Super Alert – 17 October 2025: ATO draft compliance guidelines re Payday Super, warning re inappropriate super releases, landmark ruling re civil penalties under the Privacy Act

Welcome to the weekly KHQ Super Alert. This week the ATO published its draft compliance approach guidelines for Payday Super and issued a further warning about inappropriate early releases from super. Treasury announced proposed changes to LISTO and concessional tax rate rules, and ASIC urged trustees to improve their communications practices in relation to retirement products. Also, in a landmark ruling, the Federal Court has imposed the first civil penalties under the Privacy Act 1988, in relation to a serious data breach.  

ATO – Warning to health practitioners about inappropriate releases from super 

On 16 October 2025, the ATO issued a joint media release with the Australian Health Practitioner Regulation Agency to warn about inappropriate business practices ‘that seek to use superannuation to pay for overly expensive or unnecessary medical treatments’. According to the ATO, there has been ‘significant growth in applications for compassionate release of super, particularly for dental services, where the number of requests has more than doubled in two years’.  

The ‘ATO is concerned that some health practitioners and registered agents are inappropriately supporting individuals to access their superannuation on compassionate grounds, particularly for cosmetic procedures that aren’t aligned to compassionate release requirements’. Additional guidance materials are being developed for health practitioners to educate them about the ATO’s expectations.  

Click here for details.  

APRA – Speech in relation to transitioning members to the retirement phase 

On 16 October 2025, APRA published a speech delivered by its Deputy Chair, Margaret Cole. The focus of the speech related to transitioning members to the retirement phase. Some of the key comments included the following: 

• ‘Treasury has previously estimated that around 2.5 million Australians will transition from the accumulation phase to the retirement phase in this decade. How trustees respond to the challenge of supporting a sharply higher number of members in retirement will be a true test of the system’; 

• ‘…there is a clear and growing gap between trustees who are meeting baseline expectations [of the Retirement Income Covenant] and those who have embraced retirement as a strategic and competitive imperative’; and 

• ‘APRA recently consulted with the life insurance industry on proposals to reduce capital requirements for insurers offering annuity products. APRA’s aim is to lower the cost to life insurers of providing annuity products, helping to attract participants and support growth in the market, so that more members can consider this type of product where suitable for their individual circumstances’. 

Click here for details.  

ASIC – Trustees warned regarding retirement communications practices 

On 14 October 2025, ASIC released Report 818 titled From superficial to super engaged: Better practices for trustee retirement communications. In the Report, ASIC sets out its observations of good and poor communications practices from a review of 12 superannuation trustees, with the detail of the report focused on how trustees ‘are communicating to their members about retirement in the lead up to, and through retirement’. 

In its review, ASIC reportedly ‘found little evidence of trustees tailoring their messaging and delivery methods to meet the diverse needs and preferences of their member base, including those already in the retirement phase’. 

Following its review, ASIC has called for trustees to:  

• ‘focus on informing members about retirement, rather than prioritising product promotion and member retention’; 

• ‘develop retirement communications that are better tailored to member needs’; 

• ‘ensure retirement communications are accessible to culturally and linguistically diverse members and members with a disability’; 

• ‘adequately resource governance structures to execute the retirement income strategy and communications strategy’; and  

• ‘strengthen oversight of external service providers…to ensure the communications meet…expectations’. 

Click here for details. 

Treasury – Changes announced to superannuation contribution rules and Division 296 tax 

On 13 October 2025, the Government announced its intent to boost the lowincome superannuation tax offset (LISTO) and make changes to the previously announced concessional tax rates for large superannuation balances. 

According to Treasury, it is proposed that effective from 1 July 2027, key changes to the LISTO rules will include: 

• increasing the income threshold from $37,000 to $45,000; and 

• increasing the maximum LISTO payment from $500 to $810. 

As for the concessional tax rates for large superannuation balances (proposed to be in Division 296 of the tax legislation), Treasury has explained that from 1 July 2026, the changes will include: 

• ‘introducing a second threshold to better target super concessions on balances above $10 million’; 

• ‘indexing the large balance thresholds of $3 million and $10 million’; and 

• ‘moving to a realised earnings approach that aligns to existing income tax concepts’. 

In an associated media release, the Treasurer, the Hon Dr Jim Chalmers MP, signalled the Government’s intent to ‘introduce legislation to implement these changes as soon as possible in 2026’ with further consultation to be undertaken with stakeholders and members of the superannuation industry to settle implementation. 

Click here and here for details. 

ATO – Draft guideline released setting approach for operation of Payday Super 

On 9 October 2025, the ATO released draft Practical Compliance Guideline 2025/D5 

Payday Super – first year ATO compliance approach seeking industry feedback. The Guideline ‘sets out a practical administration approach to assist taxpayers in complying with relevant tax laws’.  

The Guideline will only take effect if the Treasury Laws Amendment (Payday Superannuation) Bill 2025 (Cth) is passed. See our Super Alert from 10 October 2025 for information about the introduction of Bills to give effect to the Payday Super reforms. 

The draft Guideline explains that the ATO intends to ‘prioritise the application of compliance resources to areas of highest risk, to investigate employers who have not paid the minimum amount of SG contributions for their employees’. The Guideline will apply to all employers from 1 July 2026 to 30 June 2027. 

The consultation period ends on 7 November 2025. 

Click here for details.  

Federal Court – First civil penalties imposed under Privacy Act 

On 8 October 2025, the Federal Court handed down its decision in Australian Information Commissioner v Australian Clinical Labs Limited (No 2) [2025] FCA 1224. In a first under the Privacy Act 1988, the Federal Court has ordered Australian Clinical Labs (ACL) to pay $5.8 million in civil penalties in relation to a 2022 cyberattack on its Medlab Pathology systems, which exposed personal data of over 223,000 individuals.  

The penalty comprises:  

• $4.2 million for failure to take reasonable steps to protect personal data (in contravention of APP 11.1).  

• $800,000 for failing to assess whether an eligible data breach had occurred.  

• $800,000 for delayed notification to the OAIC. 

Justice Halley described the breaches as ‘extensive and significant’, highlighting the role of senior management in decisions around IT integration and breach response. The Court noted mitigating factors, such as ACL’s cooperation, remediation efforts, and admission of liability, in moderating the penalty.  

The ruling marks a turning point in privacy enforcement in Australia, signalling that serious data breaches can attract substantial financial consequences under the Act. The case also underscores the stricter penalty regime that allows for much higher fines for future serious privacy infringements.  

Head of our Data Privacy, Cyber & Digital team, Alex Dittel, has written a detailed summary of the case and its implications. Click here for details. 

This alert was written by Callum Hurley (Lawyer), Sanela Diamantopoulos (Senior Associate) and Natalie Cambrell (Director).

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