In a Budget which had a relatively small impact on the financial services industry, the Financial Services Council welcomed measures which it said would reduce costs through efficiency measures.
At the same time, the Association of Superannuation Funds of Australia pointed to the Government’s restate commitment to the timetable which would see the superannuation guarantee rise to 12%.
Both organisations welcomed the Budget measures supporting superannuation, not least the removal of the $450 a month income threshold.
However, the FSC said that it was particularly pleased to see the Government’s commitment to tackling the vexed issue of legacy products across the financial sector, albeit that it warned the policy settings would need to be carefully calibrated to ensure any solutions would be beneficial for consumers.
“We look forward to working closely with the Government to ensure that the product modernisation scheme for life insurance and investment products removes the tax and social security barriers which have prevented millions of Australians from moving from older products to more modern ones,” FSC chief executive Sally Loane said.
“Approximately 1.6 million Australians are currently in outdated life insurance products. The ability to move into a modern product without any tax penalties will be a great outcome for consumers.”
“The ability to move out of legacy pension products, many of which are outdated and expensive, is a welcome move. However the tax and social security settings will be the key factor in consumers and their financial advisers in determining whether to take up the scheme.”
On the funds management front, the FSC welcome changes designed to attract offshore investors to Australian managed funds, including implementation of the Corporate Collective Investment Vehicle regime.
The FSC said it also welcomed the Government’s commitment to:accelerate the program of tax treaty negotiations;
- establish an ‘early engagement service’ (or concierge service) to give investors fast track tax advice on transactions;
- consult on broadening tax residency rule changes to trusts and corporate limited partnerships;
- review the tax treatment of venture capital; and
- implement reforms to the tax hedging rules for financial arrangements.