Despite comments by the Prime Minister Julia Gillard some weeks ago that “everything was back on the table” when it came to superannuation, the financial services industry has been generally pleased that the reality of last night’s budget was much different.
After the Federal Government released the proposed changes to superannuation on 5 April, much of the response has been relief that superannuation has not been altered or raided to fund budget shortfalls.
Both organisations representing financial planners and advisers – the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) – welcomed the fact that the Federal Government chose not to make changes to superannuation.
They were joined by the SMSF Professionals’ Association of Australia (SPAA) and the Association of Superannuation Funds of Australia (ASFA) in welcoming the increase of concessional contribution caps to $35,000 for 60-year-olds from 1 July this year, and to the same level for those 50-and-over from July 2014.
SPAA head of technical and professional standards Graeme Colley said SMSF trustees should be confident that superannuation was off the Government’s radar, but was cautious on moves to tax earnings above $100,000 on assets supporting income streams.
Colley said the move could introduce substantial complexities and costs to the super system, as evidenced by the Budget allocating $43 million to administer a measure for an estimated 16,000 affected taxpayers.
AFA chief operating officer Phil Anderson said the only surprise in the Budget was the three-year pilot scheme to allow senior Australians downsizing their homes to place funds into special accounts where the funds will be exempt from pension means testing for up to 10 years – as long as they remain untouched for that period.
A number of fund managers have also released technical budget commentary, with Perpetual labeling it as “someone else’s problem” and stating this Budget “is certainly very different from your typical pre-election Budget – there is no pork-barrelling, few electoral sweeteners, no targeted spending in marginal seats and no broad-based spending programs for important voting groups”.
