Chapter 2Views on the bill
Introduction
2.1This chapter examines inquiry participants views on the provisions of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024. It summarises what inquiry participants considered to be the key issues arising from the bill and concludes with the committee’s views and recommendation.
2.2This examination is informed by the bill’s explanatory material, submissions received by the inquiry, and evidence provided at a public hearing held on 13June 2024 at Parliament House, Canberra.
Amendments relating to financial advice and superannuation
2.3Inquiry participants were broadly supportive of the policy intent of Schedule 1 of the bill—namely, of improving the accessibility and affordability of quality financial advice for Australian consumers, and reducing unnecessary and costly red tape in the industry.
2.4Generally, inquiry participants also welcomed the steps taken by this bill to implement recommendations made in the Quality of Advice Review, even as some argued for different approaches to the implementation of these recommendations.
Criteria for paying financial product advice fees from member’s interest in fund
2.5At the public hearing, several witnesses focused on the proposal for the current bill to repeal and replace section 99FA of the Superannuation Industry (Supervision) Act 1993 (SIS Act).
2.6Industry stakeholders generally acknowledged and welcomed the government’s objective of reducing the current administrative burden on relevant parties arising from the payment of fees from superannuation for financial advice.
2.7However, Super Consumers Australia disagreed with allowing the deduction advice fees from members’ superannuation accounts at all. They argued that people may be more likely to value advice if they pay for it from their own pocket rather than through superannuation. Super Consumers Australia submitted that if advice fees were to continue to be permitted to be deducted from superannuation accounts, then they supported the position that advice fees must only be deducted for advice related to a member’s interest in the fund.
2.8AustralianSuper expressed support for amendments made by the bill which would ensure that the payment of a personal advice fee from a member’s interest in a superannuation fund would not be treated as a superannuation benefit to that member.
2.9While there was general support for reducing the administrative burden of paying fees for financial product advice from superannuation funds, several submitters raised concerns about how these amendments would be implemented. Some witnesses argued that the measures may be counter-productive to the intention of removing administrative burdens. Others suggested more could be done to reduce red tape.
2.10The Financial Services Council welcomed the provision of clarity regarding income tax aspects of the amendments but noted the absence of clarification of GST treatment of all financial advice fees paid by a superannuation fund. They argued that this omission would detract from certainty regarding the payment of advice fees.
2.11An attachment to a submission from the Joint Association Working Group identified several concerns with the drafting of section 99FA. This attachment argued that, under the proposed amendments, there would no longer be any explicit statement that advice fees are permitted fund expenses, as only certain expenses would be prohibited. They stated:
To simply prohibit certain expenses does not thereby expressly authorise every non-prohibited expenditure, in circumstances where a superannuation fund trustee:
(a) can deal only with trust assets under authority (whether such authority is conferred by statute, the trust deed, or member consent); and
(b) is subject to positive obligations, including the SIS Act covenants in s 52, and the obligation under s 62, of the SIS Act to maintain the fund for the benefit of members, which guide how the trustee manages assets and expenses of the fund.
2.12They argued that this would be an insufficient basis for the payment of advice fees from superannuation funds, because trustees must only deal with trust assets under authority and are subject to positive obligations to maintain the fund for the benefit of members.
2.13The Law Council of Australia also noted that the proposed section 99FA remains drafted as a prohibition on the payment of fees under certain circumstances and does not contain express permission to pay advice fees under certain circumstances. The Law Council therefore argued that the proposed amendment does not enhance legal clarity for payment of advice fees.
2.14The attachment to Joint Association Working Group’s submission also claimed that it would be legally and operationally complex for trustees to be satisfied of some of the proposed requirements, such as the nature and scope of advice, and whether advisers’ fees are charged at cost.
2.15In contrast, the Australian Superannuation Funds Association (ASFA) and the Super Members Council advised that section 99FA would provide a legal basis for the payment of fees for advice from superannuation. ASFA noted that the insertion by section 99FA of a legal basis for payment of fees from superannuation would also clarify when a breach of that basis occurs.
2.16In addition, the Treasury, the Minister and the Explanatory Memorandum all reiterated that the proposed section 99FA will provide a legal basis for payment of these fees.
Obligation on trustees to check advice
2.17A key issue raised in evidence to the committee was whether the amendments would require superannuation trustees to check every individual piece of advice provided to members of that fund in order to discharge the trustees’ obligations. Some evidence suggested that the amendments would require each piece of advice to be checked in this way, with other evidence suggesting that current, risk-based approaches to advice review should continue to be sufficient.
2.18Those witnesses who believed that the amendments would require checking of more or all advice provided to members considered that the proposed changes would run counter to the government’s stated intention of making financial advice cheaper. For example, the Joint Licensees Group estimated that if every piece of advice had to be checked, this would result in costs in the hundreds of millions of dollars annually to consumers’ retirement savings.
2.19While the Joint Licensees Group expressed general support for the bill, they strongly opposed the new requirements under the proposed section 99FA, contending they would cause confusion, uncertainty and cost. They argued that costs would be passed onto members through increased trustee costs, and financial advisers would have to increase their fees to cover the added complexity and time involved in approval of fees by superannuation funds.
2.20The Stockbrokers and Investment Advisers Association (SIAA) noted the aim of reducing unnecessary red tape in obtaining consent for payment of fees from superannuation and acknowledged that the Quality of Advice Review found that the current regime involves complexity and duplication. SIAA welcomed the bill’s proposal to repeal existing requirements for providing feedisclosurestatements.
2.21However, SIAA also expressed concern that the proposed changes to section 99FA will establish an excessive obligation on trustees to ensure that advice and fee arrangements are compliant with the sole purpose test.
2.22In contrast, Super Consumers Australia contended that there was no basis to argue that the bill would increase red tape for consumers and require checking of every piece of advice, and that the amendments should lead to greater consistency in interpretation of the deduction rules.
2.23Super Consumers Australia emphasised that trustees and advisors should have oversight processes in place already, and if they do, it would be difficult to see why the amendments proposed by the bill would require major changes to practice or regulatory guidance.
2.24Some witnesses wanted clearer statements that not every single piece of advice would need to be checked. ASFA indicated the importance of certainty for superannuation trustees to discharge their oversight obligations concerning the deduction of advice fees from members’ accounts. On this basis, ASFA supported the inclusion of a clarification in the bill’s explanatory memorandum that the bill is not intended to impact trustee obligations.
2.25The Super Members Council believed that the status quo, risk-based compliance approach would be appropriate under the proposed section 99FA, and that the compliance burden should not increase. They identified that the updated explanatory memorandum for the bill clearly stated that trustees should have robust assurance processes in place to satisfy themselves that they meet their obligations under the current section 99FA regarding fee deductions from members’ accounts.
2.26The Law Council of Australia argued that courts would likely place limited weight on explanatory materials in the event of a dispute regarding the meaning of section 99FA, and that while the updated explanatory memorandum states that there should be robust assurance policies and processes to ensure compliance, the law does not refer to such policies or procedures. They concluded that trustees may still inadvertently breach section 99FA despite robust processes and controls, or otherwise would have to comply with section 99FA in relation to each advice fee.
2.27At the public hearing, the Financial Services Council argued in support of the Law Council of Australia’s contention that the bill would put an unacceptable regulatory cost on advice businesses and an unacceptable legal burden on trustees.
2.28In its submission, the Financial Services Council acknowledged the positive intentions of the law but argued that the bill may make the existing situation worse. They cautioned that the provisions proposed by the bill may result in multiple interpretations of the law’s impacts and could reduce clarity. Specifically, it outlined that a black letter interpretation of the provision may require superannuation trustees to check every single piece of advice, which will increase costs for consumers.
2.29The Financial Services Council also stated that the amendments have the potential to force superannuation trustees to reject fee deductions on the basis that they are not charged at cost, and financial advisers would risk not being paid fair market rates for their advice. Additionally, providers would lose the ability to charge for services provided through general advice, which the Financial Services Council identified was not a stated policy objective of the Quality of Advice Review. The Financial Service Council submitted that the deduction of fees for personal advice should be allowed.
2.30The Financial Services Council also warned that the unintended consequences of these changes could result in superannuation trustees not facilitating advice fee deductions where the adviser is independent of the superannuation fund. They cautioned that this could have a chilling effect on access to professional financial advice.
2.31The Australian Securities and Investments Commission (ASIC) gave evidence that they had been consulted by Treasury on the drafting of the bill and had provided advice on whether they would be able to administer the law consistent with the government’s policy intent.
2.32ASIC explained that its guidance on the existing law had been provided through joint letters with the Australian Prudential Regulatory Authority (APRA), and a recent report, report 781, which examined trustee oversight and laid out good practice expectations. ASIC explained that these guidance documents referred to reviewing samples of statements of advice on a risk basis, which may be appropriate as part of a trustee’s range of practices to ensure they meet their obligations.
2.33Mr Kirkland of ASIC noted that:
… trustees can access a range of evidence to make that assessment. That can include having agreements with financial advisers as part of their onboarding process, requiring attestations from financial advisers and requiring processes for checking that controls are working. Looking at some statements of advice is just one form of evidence that trustees can look to.
2.34Treasury was asked how the proposed law would compare to current obligations on trustees regarding the checking of financial advice. Dr Andrew Moore of Treasury state that the Bill ‘provides … legal certainty, consistent with the trustees’ general obligations under the SIS Act. Broadly, otherwise, it is consistent with the existing provision. It’s an objective test, as is the current provision.’
2.35Mr Kirkland supported this statement and said that ‘in relation to the sole purpose test, trustees currently need to satisfy themselves that a range of activities they undertake are consistent with that sole purpose test, and we’d see this provision being complied with in a similar sort of way.’
2.36Dr Moore also responded to the concern that the proposed law will require trustees to check every advice document to release an advice fee. Dr Moore noted that the proposed law:
… establishes an objective standard in law for deducting advice fees. The law’s not prescriptive about how a trustee might go about complying with that law. That really is a matter for the trustee to determine, based on the commercial arrangements that they have in place, the risk profile of their fund and the counterparties that they’re dealing with.’ Dr Moore noted this direction is consistent with ‘most of the key obligations that apply to trustees under the SIS Act.
2.37Mr Kirkland agreed and said that ‘in commenting on how we would interpret the proposed changes in section 99FA, we have said on a number of occasions that it is not our view that the provision would require trustees to check every statement of advice.’
2.38Treasury explained that there are a wide range of commercial arrangements and practices for different funds, and accordingly, different risk profiles. They argued that it would be a challenge for the law to prescribe how to comply with this law without threatening to infringe on commercial arrangements, and in the process threatening to introduce additional cost and inefficiency.
2.39Dr Moore also reiterated that ‘the regulators ASIC and APRA have indicated that trustees should be putting in place robust assurance processes and they’ve suggested that they could either take a risk based approach to that or a random sampling approach to that.’
2.40In response to inquiries that the proposed law might be better drafted more prescriptively, Parliamentary amendments to the bill were accompanied by a supplementary explanatory memorandum that provides further detail to trustee obligation in subsection 99FA, confirming that a risk-based approach his appropriate:
New subsections 99FA(1)(a) and (b) provide clarity to trustees in how their existing obligations (such as under the sole purpose test) apply to the deduction of advice fees from a members’ interest in the fund. Consistent with meeting their obligations under the current 99FA, trustees should have in place robust assurance processes to satisfy themselves that advice deductions from members’ superannuation accounts comply with their legal obligations. This may include random or risk-based sampling of advice.
Consent to fee arrangements
2.41Witnesses and submitters expressed various views on the new consent requirements for ongoing fee arrangements proposed in the bill.
2.42Some submitters expressed opposition to the provisions which would allow a superannuation trustee to refuse to pay costs out of superannuation, despite a member requesting, or consenting to, such costs being paid out of their fund. For example, SIAA argued that a member’s superannuation belongs to that member and that trustees should not have the right to override members’ decisions where all legal requirements are met.
2.43However, Super Consumers Australia specifically opposed calls to oblige trustees to pay advice fees if a member has directed them to do so. They characterised such an obligation as giving financial advisers the ability to override trustees regarding payment of money out of superannuation. They argued that this would be at odds with trustees’ duties under trust law and the SIS Act.
2.44AustralianSuper suggested the bill would benefit from more clarity that, in the absence of an approved form for requests or consents, superannuation funds can continue to use their own consent forms if they meet the minimum requirements in law.
2.45SIAA supported amendments which would provide flexibility around providing consent. They supported flexibility concerning the ‘anniversary date’ of fee arrangements to establish consent for such arrangements, the repeal of certain civil penalties relating to noncompliance with notification obligations, and the availability of technologically neutral signatures for documents related to ongoing fee arrangements.
2.46SIAA reiterated their position, expressed during previous Treasury consultations on the bill, that advisers should not be required to provide signed consent forms to product issuers and should instead be permitted to rely on advisers and licensees meeting fee consent obligations under the Code of Ethics and the Corporations Act 2001 (Corporations Act). While SIAA noted the bill did not remove the requirement, they welcomed the option for the Minister to approve prescribed consent forms.
2.47SIAA also expressed concern over the proposed section 962Y of the bill, which would allow account providers to request additional information from a fee recipient before deducting ongoing fees. They emphasised that it was important for parties to be able to rely on standard forms and important to avoid situations where product issuers effectively become auditors of fee arrangements between advisors and clients.
2.48At the public hearing, Treasury explained that the reason the standard mandatory consent form is subject to Ministerial approval rather than being contained in the legislation is due to flexibility. Treasury advised the committee that the design and evolution of the form over time would provide the ability to respond to changing circumstances in the future.
Use of the term ‘relevant product’
2.49The Insurance Council of Australia suggested that the use of the term ‘relevant product’ in proposed section 963BB could cause confusion with the term ‘relevant financial product’ as defined in section 910A.
2.50The Institute of Public Accountants echoed this concern and recommended that either specific insurance products be listed, or that the term ‘financial product’ be used instead.
Provision of Financial Services Guides
2.51The Financial Council of Australia welcomed the bill’s support for provision of Financial Services Guides on a company website. However, they supported expanding the circumstances for provision of a Financial Services Guide in this way to circumstances where general advice is provided, instead of only where personal advice is provided. Government amendments to the bill have subsequently provided this additional flexibility.
Receiving or giving conflicted remuneration
2.52Several submitters observed an issue with the drafting of provisions relating to consent for advice about certain insurance products. In their written submissions, both the Insurance Council of Australia and the Council of Australian Life Insurers (CALI) identified that the proposed section 963BB would unintentionally remove the operation of the conflicted remuneration exemptions for persons providing general, not personal, advice. This issue has since been rectified by parliamentary amendments to Schedule 1 to the bill. At the public hearing, CALI agreed that these amendments have now aligned the provisions with the stated intent of the bill.
2.53The Australian Banking Association expressed support for the proposed exemptions from the prohibition on receiving conflicted remuneration but asserted that they did not align with the Quality of Advice Review. They stated that it is unclear why carve-outs are given only in relation to financial products or financial services provided to the client. Instead, they suggested all benefits provided by a client should be exempt, irrespective of what the benefit is provided for.
Amendments relating to the oil and gas industry
2.54Some submitters raised concerns about the amendments in Schedules 2 and 3 to the bill.
Changes to the meaning of ‘exploration for petroleum’
2.55Australian Energy Producers (AEP) considered that the proposed definition of ‘exploration for petroleum’ goes past what was intended in TR 2014/9. The AEP characterised the proposed amendments as not aligning with the realities of activities undertaken in relation to the exploration for petroleum. They submitted that the proposed definition would create uncertainty for projects aiming to develop new gas supplies.
2.56The AEP argued that the activities undertaken, and the data collected in appraisal activities are used in a range of applications, from discovery of petroleum resources through to understanding the commercial, economic or technical viability of a project. AEP suggested that a dominant purpose test should be introduced to reflect the fact that the dominant purpose of an appraisal well is for the discovery of petroleum, but that such a well may capture data that will be used for subsequent activities that go to the viability of a project.
2.57The Tax Institute noted that there is a common theme between the revisions made to section 37 of the Petroleum Resource Rent Tax Act 1987 (PRRT Act) and TR 2014/9. However, the Tax Institute also contended that the proposed amendments go beyond TR 2014/9, and that the amending provision uses language which creates uncertainty. They argued that, overall, the proposed changes may result in complex legal and financial issues for affected taxpayers and detract from Australia’s appeal as a destination for investment in the resource sector.
Tax deductions for mining, quarrying and prospecting rights
2.58Few comments were made regarding the tax deduction changes concerning mining, quarrying, and prospecting rights. However, the Tax Justice Network Australia and the Centre for International Corporate Tax Accountability and Research stated their support for the amendments to ensure that these rights cannot be depreciated for income tax purposes until they are actually used.
Proposed retrospectivity of amendments
2.59Some submitters raised concerns with the proposed retrospective operation of the amendments proposed in the bill.
2.60The Corporate Tax Association acknowledged that from time-to-time laws will have retrospective operation, but cautioned against the implementation of measures which would have retrospective operation from 21August 2013. They also characterised this as contrary to a Full Federal Court decision.
2.61The Tax Institute suggested that the uncertainty caused by retrospective amendments could result in taxpayers seeking professional advice and undergoing time-consuming, resource-intensive reviews. The Tax Institute submitted that this could result in taxpayers entering into costly disputes with tax authorities.
2.62The Tax Institute was also concerned that proposed retrospective changes could result in the nullification of transfer notices issued by affected taxpayers, which may mean taxpayers could be found guilty of certain strict liability offences.
2.63In addition to criticising the changes to the meaning of ‘exploration for petroleum’, the AEP opposed retrospective changes to the definition of the term in relation to the petroleum resource rent tax (PRRT).
2.64The AEP stressed that the oil and gas industry has made significant investments over a sustained period in long-lived, capital-intensive assets, and underscored the importance of political and regulatory stability for attracting foreign investment.
Tax offsets for the film and screen industry
Support from industry
2.65A majority of submissions to this inquiry were made by stakeholders from the film and screen industry, including individuals and small businesses working in the industry. These submissions were strongly in support of the amendments proposed to the location offset and producer offset, urging that the bill be passed as quickly as possible.
2.66Submitters identified that the industry benefits greatly from international productions choosing Australia as a film and TV project destination. They emphasised that these international productions provide an increase in the available work for many stakeholders and provide valuable access to industry knowledge and training.
2.67These submissions supported the increase to the tax offsets available for eligible international productions. They recognised that the amendments to the tax offsets would help Australia remain a competitive destination for international productions and would attract more of these productions to Australia.
2.68These submissions emphasised the need for reforms to these offsets to be reviewed and passed as quickly as possible. Several submissions pointed to the long-term impacts of the COVID-19 pandemic and recent American film industrial strikes, which they explained as having caused significant disruption and negatively impacting income for the industry. Several individuals gave personal accounts of financial difficulties which industry participants have faced. For this reason, these submitters urged swift review and passage of these amendments.
Suggestions for further amendments
2.69Some stakeholders considered that further changes should be made to the tax regime concerning offsets for film and screen productions.
2.70Screen Producers Australia supported the training obligations being attached to the offset and the increase of the rebate to 30 per cent. They also expressed concern that these amendments would mean that taxpayer support would be increasingly balanced towards international productions.
2.71Screen Producers Australia stated that some of their members had expressed concern that ‘local screen storytelling faces restrictions that do not apply to international projects.’ Such restrictions were identified as meeting the Significant Australian Content (SAC) test and meeting stringent guidelines on the importation of international artists.
2.72While reiterating their support for the strengthened training and infrastructure obligations, Screen Producers Australia wanted to ensure that training benefits the entire screen industry and minimises inefficiencies and wastage. For these purposes, Screen Producers Australia noted that training must be done in partnership with and coordinated by government to ensure training takes place in areas of skills shortage.
2.73The Australian Writers’ Guild commented on the SAC test, suggesting further amendments should be made to improve its operation. They described it as a discretionary test which is inferior to an objective and more transparent point-based system, such as that used in Canada.
2.74The Australian Writers’ Guild also commented on the producer offset guidelines, which list matters that the film authority should take into account when considering if a work meets the SAC test. The Australian Writers’ Guild stated that creative control, copyright and intellectual property resting with Australians are significant and should be the primary consideration for the SACtest.
2.75Screen Producers Australia highlighted differences in treatment between producers of documentary series and producers of other series and suggested that the bill should address these differences.
2.76Specifically, Screen Producers Australia identified that there had previously been a 65-hour cap on the producer offset, allowing companies to only claim for the tax offset on the first 65 commercial hours of a production series. This cap was removed for drama series, but not documentary series, by a 2021 reform to the producer offset.
2.77Screen Producers Australia submitted that the bill should abolish the cap for documentary series, and that the post, digital and visual effects offset which is not currently available for feature documentaries should be available for such documentaries.
2.78Ausfilm strongly supported the bill and noted that the provisions had been subject to detailed industry consultation. They outlined the consultation procedures undertaken throughout 2023 and early 2024 and emphasised that the amendments have the broad support of industry.
2.79Ausfilm concluded that the bill strikes a healthy balance by ensuring benefits flow from international productions to Australia’s industry, and by ensuring that Australia has competitive incentives for international projects.
2.80Screen Producers Australia opposed increasing the current minimum qualifying Australian production expenditure threshold from $15 million to $20 million. They expressed concerns about a lack of policy rationale for the increase, and that the higher threshold may cause problems if the AUD to USD exchange rate becomes less favourable for financiers in the United States. They also believed it may make it more difficult for smaller Australian businesses to obtain opportunities provided by international productions.
2.81At the public hearing, representatives from the Office of the Arts appeared alongside representatives from Treasury to give evidence regarding the tax offsets for the film and screen industry.
2.82Representatives from the Office of the Arts explained that the minimum qualifying Australian production expenditure threshold had been set at $15 million in 2007 and there had been significant increases in the costs of production since then. They explained that after consultation with stakeholders, and analysis of the offset, they identified only two productions since 2007 had fallen below the $20 million threshold. On this basis, it appeared there would be minimal impact from raising the threshold from $15 million to $20 million.
Miscellaneous and technical amendments
2.83Schedule 5 proposes a number of miscellaneous and technical amendments to Treasury portfolio legislation.
2.84Some comments made on this schedule related to successor fund transfers, which are effectively bulk transfers of members from one fund to another. Stakeholders wanted to ensure that insurance coverage for members was continued through successor fund transfers.
2.85The Law Council of Australia observed a gap in the proposed section 99FA, which would mean that a member’s consent to advice fee deductions terminate when they transfer out of the fund. The Law Council expressed concern that the termination of advice fees would be to the detriment of members where successor fund transfers occur, because these members would lose access to advice, and that this could be a significant barrier for mergers.
2.86ASFA also observed that there would be instances where successor funds cannot continue members’ insurance coverage unless individuals elect to be covered, and that an individual is likely to assume that insurance would continue as part of a seamless fund transfer, and an individual is likely to assume that insurance would continue as part of a seamless fund transfer.
2.87However, ASFA noted that the bill contains measures to amend sections 68AAB and 68AAC of the SIS Act, and that they believed these amendments would ensure continuity of insurance coverage for members where a successor fund transfer occurs. They endorsed these amendments and suggested that they be legislated without delay.
2.88Schedule 5 would also implement recommendations relating to safe harbour provisions for company directors who believe a company is facing potential insolvency. The Joint Licensees Group commented on these measures and stated that an opportunity exists to remove a catch-all provision to reduce or remove legal uncertainty. They identified the catch-all provision under paragraph 961B(2)(g) of the Corporations Act
Multilateral development banks
2.89During the inquiry, no comments were made on the proposed measures which would streamline the implementation of international agreements relating to multilateral development banks, contained in Schedule 4 to the bill.
Committee view
2.90The committee is encouraged by the significant level of support from industry for the government’s Delivering Better Financial Outcomes package of reforms, and in particular the reforms in Schedule 1 of this bill that form Tranche 1 of the package.
2.91The committee notes that Schedule 1 of the bill is a critical first step in implementing the government’s response to the Quality of Advice Review, and is a faithful implementation of those recommendations.
2.92The committee welcomes evidence from the financial advice industry and other inquiry participants that reforms in Schedule 1 will remove unnecessary and costly red tape in relation to financial advice fee payments, while helping ensure millions of Australians have access to affordable, high-quality financial advice.
2.93The committee notes the views of some inquiry participants that super trustees may interpret this bill to require them to review every piece of financial advice for which fees are paid out of superannuation to satisfy their duties.
2.94The committee notes the intent of the government is to ensure that financial advice can be paid from superannuation in accordance with trustees discharging their general obligations that are designed to protect the retirement incomes of members. The committee supports this intent and is reassured by evidence that the status quo can continue, supported by greater legal clarity, and that trustees would not be obliged to check every piece of financial advice as the bill simply codifies current practice into law.
2.95In particular, the committee draws attention to the supplementary explanatory memorandum which states ‘Consistent with meeting their obligations under the current 99FA, trustees should have in place robust assurance processes to satisfy themselves that advice deductions from members’ superannuation accounts comply with their legal obligations. This may include random or risk-based sampling of advice.’
2.96Further, the committee notes that ASIC clearly supports a risk and sample based approach by trustees, as referenced in joint regulatory guidance from ASIC and APRA, in the recent 781 report, in multiple recent speeches and in evidence to this committee.
2.97The committee notes views that the primary law should be more prescriptive in outlining steps that trustees must take to meet their obligations. However, the committee is convinced by evidence from ASIC and Treasury that a prescriptive approach is likely to be impractical given the diversity within the superannuation industry.
2.98The committee also notes evidence that the general obligations on superannuation funds are not prescriptive, even though they are objective standards for funds to meet. ASIC noted that a range of approaches may be satisfactory to meeting these obligations.
2.99On the basis of this evidence, the committee is satisfied that existing audit and review mechanisms will continue to be effective for trustees’ assurance purposes.
2.100The committee acknowledges views from the resources industry that the proposed changes to the PRRT includes retrospective application of the anti-avoidance measures in the bill.
2.101However, the committee notes the importance of legislation which provides a consistent, modern regulatory environment for industry, and the need to address the exploitation of tax loopholes.
2.102The committee welcomes the commitment from the government to address tax avoidance loopholes, adopt modern drafting practices for agreements with international financial institutions and modernise treasury laws to ensure that they are consistent.
2.103The committee welcomes amendments to the location and producer offsets that will improve opportunities for the film and screen industry in Australia.
2.104The committee is pleased to hear evidence that the training opportunities and commercial benefits to Australian industry are expected to be strong.
2.105The committee notes the extensive industry consultation that has informed these changes. The committee is confident that the bill strikes the right balance between remaining a competitive destination for international productions and ensuring that local producers and workforces benefit from the investment that these productions make in Australia.
2.106The committee recommends that the bill be passed.
Senator Jess Walsh
Chair
Labor Senator for Victoria