Cautiously positive welcome for Federal Budget
The Financial Services has given a cautious welcome to a Federal Budget which mostly focused on superannuation with the key elements having been flagged weeks ago.
However, the SMSF Association has called on the Government to reopen discussions around $3 million super cap arguing that it is necessary because of the impact on small business and previous consultation was too short.
For its part, the Financial Advice Association of Australia (FAAA) pointed to the overall gloomy outlook portrayed by the Budget but welcomed the payday superannuation initiatives but joined the SMSF Association in expressing concern about the $3 million super cap and the lack of indexation.
The Australian Institute of Superannuation Trustees (AIST) representing industry funds welcomed the initiates aimed at improving the wellbeing of Australians, particularly those on low income including announcements that the tax rate on the earnings of super accounts with balances of more than $3 million would increase to 30% from 2025-26, and that employers would be required to pay super at the same time as wages from 1 July 2026.
AIST chief executive,Eva Scheerlinck said the proposed introduction of payday super payments made sense because they were now part of a digital process that placed no additional burden on employers.
“This is a win for workers and will improve the retirement balances of millions of working Australians,” she said. “It will also enable employees to identify under-payment or non-payment of their super earlier and approach their employers and, if necessary, the Australian Taxation Office, to rectify the situation before it gets out of control.
“In fact, there’s no reason why businesses and other employers need to wait until 2026 to do this and, if they want to be recognised as employers-of-choice in an increasingly tight labour market where competition for staff is intense, they should act now.”
The increase in the concessional rate would help to address the inequity of super tax concessions because $3 million was well above the balance needed for a comfortable retirement and 30% was still lower than the highest marginal tax rate.
“Most Australians, in particular women, can only dream of having a super balance of that size,” she said. “The reality is that after years of working in lower paid jobs for less money than men, including time out of the workforce caring for children and family, women face a retirement that is likely to be far from comfortable.”
Scheerlinck said AIST was also pleased the Government had made changes to the non-arm’s length income (NALI) provisions.
Industry Super Australia (ISA) also welcomed the pay day superannuation initiative saying that when combined with higher compound interest from more frequent payments could result in $50,000 more at retirement for many young Australians.
However ISA expressed disappointment that the Government had not used the Budget to deliver on its commitment to provide super on parental leave and said it would continue to lobby for the measure.
No freeze on the Levy, but increasing amount with less advisers to foot the erroneous bill, higher ASIC funding and the COSLR with higher Dixon AFCA complaints. No deductibility of Advice Fees even though the ATO and all Associations supported this. Not positive at all and the costs rise much sharper for Advisers, and be deductible for clients. Why does this government refuse to support making advice more accessible?