The Financial Advice Association of Australia (FAAA) says the government has provided a relatively gloomy outlook for its Budget despite achieving a surplus, with few surprises.
FAAA CEO Sarah Abood says: “We welcome the proposal on superannuation payment timeframes to align superannuation payments with wages from July 2026, previously announced, but confirmed in the Federal Budget handed down tonight. This will help support the retirement incomes of Australians by making it much less likely that super payments will be missed.
“The introduction of a new tax rate of 30 per cent on superannuation balances over $3 million was also previously announced. The FAAA remains concerned about the lack of indexation for the higher tax rate on super balances above $3m, and the methodology for calculation of the taxable income.
“These two measures were the main points on Budget night 2023 for the financial advice sector.
Other announcements around Non-Arms Length Income (NALI) and the Financial Regulator Assessment Authority (FRAA) were also made.
“We now have more clarity around NALI, although the announced changes are a little surprising.
“Limiting the income that is taxable as NALI to twice the level of a general expense, and exempting any that occurred before 2018-19, was not what was expected following consultation. Financial advisers will need to carefully consider the impact on any Self-Managed Super Fund clients who are affected.
“On both NALI and the pre-announced super changes, we look forward to engaging with Minister Jones and communicating more detail on these changes to our members when it is available.
Ms Abood also noted that it was concerning that the FRAA will now only review the activities of APRA and ASIC every five years, as opposed to the current two, which had not been previously flagged.
“It is disappointing to see this highlighted as a budget saving in the context of recent regulator reviews and when no consultation with industry has been undertaken,” Ms Abood says.
“We are also very keen to see more clarity soon from the government on the impact of the ASIC levy on the financial advice sector. The costs for advice businesses continue to rise and it is a high priority to minimise the impact of the levy being unfrozen from the current financial year. A great way to make financial advice more affordable for consumers, is to reduce the business costs involved in the provision of advice – and this is one important way the government can assist.”