Allens

Superannuation

Our experienced Superannuation legal team regularly publishes articles and updates - the full list of publications appears below. These publications provide a snapshot of the latest legislation, court cases, policy changes and contentious issues affecting superannuation. If you'd like to be notified when we add new superannuation publications to the site, please go to our subscription page to sign up for email alerts or, alternatively, you can subscribe to our RSS feed.

Read about Allens' track record in this dynamic area.

Superannuation Publications

  • Unravelled: Welcome changes to the derivative charging rules for superannuation trustees

    6 July 2016

    The Government has recently made changes to superannuation law that helps clear the way for trustees of regulated superannuation funds to charge fund assets in order to enter into a broad range of exchange-traded and Over-The-Counter derivative transactions. The changes are intended to make it easier for super fund trustees to manage risk in the post-GFC environment.

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  • Client Update: ASIC releases consultation paper on regulatory sandbox exemption for startups

    9 June 2016

    ASIC has released a consultation paper on proposals to facilitate innovation in the financial services sector. The proposals include details of the long-awaited 'regulatory sandbox'. It will be of interest to both emerging companies who may rely on the relief, as well as investors in this space. Senior Associate Simun Soljo and Law Graduate Antonia Ross look at what the paper proposes.

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  • Unravelled: A reprieve for ASIC and APRA ... but not for the FCA

    2 June 2016

    ASIC and APRA often cop flak from various quarters (including from us) and so today, for something different, we train our sights on the Financial Conduct Authority in the UK. What the FCA has said about providing personal advice to retail clients is interesting, debatable and likely to induce a strong sense of déjà vu.

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  • Unravelled: AMITs are here (at last)

    2 June 2016

    It has taken a while, but out of the dust of an early Federal Budget and double-dissolution election announcement, a new tax attribution regime for 'Attribution Managed Investment Trusts' has emerged relatively intact. While the AMIT regime should generally be welcomed as a positive thing for MITs in terms of certainty and flexibility, it remains to be seen whether it will achieve another of its original aims.

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  • Unravelled: New ASIC funding - looking beyond the headlines

    4 May 2016

    Along with the public release of the ASIC Capability Review Report, the Government announced a suite of reforms giving ASIC additional (but targeted) funding and has also sought to remove some of the shackles on hiring it believes may be hindering ASIC's ability to recruit top talent. At the same time, the Government confirmed that a 'user pays' model will be introduced for ASIC's funding needs from the second half of 2017 onwards.

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  • Unravelled: ASIC getting a bigger toolkit sooner than expected

    4 May 2016

    In its response to the capability review into ASIC, the Federal Government has made a commitment to accelerate the implementation of a product intervention power for ASIC and the product design and distribution obligations for the financial services industry, but it left to one side some other important issues raised by the review. We consider what this might mean for both the regulator and the regulated.

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  • Unravelled: 'Tough cop' ASIC vs a Royal Commission

    4 May 2016

    Has talk of a royal commission turned the ASIC Capability Review into an unlikely catalyst for an enhanced enforcement agenda? With Labor pushing hard for a royal commission into the banking and financial services industry and an election looming, the Government moved swiftly to announce broad reform measures to equip ASIC with stronger powers and funding, as well as a new Commissioner with a financial crime prosecution background, to ensure that, in ASIC, Australia has a 'tough cop on the beat'.

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  • Unravelled: A long time coming: The Retirement Income Streams Review Report

    4 May 2016

    Going into the 2013 election, the present Government promised a review of the regulatory framework for retirement income streams. Today, the Government finally released its report. It has been a long time coming. And while the main outcome – a new category of tax effective pensions and annuities – will be welcomed by many, there are unanswered questions and implementation may take a while.

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  • Unravelled: Providing digital financial product advice to retail clients

    5 April 2016

    ASIC is consulting on a new regulatory guide for providers of digital financial product advice, or 'robo-advice'. The regulatory guide is intended to help new entrants and existing Australian financial services licence holders. For new entrants and licensees needing a reminder, there is a nice summary of the differences between information (that they are keen on calling 'factual information') and financial product advice, and between personal advice and general advice. ASIC points out that the law is the same whether or not advice is provided in person or by means of a computer program.

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  • Client Update: ASIC's guidance on conflicts in vertically integrated funds-management businesses

    24 March 2016

    ASIC has released a report looking at the way 'vertically integrated' funds management businesses deal with conflicts of interest. The report summarises the findings of ASIC's recent review of a number of businesses, and sets out some good practice recommendations. Partner Marc Kemp and Senior Associate Simun Soljo look at the report.

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  • Client Update: Productivity Commission kicks off inquiry into superannuation

    17 March 2016

    The Productivity Commission has released an issues paper inviting submissions on the criteria that should be used to assess the efficiency and competitiveness of Australia's superannuation system. This will be of interest not only to superannuation trustees but also to service providers, including fund managers, who may be put under greater scrutiny. Submissions are due by 20 April 2016. Partner Michelle Levy and Senior Associate Simun Soljo look at the issues paper.

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  • Client Update: Defining the objective of superannuation

    9 March 2016

    The Government released a discussion paper on the Objective of Superannuation today. The paper says that the Government will 'enshrine in legislation' the primary objective recommended by the Financial System Inquiry being: 'To provide income in retirement to substitute or supplement the Age Pension.' Partner Michelle Levy, Senior Regulatory Counsel Michael Mathieson and Senior Associate Georgia Cleeve look at the discussion paper.

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  • Unravelled: Dodd Frank - promoting financial stability and other purposes

    7 March 2016

    The Dodd Frank Act is a bit like the US financial system it is trying to regulate – vast, complex and hard to wade through. It creates a bunch of new regulators on top of what was already a pretty solid cast and gives them wide-ranging powers. They can not only set capital and liquidity requirements for banks and make rules about what they can and cannot do, but they can also shut down or sell off parts of their businesses. But are these regulators smart enough or well enough resourced to identify the risks?

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  • Unravelled: Would you like best interests with that? Conflicted remuneration, American style

    7 March 2016

    Last month, we were fortunate enough to host Barney Frank, co-architect of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, to discuss financial regulation reform. Coincidentally, a couple of weeks later, we were treated to a presentation on US financial regulation reforms by a US lawyer, David W. Powell, at the annual superannuation lawyers' conference. Powell's presentation focussed on US efforts to expand 'fiduciary' duties for financial advisers, including those advising on Individual Retirement Accounts. IRAs now constitute a large chunk of US retirement savings. There are some interesting comparisons to be made between the proposed US rules and existing Australian financial advice laws. But perhaps most interesting of all is the proposed 'best interest contract exemption'.

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  • Unravelled: Transparency and Accountability - and not just for Wall Street

    7 March 2016

    The regulatory law repercussions of the GFC remain endlessly fascinating. As an example, take the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010. It runs to 848 pages. Title VII addresses, perhaps optimistically, 'Wall Street Transparency and Accountability'. My favourite provision is section 716, headed 'Prohibition Against Federal Government Bailouts of Swaps Entities'. This heading suggests that, if there is ever another AIG, it can't be bailed out. Too-big-to-fail solved by legislative prohibition. If only it was that easy.

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  • Unravelled: Conflicted remuneration, dreaming and the law of common sense

    5 February 2016

    How many times have you heard someone say 'FoFA is settled'. Next time you hear that, you should reach for one of the many quotable quotes from The Castle and 'tell 'em they're dreamin'. First, there are the so-called 'Retail life insurance industry reforms'. Then, get ready for remuneration reforms in the mortgage broking industry. After that will come remuneration reforms in the stockbroking industry. And APRA recently set up a taskforce to examine the remuneration of banking executives.

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  • Unravelled: Raising professional standards of financial advisers

    5 February 2016

    Following on from the reviews conducted by the Parliamentary Joint Committee and the Financial System Inquiry, the Government delivered on its promises by releasing an exposure draft of the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015 (the Bill) late last year for consultation. As its title suggests, the draft Bill proposes a number of amendments to the Corporations Act to raise the professional standards of financial advisers that are to apply from 1 July 2017. Many of these reforms impose obligations that licensees in the retail financial advice and superannuation trustees should carefully consider and begin making provision for.

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  • Client Update: New measures on resilience, collateral protection and client money

    22 December 2015

    The Government yesterday released for consultation draft legislation containing 'resilience and collateral protection' measures. Think payment systems, netting and derivatives. But also think superannuation trustees and life companies investing in centrally-cleared OTC derivatives – and restrictions on charging assets. The Government also released a policy paper on how to make the client money provisions more protective. Partners Tom Highnam and Michelle Levy and Senior Regulatory Counsel Michael Mathieson look at some of main points of the new draft legislation.

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  • Client Update: Superannuation product dashboard and portfolio holdings disclosure draft legislation released

    11 December 2015

    The Federal Government has released an exposure draft of new superannuation legislation and associated regulations, which refine the current rules on portfolio holdings disclosure and product dashboards for superannuation funds. The changes in the portfolio holdings disclosure area particularly (including the extended start date of 31 December 2016) are likely to be welcomed by many and, we think, do a fairly good job of achieving what the Government says they have – ie to 'provide a balance between improving member outcomes and minimising compliance costs for the superannuation industry'. Partner Geoff Sanders and Associate Georgia Cleeve report.

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  • Unravelled: Government launches innovation agenda - now wait for the ideas boom

    8 December 2015

    You might be getting tired of all of the talk about 'innovation', and keen to see some of it actually happen. The Government's recent announcements could help, but there is a long way to go before the 'mining boom' becomes the 'ideas boom'.

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  • Unravelled: FSI outcomes - what will happen and when?

    8 December 2015

    Are you interested in the financial system and how it is regulated? The Federal Government's response to the Financial System Inquiry was recently handed down but it can be hard to work out where, exactly, things are heading. We have put together a table that sets out what is likely to happen and when.

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  • Client Update: Life insurance advice remuneration legislation released

    4 December 2015

    The Government released yesterday an exposure draft of the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2015. The Government says the Bill 'removes the current exemption in the Corporations Act from the ban on conflicted remuneration for benefits paid in relation to certain life risk insurance products'. That statement is not correct. Senior Regulatory Counsel Michael Mathieson explains

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  • Unravelled: What does the Government's response to the FSI mean for banks?

    6 November 2015

    The short answer is: it depends on which kind of bank you are. The Financial System Inquiry's final report and the Government's response mean a lot for ANZ, CBA, NAB and Westpac, particularly given their significant residential mortgage portfolios. They also mean a lot for Macquarie. As for the rest of the banks, they are likely to see the ramifications for the major banks as their own gain.

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  • Unravelled: Government says 'Yes ASIC'

    6 November 2015

    The FSI recommended that the Government 'Introduce an industry funding model for Australian Securities and Investment Commission (ASIC) and provide ASIC with stronger regulatory tools'. This recommendation (No.29) covers two topics that ASIC has pursued on a number of occasions, including in its submissions to the FSI. The first is ASIC's preference to move to an industry funding model; and the second is ASIC's recommendation that penalties under ASIC-administered legislation be increased.

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  • Client Update: All but one: Federal Government issues response to FSI report

    20 October 2015

    The Federal Government today released its long-awaited response to the Financial System Inquiry. The Government says it has accepted all but one of the Inquiry's 44 recommendations released late last year. And this is broadly true, with the only substantial recommendation to be rejected being the recommendation to stop superannuation funds borrowing to invest.

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  • Unravelled: Proposed industry funding model for ASIC

    6 October 2015

    Treasury has released a Consultation Paper seeking comments on a proposed industry funding model for ASIC. Under the proposed model, the costs of ASIC's regulatory activities will be recovered directly from the companies and other entities that are regulated by ASIC – at a direct cost to industry of approximately $260 million. This amount will be collected through a combination of annual supervisory levies (around $196 million) and significant fee increases for fee-for-services activities to reflect ASIC's actual costs of providing specific on-demand services to individual entities. In this article, we look at the proposed model in more detail.

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  • Unravelled: Corporate culture and conduct risk

    6 October 2015

    Regulators, particularly in the UK and Australia, are increasingly interested in corporate culture in the financial services industry, its impact on the integrity of the system, and what the regulators are doing to try to entrench a corporate culture that works for the benefit of consumers and investors. In this article, we look at various aspects of the relationship between corporate culture and conduct risk – convincing Australian financial services organisations that by focusing less on profit, and more on investors' long-term interests and market integrity, they really are helping themselves.

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  • Unravelled: ASIC - A crackdown on corporate culture

    4 September 2015

    Corporate culture, and its role in shaping conduct within the financial services sector, is now clearly at the forefront of ASIC's enforcement agenda. This focus was apparent in ASIC's 2014-2015 strategic outlook, released in October 2014, which identified corporate culture as a key risk driver and poor culture within the financial services sector as a root cause of conduct that threatens the integrity of the financial services industry.

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  • Unravelled: Financial System Inquiry: where are we at?

    5 August 2015

    Federal Treasurer Joe Hockey released the Financial System Inquiry report on 7 December 2014 saying that: '[the] report I release today delivers on our election commitment and lays out a blueprint for the financial system over the next decade.' And he is right – the Government did, as promised, commission an inquiry and the report does set out recommendations for how the financial system 'could be positioned to best meet Australia's evolving needs and support Australia's economic growth'. But the electorate may have hoped for more than a report and a blueprint. Of more interest will be whether the blueprint will be implemented. And here, the Treasurer has been more circumspect.

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  • Unravelled: Broadening approved product lists - would it really achieve anything?

    5 August 2015

    In his report earlier this year on retail life insurance advice John Trowbridge recommended that every advice licensee include at least half of the 13 relevant life insurers on its approved product list. The Assistant Treasurer has since indicated the Government may 'consider measures to widen APLs by 1 July 2016'.

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  • Client Update: ASIC clamps down on SMSF advice

    25 July 2015

    ASIC has outlined its expectations for financial advice where the client is advised to set up a self-managed superannuation fund. ASIC has done so in two publications released yesterday – one deals with the risks associated with SMSFs (information sheet 205) and the other with the costs (information sheet 206). Blind Freddy can see ASIC doesn't think its expectations are being met. Senior Regulatory Counsel Michael Mathieson reports.

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  • Unravelled: How to avoid anti-money laundering compliance headaches - financial product issues

    3 July 2015

    Issues of securities, interests in managed investment schemes and other types of financial products typically involve a number of 'designated services' under Australia's anti-money laundering and counter terrorism financing (AML/CTF) regime. However, in the midst of preparing governing documents, disclosure documents and negotiating with service providers, it is all too easy for parties to neglect AML/CTF issues when preparing for a product launch. They should not, particularly in light of recent developments on the AML/CTF front.

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  • Unravelled: APRA's assessment of life insurers: 'must try harder'

    3 July 2015

    As an institution, APRA can be partial to bureaucratese. As keen readers of APRA's writings, we sometimes find ourselves asking – what is APRA really saying here? And that is a question worth asking when reading APRA's recent letter to life companies setting out its concerns with group insurance.

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  • Client Update: Bill to repeal equal representation rules for superannuation trustee boards

    26 June 2015

    Treasury today released what appears to be an extract from an Exposure Draft Bill that will remove the equal representation rules in the Superannuation Industry (Supervision) Act 1993 (Cth) and require at least a third of the directors of superannuation trustee boards to be 'independent'. If passed, the Bill will also redefine who can be an independent director. It has been a long time coming and is pretty much as expected. The main focus of lobbying is going to be around the definition of independent director. Partners Michelle Levy and Geoff Sanders report.

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  • Unravelled: Full Federal Court rules against agreed civil penalties

    4 June 2015

    Ecstasy, cocaine and industrial action at a construction site are unlikely subjects for an article on financial services regulation. They are, however, the things that have led to what could be a significant change to the way in which financial services regulators like ASIC and APRA can resolve civil penalty proceedings.

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  • Unravelled: Tax musings

    4 June 2015

    You would need to have been living under a large rock with your hearing aid turned off not to be aware of the current debates raging in relation to tax. But it is hard to sort the wood from the trees or the real facts and issues from all the surrounding noise.

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  • Paper: Funding a Fund: The growth of the capital call facility

    25 May 2015

    The Australian corporate debt market is primed for growth, with an increase in the number of funds providing direct lending as an alternative source of financing to the traditional lending dominated by domestic banks. In this paper, Partner Tom Highnam and Senior Associate Rita Pang examine the growth of one of the methods by which funds use and raise debt - the capital call facility.

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  • Unravelled: Attribution MITs - why try to fix something that wasn't broken?

    6 May 2015

    The exposure draft Bill for the taxation of 'attribution managed investment trusts' has been received with much hand-wringing and plaintive cries of 'what does it all mean?'. A threshold question is whether your MIT will fall within the regime. The text of the Bill makes that question difficult to answer.

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  • Unravelled: Section 68A - undue attention to an inadequate remedy

    1 April 2015

    It's not often that a section of the SIS Act makes the daily news, but section 68A of the SIS Act has done just that following the publication of a report commissioned by Industry Super Australia. It is startling how much weight ASIC and APRA are apparently giving to the report as its findings are not compelling.

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  • Focus: The Inverted Bid Model - five key questions in solving it

    18 March 2015

    Industry Super Australia's proposed Inverted Bid Model has generated a lot of interest and discussion. At a recent industry symposium, participants were invited to explore the model, with a view to further refining it for application in the Australian infrastructure market. Partner David Donnelly poses some key questions.

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  • Unravelled: Indirect costs - where to from here for superannuation trustees?

    5 March 2015

    As many in the superannuation and managed investments industries are well aware, there has been a number of significant changes to the manner in which 'indirect costs' will need to be calculated and disclosed in PDSs that are on issue after 1 January 2016. While parts of the industry are continuing to discuss with ASIC some of the problems under the revised regime, it is now clear that core aspects of the new rules are here to stay.

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  • Unravelled: MySuper and promoting the financial interests of MySuper beneficiaries

    5 March 2015

    An examination of a trustee's duty to promote the financial interests of its MySuper beneficiaries: is it outcomes-based or process-based?

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  • Unravelled: ASIC's enforcement powers may receive a boost

    5 February 2015

    In preparing its Final Report, the FSI has clearly paid close attention to the report of the Senate Economics References Committee's Report into ASIC's performance and its recommendations designed to strengthen ASIC through a combination of better funding, an enhanced regulatory toolkit and higher penalties, with a view to enabling it to be the 'respected and feared' leader desired by the Senate Committee. The impact of the FSI's recommendations is now likely to be the subject of further submissions to the Government before any decisions are taken.

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  • Unravelled: The best interests duties - process or outcome?

    5 February 2015

    Superannuation fund trustees and their lawyers (including this one) have been grappling for years with what the covenant in section 52(2)(c) of the Superannuation Industry (Supervision) Act 1993 means. What must a trustee do to exercise its powers and discharge its duties in the best interests of beneficiaries? And despite some very clear statements by many judges including in the High Court that the covenant is concerned with ensuring the trustee is free to exercise its powers and discharge its duties for their proper purpose (without any unauthorised conflict or profit) - the idea that the duty in fact requires trustees of superannuation funds to achieve good outcomes for beneficiaries persists.

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  • Unravelled: What do smoked fish have to do with retirement incomes?

    5 February 2015

    The final report of the Financial System Inquiry recommended that APRA-regulated superannuation trustees be required to offer a 'comprehensive income product for retirement'. This rather modest recommendation in the final report stands in stark contrast to the retirement phase policy options canvassed in the interim report. Some of those policy options were quite radical. My view at the time was that the Inquiry had not done the work needed to support such bold options. Similarly, APRA sounded some notes of caution in its second-round submission to the Inquiry. In this context, it is just as important to identify what the Inquiry has dismissed as it is to discuss what the Inquiry has recommended.

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  • Unravelled: Will Australia serve up a Chilean-style super system?

    5 February 2015

    The Financial System Inquiry's final report was blunt in its assessment of the current state of Australia's super system, noting that the 'superannuation system is not operationally efficient due to a lack of strong price-based competition.' The Inquiry's concern with super fees and costs led to one of the most radical recommendations in its final report - that Australia should consider adopting a system which could perhaps have a distinctly Chilean flavour.

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  • Unravelled: Will Australia serve up a Chilean-style super system?

    5 February 2015

    The Financial System Inquiry's final report was blunt in its assessment of the current state of Australia's super system, noting that the 'superannuation system is not operationally efficient due to a lack of strong price-based competition.' The Inquiry's concern with super fees and costs led to one of the most radical recommendations in its final report - that Australia should consider adopting a system which could perhaps have a distinctly Chilean flavour.

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  • Unravelled: Bold and sometimes radical - the final Murray report

    7 December 2014

    The Financial System Inquiry's final report has been released. We haven't tested this with 'Word Cloud', but we think the report can best be encapsulated in the word 'however'. The financial system has held up well, 'however, ...'. And what follows the 'however' is often bold and sometimes radical. There are five chapters and just 44 recommendations - compare this with the Cooper Review's 177 recommendations. But this helps - the messages are clear and the recommendations plain, although much of the implementation is left to the imagination.

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  • Unravelled: Opportunities for financial services from the China-Australia FTA

    3 December 2014

    The Australian and Chinese governments recently announced the conclusion of negotiations on the China Australia Free Trade Agreement. According to DFAT, China's financial services commitments under the agreement represent one of the most substantial market access undertakings China has agreed to with any FTA partner. Australian financial services providers should consider the opportunities that the deal presents.

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  • Unravelled: Taxation of certain unit trusts - 'attribution' model to replace 'present entitlement'

    3 December 2014

    You may be forgiven for having lost track of the proposed reforms to the taxation of managed investment trusts (or MITs) given that this initiative has been 'announced' by successive Federal governments since 2010. Finally though, an exposure draft of new legislation is expected to be released before Christmas that will include a 'third' regime that is intended to provide greater certainty as to the tax transparency (or flow through treatment) of qualifying MITs.

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