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The Association of Financial Advisers (AFA) has heightened its calls for financial advice to become tax-deductible following last night’s 2010-11 Federal Budget announcement, while the National Institute of Accountants (NIA) says Australia will have to wait for serious tax reform.
The AFA otherwise broadly welcomed changes affecting financial services outlined in the Budget, which chief executive Richard Klipin said went a long way towards addressing Australia’s deficit. This was a good thing for employment and inflation, and for Australia to live within its means, Klipin said.
“We’ve said long and loud that if you’re going to bring in a mandated fee model for advice, then incentivising Australians to seek advice by putting in a tax deductibility component is one of the powerful motivators that hasn’t been addressed in this Budget – and we’ll obviously continue that conversation with the government,” Klipin said.
In an industry-specific sense, the combination of the Ripoll recommendations, the Henry Review and the Budget were a major step forward, he said.
“Together, they will help reduce debt and ensure we pay our own way. They will help address the problems of an ageing population, and they will build on Australia’s reputation as a centre of excellence for financial services and an exporter of capability.”
The superannuation increase from 9 per cent to 12 per cent and tax breaks for small business were particularly welcome, he added.
“Australia has great capability and great expertise, and what we need now is the comprehensive plan to take that to the rest of the world.”
NIA chief executive Andrew Conway said small business continues to be overwhelmed by the regulatory burden and needs immediate tax relief.
“We have been disappointed that only a handful of the Henry Review’s recommendations are proposed to be implemented, and that they are contingent on the resource super profits tax going ahead,” he said.
“Small business is still facing major uncertainties around discretionary trusts and the use of corporate beneficiaries, and we noted the omission of well overdue reforms to fringe benefits tax which represents a significant compliance burden on small business,’ he said.
Incentives such as the immediate writing off of assets and reduction in corporate tax would not be implemented until 2012, while the increase in the super guarantee over time would absorb much of the savings small business was entitled to, Conway said.
