements are already contained in obligations with which trustees must comply, including but not limited to, general trust law obligations, the best financial interests duty, the sole purpose test, requirements regarding the formulation and maintenance of investment strategies and the new Design and Distribution Obligations (DDO). We are concerned that requirements for trustees to consider their members' non-superannuation investments is beyond their remit.
Employee Share Schemes
2.85
As outlined in the EM, schedule 10 of the bill removes cessation of employment as a taxing point for Employee Share Schemes (ESS) interests which are subject to deferred taxation. The EM states that where an employee ceases the relevant employment, their deferred taxation arrangement will continue and the earlier of the remaining deferred taxation points will apply.
2.86
The committee heard that in respect to shares or options that are issued to employees, the relevant taxing points after cessation of employment falls away would be ‘when a real risk of forfeiture of the share or right to acquire the share no longer exists. That would be the key alternative taxing point that will most commonly occur’.
2.87
The committee noted that in a situation where an employee leaves employment but have shares that are still subject to forfeiture because they are outstanding key performance indicators, the proposed reform in the bill would mean the employee does not get taxed at the point they leave employment but at the latter time, when the risk of forfeiture falls away.
2.88
While the committee asked questions related to the ESS, no comments were received in submissions.
Committee view
2.89
The committee acknowledges that there is overwhelming support for the CCIV regime. The committee believes that the intent of the bill, to increase the international competitiveness of Australia’s managed fund industry, would be met as CCIVs share the characteristics of other internationally recognised investment structures.
2.90
In response to submitters proposed enhancements relating to the CCIV taxation framework, the committee understands that the CCIV would be a corporate entity and would have a regulatory and tax framework to provide for that. It is the committee’s view that the proposed bill would provide equivalent tax outcomes with what happens currently in tax law.
2.91
The committee commends Treasury, ASIC and the ATO for their work on this complex bill.
2.92
The committee also recognises the strong support from submitters to insert the retirement income covenant into the SIS Act. The committee is supportive of the intent of the covenant to better develop the retirement phase of superannuation and the principles based requirements of the covenant for superannuation trustees to formulate, review regularly and give effect to a retirement income strategy for beneficiaries approaching or who are in retirement.
2.93
Regarding issues raised by submitters when formulating and giving effect to their strategy, the committee is confident that trustees can fulfil the requirements of the covenant and create effective retirement income strategies without providing financial advice or breaching anti-hawking laws.
2.94
Further, the committee understands that Treasury’s Review of the quality of financial advice consultation process will explore the issue of whether financial advice concepts could be simplified.
2.95
The committee notes calls from submitters, supporting both the CCIV and the retirement income covenant, that the bill should be passed as soon possible and that the enhancements proposed by submitters should not slow or stop the passage of the bill.
2.96
The committee understands that there would be ongoing conversations about proposed improvements and enhancements if the bill were to pass to ensure the CCIV remains a competitive corporate structure and the retirement income covenant provides flexibility for trustees assisting their members.
2.97
The committee recommends that the bill be passed as soon as practicable in order to provide certainty to stakeholders working towards the 1 July 2022 deadline for implementation of the CCIV and the retirement income covenant.
2.98
The committee recommends that the bill be passed.
Senator Paul Scarr
Chair
Liberal Senator for Queensland