Welcome to Issue 74 of the FSC Policy Update. This article outlines legislative and regulatory developments in the superannuation, investments, financial advice, tax and technology and innovation sectors, plus more. Learn about what’s impacting the financial services industry below.
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Click on the topic of interest below to read more.
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Financial Accountability Regime
Superannuation in the Intergenerational Report
Treasury to release a consultation paper on the availability of longevity products
Performance Test and the need for product modernisation
Objective of superannuation – Government consults on draft legislation
Fair Work Commission Review of Superannuation Clauses
Legislation passed to provide competition in the provision of clearing and settlement services
Managed Investment Scheme (MIS) Review
ASX Consultation on the future of mFund settlement service
Climate-related financial disclosures
Responsible investment product labelling guidance
Sustainable finance strategy consultation
Foreign Financial Service Providers legislation
Legislation commencing the experienced pathway for financial advisers has passed the Parliament
Greater flexibility for new entrants to the profession
Financial Adviser Registration
Technology and Innovation in the Intergenerational Report
Modernising Business Communications legislation
Reserve Bank Central Bank Digital Currency trial
Design and Distribution Obligations
FSC Investment Management Agreement
Corporate Collective Investment Vehicles
Anti-Money Laundering and Counter-Terrorism Financing laws (AML/CTF)
Policy Briefing: Global Parity Alliance – Diversity, Equity and Inclusion Lighthouses Report
Intergenerational Report and tax
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PARLIAMENT, LEGISLATION AND REGULATION
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Financial Accountability Regime
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The Financial Accountability Regime Bill 2023 and the Financial Accountability Regime (Consequential Amendments) Bill 2023 (FAR) were passed by both Houses on 5 September. Royal Assent to bring the Bills into law has not yet occurred at the time of writing.
The FAR 2023 has only one change compared to the Bill introduced in September 2022 regarding an exemption from the Minister. Now, the Minister has to use a notifiable instrument rather than a written notice to exempt an accountable entity from compliance with FAR. In addition, the Minister must now be satisfied that it would be unreasonable for the accountable entity to be required to comply and the Minister must give reasons for making the exemption in the case of a single accountable entity. The Minister may still also by legislative instrument exempt a class of accountable entities from compliance but the new Bill now also specifies that he can only do so if he is satisfied that it would be unreasonable for the class of accountable entities to be required to comply.
The FAR will apply to the banking industry six months after commencement. The Banking Executive Accountability Regime (BEAR) will be repealed as the obligations under the FAR apply to the banking industry. The FAR will apply to the insurance and superannuation industries 18 months after commencement.
To confirm, the proposed amendment by the Greens to include $1.1 million individual civil penalties for accountable persons has not been included.
The FSC has contacted ASIC and APRA to seek an update on expectations as to when we can expect to see joint guidance issued by the regulators.
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Please contact Ashley Davies for more information.
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SUPERANNUATION
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Superannuation in the Intergenerational Report
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The commentary on superannuation in the Treasurer’s 2023 update to the Intergenerational Report (IGR 2023) is its most favourable and conclusive to date.
Spending on the Age Pension is forecast to fall over the four decades at a sustainable trajectory, reducing from 2.3 per cent to 2.0 per cent of GDP. This is attributed to superannuation becoming the key source of retirement income and Age Pension means testing rules targeted to those most in need. It noted this forecast contrasts with the experience of most OECD nations, where on average public pension spending is expected to grow by 1.4 per cent of GDP from 2018-2020 by 2050.
IGR 2023 is the second IGR (after IGR 2021) to forecast the cost of superannuation tax concessions to then estimate the total cost of government support for the retirement income system. It found that superannuation tax concessions are projected to increase from around 1.9 per cent to 2.4 per cent of GDP, driven primarily by earnings tax concessions rising from around 1.0 per cent to 1.5 per cent of GDP. The total projected annual cost of Australia’s retirement income system is expected to remain relatively steady over the next 40 years, at around 4.0 per cent to 4.5 per cent of GDP.
IGR 2023 makes prominent two risks to the fiscal sustainability of the retirement income system. The first is the availability of private-sector longevity products as people have historically relied on the Government for protection against longevity risk through the Age Pension. The second is the declining levels of home ownership levels among younger age groups, which will impact the sources, amount and pattern that people can draw down from for their retirement.
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Treasury to release a consultation paper on the availability of longevity products
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The Treasurer has flagged a Treasury consultation paper to explore the availability of retirement income products. The purpose of the consultation paper is to initiate policy discussion on encouraging more ‘well rounded’ retirement income products (beyond simply account-based pensions) that can be offered by trustees to assist their members in retirement, in connection with their duties under the retirement income covenant.
Treasury is expected to release a Consultation Paper in the coming weeks.
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Performance Test and the need for product modernisation
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Following a broader Treasury review of the Your Future, Your Super (YFYS) measures, the Government has now finalised regulations to amend the design of the YFYS performance test as its application is expanded beyond MySuper products to include Trustee-Directed Products (TDPs) from 2023 onwards.
The FSC is committed to helping Government realise the policy objectives of the performance test (to remove underperforming products), which must involve an effective product modernisation regime. One of the key limitations of the current framework is that superannuation trustees with TDPs that repeatedly fail the performance test and are required to close these TDPs to new members. Yet because of their fiduciary obligations, trustees are constrained from decommissioning these legacy products and moving consumers to a better performing product because CGT rollover relief does not exist at a product level. The FSC will continue to advocate for an improved product modernisation regime ahead of the next Federal Budget and the next application of the performance test.
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Objective of superannuation – Government consults on draft legislation
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The Government has released for consultation exposure draft Legislation on the Objective of Superannuation. The consultation will run until Friday 29 September.
The draft Objective is the same as the version in the February 2023 Consultation paper. The definition remains: “The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
The objective will be established in a new Act, the “Superannuation (Objective) Act 2023” and make clear that the objective does not impact or interact with other legal provisions for superannuation (consistent with FSC position).
The objective will require a member of Parliament who proposes to introduce a superannuation Bill into a House of the to prepare a statement of compatibility in respect of the Bill.
The explanatory material provides further detailed explanations for the key components (Preserve Savings, Deliver Income, Dignified, Government Support, Equitable, Sustainable) of the objective wording.
Pleasingly the Explanatory Material responds to previous FSC feedback, clarifying equitable and sustainable in a satisfactory way.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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Fair Work Commission Review of Superannuation Clauses
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Late last year, the Fair Work Commission (FWC) began a review of clauses within modern awards relating to superannuation, looking to bring awards into line with recent legislative developments such as stapling and the MySuper performance test. Because these pieces of legislation trump modern award conditions, the effect of the changes would simply be to avoid confusion amongst employers who may not be otherwise aware of their obligations.
The review has no scope to review default funds within awards, or the default fund lists, and the FWC only has the capacity to make minor changes to these clauses to relieve any ambiguity with the law.
The Fair Work Commission delegated responsibility to the Australian Chamber of Commerce and Industry (ACCI), Australian Industry Group (Ai Group), and the Australian Council of Trade Unions (ACTU) to work together to propose a suggested updated wording to the clauses. The group had been unable to reach a consensus and negotiations on the matter has prolonged the decision until now.
ACCI and Ai Group released a joint position, with the ACTU releasing an alternative position. The ACCI position makes only minimal changes whilst the ACTU position proposes placing a significant amount of guidance into the award.
The FSC made a submission to the review supporting the ACCI position on the grounds that the FWC only has limited capacity to make changes and introducing significant guidance could make the awards inconsistent with the law later on.
The matter will be revisited at a hearing on 13 September.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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INVESTMENTS
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Legislation passed to provide competition in the provision of clearing and settlement services
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The FSC provided a submission to Treasury in April supporting competition in the provision of clearing and settlement services.
The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 has passed Parliament, and supports competition in clearing and settlement services, which are critical to the functioning and stability of financial markets.
From Royal Assent, the Reserve Bank and ASIC will have powers to set rules for the conduct of clearing and settlement service facilities.
The ACCC will also have the power to arbitrate disputes between parties around the price and access to clearing and settlement services.
For further information please see: Treasury Laws Amendment (2023 Measures No. 3) Bill 2023
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Managed Investment Scheme (MIS) Review
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Treasury released the consultation paper on the MIS Review in August for feedback by 29 September 2023.
There are eight chapters in the consultation paper, which align with our prior expectations, focusing the regulatory framework for MIS’ - including RE governance - and incorporating a number of themes raised in relation to failed schemes (like the Sterling Income Trust and failed agribusiness schemes regarding members abilities to change the RE and winding up insolvent schemes).
- Whether the wholesale client thresholds remain appropriate – raising questions whether the financial thresholds for the product value test; and for the net assets/gross income individual wealth test should be increased, whether the family home should be excluded and what form consent requirements should be introduced to ensure investors understand the consequences of being considered a wholesale client.
- Suitability of scheme investments – whether certain schemes should be offered to retail clients, any changes to scheme registration; whether conditions should be imposed on certain scheme arrangements and whether ASIC should be permitted to refuse to register a scheme.
- Scheme governance and the role of the RE – raises questions on whether any changes are required to RE obligations to enhance scheme governance and compliance and whether RE’s should have a majority of external board members (removing the flexibility offered by the current model which enables an RE to choose whether to use a compliance committee structure or use a majority board). Questions around changing compliance plan provisions to have tailored compliance plans for individual schemes or introducing legislative qualitative standards for auditors in relation to compliance plan audits are also put forward for feedback.
- Right to replace the RE – raises questions directed towards whether it should be easier for members to change the RE, when an RE should be required to assist prospective REs conduct due diligence and restrictions on provisions in agreements or constitutions that disincentivize members from replacing an RE.
- Right to withdraw from a scheme – focuses on whether the definition of liquid assets is appropriate (how should liquid assets be defined), whether changes are needed to withdrawal procedures for schemes and mismatch between member expectations regarding ability to withdraw and actual rights to withdraw.
- Winding up insolvent schemes – raises questions on the need for any changes to winding up provisions for registered schemes and whether that would improve outcomes for scheme operators, members and creditors, introducing statutory limited liability to protect personal assets of scheme members.
- Commonwealth and state regulation of real property investments – this issue is linked to the Sterling Income Trust (where a long-term tenancy was linked to the performance of an investment) and whether issues raise for investors because of the dual responsibility when regulating schemes with real property.
- Regulatory cost savings – seeking feedback on opportunities to modernise and streamline the MIS regulatory burden without detracting from consumer outcomes.
Treasury is holding a number of roundtables in September focused on general issues in the MIS Review, as well as specifically on the wholesale investor test. The FSC is participating in the roundtables as well as continuing bilateral discussions with Treasury.
The FSC will continue working with and updating members on the developments of the MIS Review. The closure date for submissions is 29 September 2023.
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ASX Consultation on the future of mFund settlement service
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The FSC finalised its submission to the ASX consultation on the future of the mFund settlement service, which may close. Key points raised in the FSC submission note that once mFund closes this infrastructure will cease, however, it is also acknowledged that in its current form mFund is unlikely to play a significant role in fund design and distribution strategies.
Key points in the submission include:
- Identifying the legal, cost and resource implications that arise from a decision to close mFund and what would be required to improve mFund.
- Emphasising transition requirements, should a decision be made to close mFund, to support an orderly transition and ensure the industry receives the appropriate information and support needed to navigate the transition. This would require considered forward planning with key stakeholders and investor education on the closure of mFund and what this will likely mean for them.
Climate-related financial disclosures
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The FSC and its members met with Treasury on 15 August to work through industry feedback seeking clarity on the proposed reporting obligations and their applicability at a corporate level versus the fund/MIS/product level, scope 3 emissions for funds, and liability for forward-looking statements when there was a reliance on estimates.
An exposure draft for legislation needed to give effect to the new requirements will be consulted on in the second half of this year, with commencement from 1 July 2024. Separately, the Australian Accounting Standards Board (AASB) will consult on detailed disclosure standards in the second half of 2023. The AASB will look to finalise the disclosure standards in Q2 2024, subject to the passage of legislation.
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Responsible investment product labelling guidance
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The FSC ESG Working Group has finalised drafting guidance for the labelling of Responsible Investment (RI) or Sustainable Investment (SI) themed investment products. The purpose of the guidance is to assist members when labelling products with RI/SI labels or using RI/SI terms to have a reasonable basis for their use. This guidance has been provided to ASIC prior to release.
The guidance will also need to be considered in light of the Government’s upcoming Sustainable Finance Strategy consultation, which will include ESG labelling and whether the government and regulators should play a bigger role in providing a product labelling framework. This consultation will be led by Treasury but will also be assisted by ASIC.
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Sustainable finance strategy consultation
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Treasury is expected to release a consultation paper on the Government’s sustainable finance strategy in the next few months. Among other things, it is expected to cover:
- Arrangements to strengthen the development and disclosure of company transition plans including guidance in making and assessing transition plans.
- Options and priorities for addressing key data challenges and the provision of guidance.
- The labelling of sustainability products.
- Supporting the creation of an Australian sustainable finance taxonomy.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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Foreign Financial Service Providers legislation
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On 7 August, ASIC issued an Instrument which extends the class order relief for Foreign Financial Service Providers (FFSPs) (from the requirement to hold an Australian financial services (AFS) licence when providing financial services to Australian wholesale clients) for a further 12 months, until 31 March 2025. The Federal Government has now released exposure draft legislation. The Government is seeking views on the exposure draft which seeks to provide Australian financial service licensing exemptions to foreign financial services providers.
The legislation amends the Corporations Act to provide an exemption from the requirement to hold an Australian financial services license for:
- Persons that provide financial services from outside Australia to professional investors (the professional investor exemption).
- Persons regulated by comparable regulators that provide financial services to wholesale clients (the comparable regulator exemption).
- Persons making a market for derivatives that are able to be traded on specified licensed financial markets (the market maker exemption).
An exemption is also proposed from the fit and proper person test for persons regulated by comparable regulators when applying for an Australian financial services licence for the provision of financial services to wholesale clients (the fit and proper person test exemption).
The FSC is working with members to prepare a submission on the draft legislation.
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For more information, please contact Ashley Davies.
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ADVICE
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Legislation commencing the experienced pathway for financial advisers has passed the Parliament
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The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 passed the Parliament to exempt advisers who practiced in the industry for 10 years, who have a clean record and who have passed the Financial Adviser Exam. The Bill is awaiting Royal Assent.
There is no sunset clause in the legislation which means advisers with 10 years’ experience accrued at any time between 2007 and 2021 can use the experienced pathway to register as a financial adviser at any point in their working life.
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Greater flexibility for new entrants to the profession
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The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 passed last week will also provide more flexibility for a new entrant to demonstrate that they have completed an approved degree. This will be either by:
- Applying to the Minister for an approval.
- By obtaining written confirmation from their course provider that they have substantively met the conditions for the specified approved qualification.
This follows advocacy by the FSC to allow for greater overall flexibility with regards to application of the education standards the profession.
Further amendments will be required to the legislative instrument in order to enable course providers to provide written confirmation that a course substantively met the conditions for the specified approved qualification. Treasury will work with higher education providers and industry on the changes to the legislative instrument.
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Financial Adviser Registration
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The extension to 1 July for financial advisers to self-register has been given effect under the Corporations Amendment (Registration of Relevant Providers) Regulations 2022. However, the Treasury Laws Amendment No.1 2023 Bill remains currently before the Senate with provisions that will enable dual registration and allow ASIC to administer this registration through automated tools. ‘Being registered’ is not current for the purposes of the Financial Adviser Register and once the register is open advisers will be encouraged to register as soon as possible. It will be a strict liability offence where they are still practicing but not current on the Financial Adviser Register.
The Bill has not yet passed the Parliament and it is not certain when that is likely to occur. ASIC addressed this issue by using its powers as regulator to extend the registration date from July to October 2023. It is within its powers to do so again if it chooses.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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TECHNOLOGY AND INNOVATION
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Technology and Innovation in the Intergenerational Report
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Technological and digital transformation are key themes of the 2023 Intergenerational Report. It notes that technological advancements will have an impact on many aspects of our lives, such as the way we work and the way that we manage our health. It acknowledges that the transitions and risks of technological innovation need to be managed carefully.
Participation
The report acknowledges that technological innovation will have a significant impact on productivity growth and will shape the future of work, changing the types of occupations, skills and tasks demanded in the labour market as well as how people work more generally. It notes that the share of jobs requiring a tertiary education and routine cognitive load has increased significantly since 1966.
Although many may assume that increase automation leads to job losses, it is predicted that there will be only a slight decrease in hours over the next 40 years. Increased demand for jobs with a high cognitive load will give rise to more use of automation, freeing up workers from menial and routine tasks so that they can focus on the more complex aspects of their roles.
This shows that technology will continue to have a significant impact on the workforce. Although people won’t necessarily be replaced by machines, employees will need to upskill to be across emerging technologies in order to remain competitive in the job market. Organisations will also need to consider how best to utilise automation within their workforces whilst offering professional development to employees to grow their careers within the innovation landscape.
The report notes that productivity growth is predicted to be smaller over the next forty years than it will be in the next 40. However it also acknowledges that there is a significant gap between Australian firms and the global technology landscape with significant opportunities for investment and adoption of new innovations.
From this, organisations should take away that Australia is behind the curve in terms of take up of technological innovations and this has an impact on how much it will impact productivity. Although the investments will likely be seen as a significant upfront expense, with little seen in the way of productivity gains initially, organisations will be rewarded in the future for keeping up with innovation.
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Modernising Business Communications legislation
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The Modernising Business Communications legislation finally passed both houses after being introduced in November of 2022. The legislation makes minor updates to the Corporations Act to make electronic communication and e-signatures possible for some documents required under that Act.
The most important effect of the legislation from an FSC member perspective is that all documents which are required to be signed under the Corporations Act can now be signed either electronically or in wet-ink and certain documents can now be sent in either hard copy or electronic form. It also removes the requirements to send documents to a member where the contact details are known to be incorrect.
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The National Anti-Scam Centre (NASC) commenced operation on 1 July. At the launch of the NASC, Assistant Treasurer, the Hon. Stephen Jones, announced that the first focus of the NASC would be investment scams through the operation of a “fusion cell”.
A number of FSC members have been included in the fusion cell and will make significant contributions to the sandboxing of disruption activities against investment scams.
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Reserve Bank Central Bank Digital Currency trial
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The Reserve Bank (RBA) has been conducting research in conjunction with the Digital Finance Cooperative Research Centre into use cases for Central Bank Digital Currency (CBDC) in Australia.
The study explored 14 potential use cases for CBDC in Australia across four themes: Smarter payments, Inclusion and resilience, Digital money; and Markets.
Of note to FSC members was the use case exploring CBDC as a real-time payment method for superannuation payments. This was piloted by ANZ and OBAN with the help of HESTA, CBUS, Link and Grow Inc.
The pilot reportedly demonstrated the efficiency and effectiveness of employers using pilot CBDC for superannuation contributions through SuperStream. It tested voluntary contributions to both APRA-regulated funds and a self-managed superannuation fund. Specifically, each contribution triggered a request to ANZ to debit the pilot CBDC wallet of the employer, ANZ then validated each wallet for each contribution request. The gateway service provider simultaneously released the SuperStream information to the superannuation fund. This data was then immediately matched to the payment for allocation. The result was that voluntary contributions were credited the same day as the payment.
This is also of interest given the ATO’s work on implementing payday superannuation.
Other use cases explored by the CBDC project include: Trading of nature-based assets (carbon credits etc.); Authorisation (including KYC) of CBDC trading for participants who do not operate an Exchange Settlement Account with the RBA; and; Custodial models for CBDC.
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The Government continues on its course of promoting uplift of Consumer Data Right (CDR) among consumers within the services already offered – banking and non-bank lending.
Treasury has released a new consultation on screen scraping, which is a technology used by many financial services firms to consensually pull personal data from a website. The Government has flagged in the consultation that this practice is at odds with best practice cyber security protections and is undesirable where the CDR is offered as a safer alternative.
The new consultation flags that screen scraping may become illegal where there is a viable alternative such as CDR.
The FSC is not aware of any significant use of screen scraping among members but will work with the Technology and Innovation Experts Group, and the Scams, Fraud, and Cybersecurity Working Group to further assess.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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LEGAL, TAX AND CROSS-PORTFOLIO
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Design and Distribution Obligations
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The FSC released version 2 of the template Target Market Determination (TMD) for funds management. This responded to comments from ASIC, including in ASIC Report 762 Design and Distribution Obligations (DDO): Investment Products, and several rounds of feedback ASIC provided to the FSC on the template. A member briefing on the revised template was held on Wednesday 12 July.
The FSC wrote to ASIC on 8 August raising concerns with several views ASIC expressed in Report 762 and in recent DDO enforcement actions. ASIC replied on 28 August and members are considering how ASIC’s views impact their businesses. ASIC’s letter has partially addressed some concerns raised by members and has taken on board some of the FSC’s feedback, including that ASIC should provide more detail and clarity in its press releases when criticising TMDs, and make its commentary on DDO and enforcement action more accessible. Members are deliberating as to possible further engagement with ASIC.
The FSC is continuing to work with members to develop version 2 of the FSC’s TMD templates for superannuation master trusts (pending final approval), superannuation wraps/platforms, IDPS products, and managed accounts (in final review).
The FSC and members are working on a number of other miscellaneous projects relevant to DDO, particularly:
- Preparing an agreed form of funds management distribution condition menu.
- Developing standard questions for customers entering fund products.
- Revising the FSC DDO distribution questionnaire template.
Finally, ASIC Report 770 on OTD Derivatives and DDO was released on 6 September and the FSC is discussing this report with members.
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FSC Investment Management Agreement
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The new FSC Investment Management Agreement (IMA) has been settled by the FSC IMA Working Group and been reviewed by the Funds Management Board Committee. It is expected to be approved at the next relevant Board Committee meetings.
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Corporate Collective Investment Vehicles
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The FSC has been working with members on a template constitution for Corporate Collective Investment Vehicles (CCIVs). The drafting has been substantially completed and it is expected that a final version will be prepared in the coming weeks for final approval.
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The FSC has made a submission on the report of the Attorney-General's Department's review of the Privacy Act 1988 (released in February 2023). Next steps at this stage are unclear.
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Anti-Money Laundering and Counter-Terrorism Financing laws (AML/CTF)
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The Attorney General announced in May a consultation on proposed reforms of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime. The FSC worked with members and prepared a submission on the consultation, outlining concerns with the practicalities and costs of implementation. It is expected that a further consultation round will be announced before draft legislation is published.
The FSC has also separately been reviewing its suite of AML/CTF forms and discussing changes and updates with members.
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The FSC is discussing with members the upcoming ASIC changes to simplify the derivative reporting rules which commence from 21 October 2024 (DTR changes).
ASIC’s reports leading to the DTR changes acknowledge that reporting entities are facing difficulties and uncertainties in implementing the current reporting rules. The DTR changes are the result of ASIC seeking to simplify the rules and harmonise them with similar global regimes in an effort to reduce these difficulties, uncertainties and instances of varying industry practice. While the rules only come into effect from 21 October 2024, until the implementation date, the difficulties, uncertainties and variances will continue, and members will need some time to prepare for implementation.
FSC and members are considering the best approach to ASIC which may be by way of a request for a formal no action position on derivative transaction reporting breaches.
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Please contact Ashley Davies for more information.
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Policy Briefing: Global Parity Alliance – Diversity, Equity and Inclusion Lighthouses Report
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Leaders need clarity on what works to improve diversity, equity, and inclusion. The Global Parity Alliance's Diversity, Equity and Inclusion Lighthouses 2023 Report reveals success factors that have emerged, as well as what effective DEI impact can look like through compelling case studies.
The Global Parity Alliance, a group developed in collaboration with McKinsey & Company, has identified five success factors common across the DEI initiatives that yielded the most significant, scalable, quantifiable, and sustained impact for underrepresented groups.
To understand what these factors are, and actions that contribute to DEI progress, the FSC invites members to join us for a webinar discussion with the authors of the report - moderated by FSC Board Director, Jen Driscoll:
- Kweilin Ellingrud, Global Institute Director and Senior Partner, McKinsey & Company (joining from Minneapolis)
- Ishaa Sandhu, Engagement Manager, McKinsey & Company (joining from London)
- Jen Driscoll, FSC Board Director and CEO of AllianceBernstein (AB) Australia
This is a great opportunity to hear the key insights and the DEI initiatives that can be actioned within your organisation.
Date: Thursday 28 September
Time: 8:30am - 9:30am
Venue: Webinar (Via Webex)
Cost: Free and Member Only
FSC members can register here
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The Senate Economics Legislation Committee is conducting an inquiry into proposed changes to multinational tax laws in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Bill 2023. The FSC made a submission to the inquiry and participated in a public hearing on 15 August 2023, raising concerns on the extensive effect of proposed debt deduction creation rules and issues with the application of rules to trusts.
In its evidence, Treasury indicated the potential for amendments to address some concerns raised by the FSC submission as the Bill is considered by Parliament. Any future amendments will be a decision for government.
The Committee is expected to present its final report on the Bill on 22 September.
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Intergenerational Report and tax
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The 2023 Intergenerational Report highlighted expected trends in taxation receipts over the next 40 years. These include a reduction in indirect revenue, as electrification, decarbonisation, and changing consumption preferences reduce receipts from fuel and tobacco excise as adoption rates for electric vehicles increase and smoking rates decline. Indirect taxes (other than GST) are projected to decrease from 2.2 per cent of GDP in 2022-23 to 1.4 per cent in 2062–63.
While GST receipts are expected to move in line with economic growth, personal income tax will increase as a share of GDP and corporate tax will decline. Personal income tax is projected to grow from 50.5 per cent of tax receipts in 2022-23 to 58.4 per cent in 40 years’ time, driven by growth in incomes and population. Company tax receipts are projected to fall from 23.5 per cent of the total 2022-23 to 18.0 per cent by 2033-34 and beyond.
Long-term economic growth in real GDP terms is projected to average 2.2 per cent annually, a rate 0.9 per cent slower than experienced in past decades. Key factors are lower population growth, reduced workforce participation as the population ages, and expected slower long-term productivity growth. Returns from government financial assets and non-tax receipts are expected to decline due to the expected drawdown on the Future Fund.
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As part of its consultation on Miscellaneous Amendments to Treasury Portfolio Laws 2023, Treasury has issued exposure draft legislation and regulations that cover attribution rules for input tax credits to ensure alignment with practice prior to the Federal Commissioner of Taxation v Travelex Limited judgment, attribution and time limit rules, and income tax deductions for GST paid by reverse charge.
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Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.
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