..... Future of Financial Advice laws on July 1," says Dante De Gori.

Sighs of relief greeted Tuesday’s federal budget, which contained few surprises and no further changes to personal superannuation.

While some in the industry had predicted changes that would reduce incentives and benefits, Treasurer Wayne Swan resisted the urge to further tinker with the superannuation system.

The Financial Planning Association (FPA) said there were plenty of positives, particularly in respect to the raising of superannuation caps. The cap on concessional limits to superannuation will be raised to $35,000 for 60 year olds from July 1, 2013 and will be again raised to $35,000 for 50-year olds in July 2014.

“The FPA strongly urged government to avoid tinkering with superannuation and we are happy to see Treasurer Swan has avoided changes that would reduce incentives and benefits of the superannuation system,” said Dante De Gori, general manager policy and standards at the FPA.

Off the table

After much speculation following the prime minister’s recent statement that “everything was back on the table”, others in the sector welcomed the budget and expressed relief that superannuation was not raided to fix budgetary problems.

“The budget essentially reiterated the superannuation announcements already made on April 5, 2013,” said John Randall, superannuation tax partner at Deloitte.

“Individuals and the superannuation industry should now be able to carry on with some sense of certainty and stability at least until the November mid-year economic forecast outlook.

”The Association of Superannuation Funds of Australia (ASFA) agreed with chief executive Pauline Vamos, stating that this will allow people to plan for their retirement with some confidence.

“Over the past few months we have expressed concern regarding the impact on community confidence in superannuation as a result of the ongoing speculation. These concerns appear to have been addressed,” she said.

“We note that some measures have been slightly adjusted as a result of the response to the April announcements, however there is still further work to be done to address any potential issues which may arise on implementation.”

Cost, complexity cools confidence

While most of the announcements in the budget were not new, with most having been released over the last few months, one surprise was the future ability for retirees to downsize their home and invest up to $200,000 of the surplus sale proceeds without impacting their pension means testing.

The SMSF Professionals’ Association of Australia (SPAA) head of technical and professional standards, Graeme Colley, said the association was pleased that, aside from a few minor technical amendments, the government had stuck to its word.

“SMSF trustees should now feel more confident that the superannuation system is off the government’s radar and remains Australia’s primary retirement savings vehicle,” he said.

However, Colley cautioned that the government’s move to apply tax to earnings above $100,000 on assets supporting income streams could introduce substantial complexities and costs to the super system.

The Institute of Public Accountants (IPA) also had a mixed reaction to the news.

“The federal government has provided a ‘mish mash’ of reforms in place of a long term policy platform. This will impact on future retirement expectations of thousands of Australians,” said IPA chief executive officer, Andrew Conway.

“While the budget made some good announcements for the superannuation sector these have been tempered by other negative announcements.

“We welcome the government’s commitment to finally reform the Excess Contribution Tax by taxing people at their marginal tax rate plus an interest charge, rather than at the highest marginal tax rate.”

FoFA frustration

The FPA also flagged its concerns with government’s lack of support for small business, especially those facing significant reform.

“We are disappointed to see no announcement in support of small business across Australia. The financial planning profession has been and will continue to be under significant strain as a raft of new regulation come into effect in 2013,” said Dante De Gori.

“These small financial planning businesses will receive no support from government with the implementation of Future of Financial Advice laws on July 1. This is unfortunate however we encourage all financial planners to use all the tools and support being provided to you through your professional association.”

Andrew Starke
15th May 2013Source: 
Professional Planner    www.professionalplanner.com.au