Thursday, 17 February 2022
Treasury Laws Amendment (Streamlining and Improving Economic Outcomes for Australians) Bill 2022; Second Reading
That this bill be now read a second time.
Schedule 1 to the bill implements the government's 2021-22 budget commitment to restore previously well-established licensing relief for foreign financial service providers to ensure continued access to foreign financial service providers for Australian investors.
Access to foreign financial service providers enhances market competition, lowers costs and increases the diversity of investments and sources of financing available for Australians.
The previously well-established relief is substantially restored through the introduction of new legislated exemptions, while improving regulatory safeguard mechanisms to address Australian Securities and Investments Commission (ASIC) concerns with the previous relief.
Schedule 1 introduces the comparable regulator exemption,whichexempts foreign financial service providers from the requirement to be licensed when dealing with Australian wholesale clients. The exemption applies to foreign financial service providers that are authorised to provide financial services in a comparable regulatory regime.
Schedule 1 to the bill also introduces the professional investor exemption which is targeted to foreign financial service providers who provide financial services from outside Australia to professional investors.
Lastly, the fit-and-proper person assessment exemption fast-tracks the licensing requirements for foreign financial service providers by exempting certain providers from the fit-and-proper person assessment when applying for a standard financial services licence in Australia if they wish to do so.
This government continually supports the reduction of regulatory barriers across financial services when it makes sense to do so. Regulatory safeguard mechanisms have been enhanced in the restored relief, including the ability for ASIC to add new conditions to providers relying on the exemptions. Further, oversight has been improved by adding a requirement to notify ASIC of any reliance on the relief.
The Legislative and Governance Forum for Corporations was notified of these changes as required under the Corporations Agreement 2002.
Schedule 2 to the bill extends and adapts the financial reporting and auditing requirements in chapter 2M of the Corporations Act 2001 to apply to registrable superannuation entities. This will improve the quality and transparency of financial reports that are prepared by super funds.
Superannuation funds with more than four members currently have a combined value of $2.3 trillion, almost the same value as all listed companies in Australia.
Given the importance of the super sector and the need for trust and transparency, it's appropriate that superannuation funds are subject to similar financial reporting obligations as public companies.
Importantly, the new financial reporting requirements will require registrable superannuation entities to lodge financial reports on the public record with the ASIC.
Requiring registrable superannuation entities to lodge financial reports with ASIC will, obviously, increase the consistency and transparency of financial information that's publicly available and complement APRA's regulation of super funds by enabling stronger enforcement action to be taken to ensure compliance with the financial reporting requirements.
The new requirements will impose stricter rules for auditors of registrable superannuation entities which includes additional reporting and independence obligations for audit firms and audit companies.
The government has carefully examined the issues raised by stakeholders during consultation on the exposure draft legislation and the subsequent changes to the bill are therefore aimed at reducing the regulatory burden on the superannuation and auditing sector while maintaining appropriate transparency.
These changes complement the government's suite of reforms to improve the transparency and accountability of the superannuation system, including the recent Your Future, Your Super changes.
Finally, schedule 3 to the bill allows small businesses to seek orders from the Administrative Appeals Tribunal that stay, or otherwise affect, ATO debt recovery actions while the small business is disputing the underlying tax assessment in the Small Business Taxation Division of the Administrative Appeals Tribunal.
These amendments implement the 2021-22 budget measure 'Increased powers for the Administrative Appeals Tribunal in relation to small business taxation decisions'.
Small businesses will save in court and legal fees and as much as 60 days waiting for a decision, as compared to the current process of applying to a state or federal court for a stay on debt recovery.
These orders will be subject to integrity checks intended to prevent aggressive taxpayers without genuine disputes from receiving stay orders sought with the intention of frustrating the recovery of genuine tax debts.
As always, full details of these measures are contained in the explanatory memorandum.