Recent developments

Welcome to the March technical roundup, an update of legislative and regulatory developments in the period 9 February to 7 March 2024 that may affect financial services professionals.

During this time, the bill containing the Government’s proposed changes to the Stage 3 tax cuts passed both houses and received Royal Assent. The Government also announced that it intends to amend the Paid Parental Leave Scheme by introducing superannuation contributions to the payments.

Also of note is the release of the Average Weekly Ordinary Time Earnings (AWOTE) figure for the December 2023 quarter, which triggered indexation of the concessional and non-concessional contribution caps.

Legislative developments

Acts

Cost of living tax cuts passed

On 5 March 2024, the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Cth) and the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Cth) received Royal Assent.

The tax rates (excluding Medicare Levy) that will apply from 1 July 2024 are as follows:

Swipe for more

Threshold ($)

Tax rate (%)

0 ≤ income ≤ 18,200

Nil

18,200 < income ≤ 45,000

16

45,000 < income ≤ 135,000

30

135,000 < income ≤ 190,000

37

190,000 and over

45

Additionally, the Medicare levy low income thresholds were also amended. The thresholds that will apply to the current income year (2023-24) are as follows:

Standard taxpayers

  • Single: nil if income is equal to or less than $26,000, or 2% if income is equal to or greater than $32,501
  • Couple/family: nil if income is equal to or less than $43,846*, or 2% if income is equal to or greater than $54,808**

Senior and pensioner tax offset recipients

  • Single: nil if income is equal to or less than $41,089, or 2% if income is equal to or greater than $51,362
  • Couple/family: nil if income is equal to or less than $57,198*, or 2% if income is equal to or greater than $71,498**

*$4,027 increase per dependent
**$5,034 increase per dependent

If income is between the lower and upper thresholds, the levy will be limited to 10% of the amount of taxable income in excess over the lower threshold.

Regulator views

ASIC

Call on industry to improve oversight of Choice super performance

On 21 February 2024, ASIC announced the release of Report 779 Superannuation and choice products: What focus is there on performance? (the Report), which reviewed the conduct of super trustees, financial advisers and financial services licensees by examining how certain members continued to invest in persistently underperforming investment options in choice ­­superannuation products.

Some of the key findings that were contained in the Report include:

  • there was a lack of evidence of trustees communicating to members who were invested in underperforming investments, and financial advisers were not always addressing the underperformance of Choice products appropriately
  • trustees, advice licensees and financial advisers should undertake performance-based due diligence before offering investment options to members, approving options for use by advisers (e.g. approved product list) and recommending those investments to members
  • financial advisers should treat performance as a primary consideration and consider information from a range of sources to develop and support their recommendations
  • advice licensees must have adequate risk management in place to detect and manage underperforming investment options when approving products for use by their advisers and address issues in a timely manner.

ASIC also stated that it was considering a range of regulatory responses where there was an indication that clients were at risk of detriment as a result of personal advice and will work with APRA to ensure fund members are achieving good investment outcomes.

Other

AFCA

Changes to AFCA scheme approved by ASIC

On 7 March 2024, AFCA announced that ASIC has formally approved material changes to the AFCA scheme with respect to its Rules and Operational Guidelines.

AFCA confirmed that a total of 13 changes will come into effect from 1 July 2024, which include:

  • increasing AFCA’s ability to manage unreasonable or inappropriate conduct within the scheme from complainants and paid representatives
  • allowing AFCA to deal with complaints where an appropriate offer of settlement has been made or where issues in dispute have been previously settled
  • amendments to clarify that AFCA will exclude investment-related complaints from sophisticated or professional investors, unless special circumstances apply
  • enhance the visibility, accessibility and performance of AFCA’s forward looking formal review mechanism.

Important information

This information is provided by Macquarie Investment Management Limited ABN 66 002 867 003 AFSL 237 492 (MIML or We). MIML is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MIML’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542, AFSL 237502. Any investments are subject to investment risk including possible delays in repayment and loss of income and principal invested. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML.

This information is provided for the use of financial services professionals only. In no circumstances is it to be used by a potential investor or client for the purposes of making a decision about a financial product or class of products.

The information provided is not personal advice. It does not take into account the investment objectives, financial situation or needs of any particular investor and should not be relied upon as advice. Any examples are illustrations only and any similarities to any readers’ circumstances are purely coincidental.

While the information provided here is given in good faith and is believed to be accurate and reliable as at the date of preparation, 7 March 2024, it is provided by MIML for information only. Neither MIML, nor any member of the Macquarie Group gives any warranty as to the reliability or accuracy of the information, nor accepts any responsibility for any errors or omissions. MIML does not accept any responsibility for information provided by third parties that is included in this document. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. This information does not constitute legal advice and should not be relied upon as such. MIML will not be liable for any direct, indirect, consequential or other loss arising from reliance on this information.

MIML does not give, nor purport to give, any taxation advice. The application of taxation laws to each client depends on that client’s individual circumstances. Accordingly, clients should seek independent professional advice on taxation implications before making any decisions about a financial product or class of products.

Copyright 2024 Macquarie Group Limited.