Financial planners in limbo until after Federal Election
Planner recruitment and migration within the financial services industry is virtually on hold. The best advice anyone can provide to financial planners looking to change licensees is to stay put until after the 7 September Federal Election when the rules around grandfathering must ultimately be clarified.
This virtual freeze on movement across the financial planning sector is symptomatic of just how unfinished the Government’s financial services legislative agenda really is – and how little cognizance seemed to be taken of the impact of uncertainty on not only individual businesses but the broader industry.
While the interpretations and regulations around grandfathering must sit at the top of the list of unfinished business, it was worth noting the Towers Watson briefing note issued last week which identified the other legislative and regulatory loose ends left by the Government.
These included the Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill 2012 – which provided for criminal and civil penalties for promoters of illegal early release schemes – and which failed to make it into the Parliament and therefore will lapse.
Then, of course, there is the long list of things the Government promised but somehow did not manage to translate into definitive legislation capable of introduction to the Parliament:
Capping of the tax exemption for earnings on superannuation assets supporting income streams at $100,000, with a concessional tax rate of 15 per cent applying thereafter – announced to commence on 1 July 2014;
Extension of the normal deeming rules to superannuation account-based income streams – announced to apply to new account-based income streams commenced on or after 1 January 2015;
Extension of concessional tax treatment to deferred lifetime annuities – announced to commence from 1 July 2014;
The Government’s proposal to require superannuation funds to report to members as to whether contributions have been received for them either quarterly (in electronic form) or half-yearly (via a paper statement) – released in consultation draft only;
Establishment of the Super Council and the Charter of Superannuation Adequacy and Sustainability; and
Further increases in the threshold below which small inactive superannuation accounts, including inactive accounts of uncontactable members, are required to be transferred to the Australian Taxation Office, announced 2 August 2013.
Then, too, the supporting Tax and Super Laws Amendment (2012 Measures No.1) Act do not yet actually exist.
It is not unusual for large slabs of legislation and regulation to be left unfinished as Governments rush off to elections, but it is unusual for so much of it to affect one particular sector.
The Government has promised that, if re-elected it will not make major changes to super policy for five years. Given that so much was left unfinished after six years in power, that promise may not be that hard to fulfil.
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