APRA says some salary sacrificing advice breaches the sole purpose test

Some financial advice provided to superannuation fund members around salary sacrificing into superannuation may actually be in breach of the sole purpose test, according to the Australian Prudential Regulation Authority (APRA).

Asked by the chairman of the Senate Economics Committee, West Australian Senator, Slade Brockman whether the sole purpose test applied to advice on reducing expenditure to enable a member to salary sacrifice into super, APRA said such advice would only be compliant if paid for from monies held outside of superannuation.

“If the advice was being paid for by the individual with monies held outside of superannuation, the sole purpose test would not apply,” APRA said.

“If the advice was paid for by the superannuation fund trustee with the consent of the member, then it is likely to inconsistent with the sole purpose test,” the regulator said.

Asked by Brockman whether an extension of intrafund advice to allow for the provision of advice to the spouse of a member would be in breach of the sole purpose test, APRA said it was likely to be a breach.

“Only members of the fund can receive intrafund advice paid for out of superannuation,” APRA said.