FSC and ASFA welcome Budget measures

Mike Taylor

Managing Editor/Publisher, Financial Newswire

9 May 2023

The Federal Budget has received a solid welcome from key financial services organisations including the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC).

The Association of Superannuation Funds of Australia (ASFA) said tonight’s Federal Budget builds on the recent announcement targeting Superannuation Guarantee (SG) compliance and will boost retirement outcomes.

It said ASFA had consistently highlighted the detrimental impact of unpaid superannuation on retirement outcomes and recommended paying superannuation with wages, improving data matching utilising the enhanced reporting provided by funds, stronger ATO enforcement against non-compliant employers and greater transparency of the ATO’s progress in recovering outstanding amounts.

“Missing out on superannuation entitlements means people have less retirement income. Every dollar counts in retirement and that’s why measures to improve SG compliance are so important,” ASFA Deputy CEO, Glen McCrea said.

The Budget will improve data matching capabilities by the ATO (including matching employers and super fund data at scale) and will allow the ATO to build a new compliance system to proactively identify instances of under or unpaid super in near-real time. There will also be public targets on the recovery of unpaid superannuation by the ATO and funding for the ATO to engage more effectively with business to address superannuation liabilities.

The Budget also amends the Non-Arm’s Length Income (NALI) provisions which apply to expenditure incurred by superannuation funds and exempts large APRA regulated funds from the NALI provisions for both general and specific expenses of the fund.

“The practical effect of the NALI amendment is that large APRA regulated superannuation funds can continue with existing service arrangements that are in the best financial interests of their members. ASFA has long advocated for appropriate targeting of the NALI provisions and appreciates the Government’s rigorous consultation and pragmatic decision.”

The FSC chief executive, Blake Briggs congratulated the Government on maintaining fiscal discipline.

“Having focused on supporting low and middle-income households the FSC encourages the Government to continue to focus on policies that will increase the productive capacity of the economy to boost employment,” he said.

“Growth orientated policies will offset global economic headwinds and help the Government maintain a balanced Budget over the medium-term, without resorting to further tax increases,

“Tonight’s Budget revealed the new tax on superannuation balances over $3 million will raise an unprecedented $2.3 billion each year from 2027-28, its first full year of operation.”

The FSC specifically welcomes Government announcements in relation to the Interfunding Exemption for foreign owned funds that invest on behalf of Australian consumers, funding for a comprehensive sustainable finance agenda, and new initiatives tackling Australia’s cyber security challenges.

The Interfunding Exemption exempts investors from unnecessary red tape, specifically complex reporting requirements and related fees, that create an unlevel playing field between domestic and international investors.

“The Interfunding Exemption announced in the Budget is a modest but important measure that will boost Australia’s standing as an attractive destination for overseas fund managers, ensuring the domestic market will remain competitive, and will benefit consumers with greater choice,” Briggs said.