No adjustment for advice fees in $3m super cap

Mike Taylor

Managing Editor and Publisher

28 April 2023

Financial advice and investment fees appear unlikely to be significantly affected by the administrative settings underpinning the Government’s proposed new $3 million superannuation cap.

Submissions responding to Treasury consultation around the $3 million cap, expected to be confirmed in next month’s Budget, have confirmed the new regime will not adjust for advice or investment fees.

A submission filed by the Association of Superannuation Funds of Australia (ASFA) said that the organisation understood from discussions with Treasury “that the intention is not to adjust for outflows from accounts such as insurance premiums, fees charged by the fund (such as administration and investment fees) and advice fees”.

“We accept that this decision has been made on the basis that such fees are part of the ordinary operation of superannuation and also that reporting this additional data to the Australian Taxation Office (ATO) would increase the reporting and compliance burden on funds,” it said.

However ASFA said outflows that should be adjusted for in determining an individual’s liability for the proposed tax include:

• all benefit payments from the individual’s interest, whether cash payments or in specie, lump sum or income stream, during the member’s life or after their death and regardless of the benefit type or condition of release satisfied
• payment splits under the Family Law Act 1975 from the individual’s interest
• contribution splits to a spouse
• amounts paid out of the account under a release authority, including payments of Division 293 tax liability, excess contributions tax and liability under the proposed tax
• payments to foreign funds (for example, KiwiSaver transfers).