Streamlining Release Authority Statements. December 2017

Transcription

1 Streamlining Release Authority Statements December 2017

2 Summary of changes From 1 July 2018 In the 2016 Federal budget, the Government announced the streamlining of the administrative process for releasing superannuation The streamlining of release authorities applies to the following products: Excess concessional contributions (ECC) determinations for the FY onwards Excess non-concessional contributions (ENCC) determinations for the FY onwards Excess non-concessional contributions tax (ENCCT) assessments for the FY onwards Division 293 due & payable tax assessments for the FY onwards Division 293 deferred debt assessments for the FY onwards Release for Division 293 debt account discharge liability has not been streamlined Unclassified Streamlining Release Authority Statements 2

3 Summary of changes cont. Provider requirements have also been aligned under the streamlined process: Timeframe to make payment to the ATO is now 10 business days from the issue date of the release authority Timeframe to return the release authority statement to the ATO is now 10 business days from the issue date of the release authority A provider will not be required to send a copy of the release authority statement to the member From 1 July 2018 the maximum available release amount will only exclude defined benefit interests All payments are to be made to the ATO CLASSIFICATION Title of presentation 3

4 Actioning streamlined release authorities Unclassified Streamlining Release Authority Statements 4

5 Maximum available release amount The definition for maximum available release amount has moved to section in Schedule 1 to the Taxation Administration Act 1953 (TAA) and means the total amount of all superannuation lump sums that could be paid from the interest at that time. Previously, maximum available release amount for ECC did not include: amounts in defined benefit interest, amounts in non-complying funds and interests treated as a separate interest under section of the Income Tax Assessment Act 1997 (ITAA) that were supporting a super income stream. From 1 July 2018 the exclusions from maximum available release amount for ECC have been streamlined with the other products. Only amounts in a defined benefit interest are now excluded from the maximum available release amount. The release authority statement for ECC will be updated to remove these two options from the Reason for not releasing money section. The only exclusion from the maximum available release amount for all products will be amounts in a defined benefit interest Unclassified Streamlining Release Authority Statements 5

6 Releasing money for a streamlined release authority The timeframe to make the payment has been streamlined For release authorities issued from 1 July 2018, a superannuation provider must make the payment to the Commissioner within 10 business days for all products. This timeframe starts on the day that the release authority is issued and ends when the fund makes the payment. Product Timeframe pre 1/7/18 Timeframe post 1/7/18 ECC 7 days 10 business days ENCC 21 days 10 business days ENCCT 21 days 10 business days DIV293 due & payable 30 days 10 business days DIV293 deferred 30 days 10 business days Unclassified Streamlining Release Authority Statements 6

7 Timing for releasing amounts The timeframe will be 10 business days from 1 July When does the timeframe begin? The timeframe begins on the day that the release authority is issued by the Commissioner Not when the release authority is received by the provider When does the timeframe stop? The timeframe stops when the money is sent to the Commissioner Not when the release authority is received by the ATO. Timeframe is met if a cheque is posted within 10 business days of the issue date. Unclassified Streamlining Release Authority Statements 7

8 Returning release authority statement (RAS) to ATO The timeframe to return the RAS to the ATO has been streamlined For release authorities issued from 1 July 2018, a superannuation provider must send the RAS to the Commissioner within 10 business days for all products. This timeframe starts on the day that the release authority is issued and ends when the RAS is sent to the ATO. Product Timeframe pre 1/7/18 Timeframe post 1/7/18 ECC 7 days 10 business days ENCC 21 days 10 business days ENCCT 21 days 10 business days DIV293 due & payable 30 days 10 business days DIV293 deferred 30 days 10 business days Unclassified Streamlining Release Authority Statements 8

9 Timing for returning the release authority statement The timeframe will be 10 business days from 1 July When does the timeframe begin? The timeframe begins on the day that the release authority is issued by the Commissioner Not when the release authority is received by the provider When does the timeframe stop? The timeframe stops when the release authority statement is sent to the Commissioner Not when the release authority statement is received by the ATO. Timeframe is met if the RAS is sent within 10 business days of the issue date. Unclassified Streamlining Release Authority Statements 9

10 Notifying the individual of a successful release Funds will no longer be required to send a copy of the RAS to the individual For release authorities issued from 1 July 2018, the requirement for super providers to notify the individual of the amount released has been removed. Under the streamlined process it will be the responsibility of the Commissioner to notify an individual of the amount that has been successfully released. Product Current framework - Responsibility for notifying individual of successful release ECC Commissioner Commissioner ENCC Provider Commissioner ENCCT Provider Commissioner DIV293 due & payable Provider Commissioner DIV293 deferred Provider Commissioner Streamlined framework: Responsibility for notifying individual for successful release Unclassified Streamlining Release Authority Statements 10

11 Amounts not released Where a fund is not able to release the full amount From 1 July 2018, the requirements for notifying the Commissioner of unsuccessful release will be streamlined. Where a provider is issued a streamlined release authority under Section of the TAA 1953 but is not required or able to pay the full amount due, then the provider must notify the Commissioner that they are not required to comply with the release authority. This notification must be made via the release authority statement and sent to the Commissioner within 10 business days of the issue date of the release authority. Under the streamlined release process there are only two valid reasons for being unable to release the full amount: 1. Where the individual s only interest with the provider are defined benefit interests 2. Where the individual has nil super interests remaining with the provider. Timeframe is met if the RAS is sent within 10 business days of the issue date. Unclassified Streamlining Release Authority Statements 11

12 Release authorities issued prior to 1 July 2018 Release authorities issued prior to 1 July 2018 will remain valid until the period for the provider to make the payment to the Commissioner has elapsed, even if this is after the legislative start date. As a result providers may receive both the existing release authorities and the streamlined release authorities during the transitional period. Providers must comply with the release authority as it is provided to them. The requirements to make the payment, notify the individual and send the RAS to the Commissioner correlate to the release authority that is received by the provider. If a valid release authority issued prior to 1 July 2018 is received by a fund, the provider must comply with the requirements set out in that release authority even when it is received by the fund after 1 July Providers may receive current and streamlined products for a transitional period Unclassified Streamlining Release Authority Statements 12

13 Changes for ECC Unclassified Streamlining Release Authority Statements 13

14 Excess concessional contributions (ECC) Changes to the process for releasing excess concessional contributions Election options The election options for an individual with ECC will not be altered by the streamlining process. Individuals have up to 60 days to make an election (or a further period as allowed by the Commissioner) Individuals can choose to release up to 85% of their ECC from their super interests or take no action and leave the ECCs in their funds. ECCs which remain in super will count towards their non-concessional contributions cap. If an election is not made, the Commissioner will not initiate a release as the release is voluntary. Election period Currently, an individual who receives a determination, amended determination or unsuccessful release letter for an amount of ECC has 21 days from the issue date to make an election. Under the streamlined release process this will be extended to 60 days from the issue date. If an individual has an election period which crosses the 1 July 2018 legislative start date and a valid election is not made before this time, the election period is extended to 60 days from the issue date. Payment destination Providers will continue to pay released amounts to the Commissioner who will use the money to pay any outstanding tax or Australian government debts of the individual and refund to them any remaining balance. Sample release authority Unclassified Streamlining Release Authority Statements 14

15 Changes for ENCC Unclassified Streamlining Release Authority Statements 15

16 Excess non-concessional contributions (ENCC) Changes to the process for releasing excess non-concessional contributions Election options Under the new framework the election option to not release as their super interests are nil, is removed. If an individual has nil super interests they can elect to release a nil amount from super. The ATO will then confirm with the individual s fund(s) that they have no amounts left in super. If a valid election is not received by the ATO within the election period, the individual will be defaulted to release the ENCC and associated earnings amount. The Commissioner will send an ATO-initiated release authority to one or more providers that hold superannuation interests for the individual. Election period The election period for ENCC will be the same under both release frameworks. An individual has 60 days from the issue date of the latest determination, amended determination or unsuccessful letter to make an election under both frameworks. Payment destination Release authorities for ENCCs currently requires the payment to be made to the individual. The streamlined release authorities issued from 1 July 2018 will instruct the fund to make payment to the Commissioner who will use the money to pay any outstanding tax or other Australian government debts of the individual and refund to them any remaining balance. Sample release authority Unclassified Streamlining Release Authority Statements 16

17 ENCC changes to the default process Under the current process, if an individual does not make an election for an ENCC determination, the default process is to assess them for excess non-concessional contributions tax. This is almost always to the individual s detriment. The streamlined process allows the ATO to release the amount of an individual s ENCC in the absence of an election by the individual. A release authority under the default process will be issued to funds in order of which has the highest reported account balance at the time. This may result in super accounts being closed and any associated insurance policies being cancelled. If the ATO receives an unsuccessful release notification for all of the individual s known funds and they have no amounts in any superannuation fund, the ATO will issue a direction to disregard this excess amount. If the ATO receives an unsuccessful release notification for all of the individual s known funds and their only super interest left is held in a Defined Benefit Fund that can t be released, the individual will be issued an excess non-concessional contributions tax assessment for the amount unable to be released. If a ENCC determination is issued prior to 1 July 2018 the individual will still be defaulted to be assessed ENCCT Unclassified Streamlining Release Authority Statements 17

18 Changes for Division 293 Unclassified Streamlining Release Authority Statements 18

19 Division 293 due and payable Changes to the process for releasing Division 293 due and payable amounts Election options Currently an individual does not make any election for Division 293 due and payable. Under the streamlined process from 1 July 2018 the individual will have 60 days to make an election (or a further period as allowed by the Commissioner) to elect a fund to voluntarily release an amount. If an election is not made, the Commissioner will not initiate a release as the release is voluntary. Election period An individual will have 60 days from the issue date of the notice of assessment of Division 293 tax. Payment destination All Division 293 due and payable release authorities issued from 1 July 2018 will be sent from the ATO and require the fund to make the payment to the ATO who will then offset outstanding tax or Australian government debts and refund to the individual any remaining balance. Release authorities issued within 120 days before 1 July 2018 The existing release authorities which will continue to issue to the individual until 30 June 2018 will remain valid until 120 days from their issue date. As a result for a 120 day period from 1 July 2018, funds may receive both the existing Division 293 due and payable release authority from an individual and streamlined Division 293 due and payable release authorities from the ATO. Sample release authority Unclassified Streamlining Release Authority Statements 19

20 Division 293 deferred debt account Changes to the process for releasing Division 293 deferred amounts Election options Currently an individual does not make any election for Division 293 deferred. Under the streamlined process the individual will have 60 days (or a further period as allowed by the Commissioner) to elect a fund to voluntarily release an amount. If an election is not made, the Commissioner will not initiate a release as the release is voluntary until the individual takes the end benefit from the defined benefit account to which their deferred debt is attributed. Election period An individual will have 60 days from the issue date of the notice of assessment of an amount of Division 293 tax. Payment destination All Division 293 deferred release authorities require the payment be made to the ATO who will use the money to pay the amount of deferred debt for that super interest. The individual can also pay the deferred debt at any time out of their own pocket. Sample release authority Unclassified Streamlining Release Authority Statements 20

21 Other key points Unclassified Streamlining Release Authority Statements 21

22 Closing account with insurance policies Insurance indicator from the MCS will be used for alerts Where an individual elects to release from a fund with a small balance and that fund has an insurance indicator, they will receive an alert on ATO Online that this may close the account and remove insurance benefits An alert will also be included on determinations Individuals will not be alerted if they make an election on the paper form or if the ATO initiates the release Unclassified Streamlining Release Authority Statements 22