News in brief

COVID advice relief extended

The Australian Securities and Investments Commission (ASIC) will allow financial advisers to continue to use records of advice (ROA) when providing advice to existing clients where it is related to the impact of COVID-19 until midOctober 2021.

The regulator said it was extending the relief, first issued on 14 April 2020 for a one-year period, for a further six months, but other relief measures also announced on that date have expired.

Under the relief extension, financial advisers will be able to use ROAs instead of statements of advice (SOA) with existing clients where their personal circumstances had changed as a result of COVID-19 and the client had already dealt with that adviser or another adviser from the same Australian financial services licensee or practice until 15 October.

ASIC stated it had decided to extend the relief measure after consulting with industry and identifying that some financial advice practices have found the measure helpful.

Pension-phase NALI clarified

The SMSF Association has secured confirmation from the ATO as to how the rules governing nonarm’s-length capital gains tax (CGT) triggered by assets used solely to support an income stream will be applied.

To this end, the regulator has stated the amendment to Treasury Laws Amendment (2020 Measures No 6) Act 2020, granted royal assent in December last year, will take effect from 1 July 2021 and means all non-arm’s-length capital gains in relation to segregated current pension assets will be treated as nonarm’s-length income (NALI) from that date.

The existing legislation had been changed to rid it of the anomaly created by section 118-320 of the income Tax Assessment Act 1997, which dictated any capital gain made from a segregated current pension asset can be disregarded, making any capital gains from these assets exempt from the NALI provisions.

However, conflicting information regarding the legislation change had until now existed, with the amendment indicating it had come into effect immediately, while the relevant explanatory material specified the new provisions would only apply from 1 July 2021 onwards.

As such, the SMSF Association sought clarification from the ATO about this matter and has now received the regulator’s categorical position on it.

Admin service adds documents

SMSF administration provider Mclowd has expanded its services to include the provision of documents through a partnership with listed financial services business Sequoia.

Under the arrangement, Mclowd will offer its adviser and trustee clients access to white-label SMSF and company documents and deeds produced by Sequoia-owned Docscentre and created by qualified practitioners.

On its website, Mclowd stated the document service will be available via its platform and an Australian Securities and Investments Commission compliance solution using the document service was currently in development, but technical support and billing for the document service will still be handled by Docscentre.

Mclowd managing director Ashley Porter said the ability for the firm to provide the establishment and management of SMSF deeds increased the benefits on offer to its clients at minimal cost.

Early release a success

The federal government has described the initiative that allowed individuals to access their superannuation early due to financial hardship caused by COVID-19 as a success after the recent release of the Australian Bureau of Statistics’ (ABS) Household Financial Resources report.

The ABS report indicated the majority of Australians who took advantage of the measure, 55 per cent, used the money to pay their mortgage, rent or other household bills. The data showed an additional 15 per cent of individuals accessed their retirement savings early to pay down debt, while a further 13 per cent used it to add to their savings.

According to the government, the statistics are consistent with the finding of the Retirement Income Review that providing superannuants with limited and prudent early access to their retirement savings helped balance pre and post-retirement living standards.

Further, the coalition government stated the report demonstrated the relief measure as a response to the financial hardship caused by the coronavirus pandemic definitely provided people across the country with significant support in a period of financial uncertainty.

Superannuation, Financial Services and the Digital Economy Minister Jane Hume said the ABS figures demonstrated the early release of super scheme was an unquestionable success.