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The Financial Planning Association of Australia (FPA) welcomed measures to encourage older property owners to downsize in the Federal Budget, but cited concerns with increased complexity to the superannuation system.
FPA CEO Dante De Gori CFP® said: “A person aged 65 or over will be able to make a non-concessional contribution to superannuation of up to $300,000 from the proceeds of selling their home from 1 July 2018.
“The aim of this incentive is to encourage the baby boomer generation to sell, freeing up larger houses for younger families upgrading into more suitable homes. We support this initiative, however these changes add to the complexity of the superannuation system and are only tinkering with the housing affordability problem.”
First home buyers will be able to withdraw voluntary contributions to superannuation made from 1 July 2017, along with associated deemed earnings, for a first home deposit.
Under the measure, up to $15,000 per year and $30,000 in total can be contributed, within existing caps. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30 per cent offset. Both members of a couple can take advantage of this measure to buy their first home together.
While the FPA supports initiatives to make housing more affordable, the association says
accessing super is not the solution to the housing affordability issue, and is not in the national interest.
“Our members, who provide advice to millions of Australians, are concerned that changes that reduce retirement savings of future retirees, will only add extra pressure on the age pension.”
The 0.06% tax on bank liabilities introduced in the Federal Budget is also an area of concern for the FPA. “There is a question about what the funds raised will be used for and if the tax will be passed onto customers. This will only increase the cost of borrowing and will likely have a knock-on effect for the economy,” said Mr De Gori.
The FPA acknowledges the introduction of the Australian Financial Complaints Authority that will combine the current External Dispute Resolution Schemes and the Superannuation Complaints Tribunal into one body. The FPA cautions against the cost of the Authority which will be funded by the industry via a new levy, adding additional cost pressures on consumers.
“As a result of tonight’s announcement, the FPA encourages planners to plan client reviews carefully, giving priority to those affected immediately or very soon, versus those where the potential impact is very significant.
“From a consumer point of view, we encourage consumers, particularly those most affected to seek professional advice in order to navigate the various potential effects of tonight’s announcement,” concluded Mr De Gori.
The FPA is hosting a webinar on Wednesday 10 May, 2:30pm-3:30pm AEST to help FPA members understand how the budget announcements could affect financial planners and clients. For more information, click here.
Dante De Gori CFP® will be live on Twitter on Thursday 11 May, 12.00pm-1.00pm AEST to answer questions about how the budget announcements could affect financial planners and clients. Follow the conversation #AskDante @ddegori10.