The Financial Planning Association of Australia The Financial Planning Association of Australia

FPA responds to draft legislation to enact super changes

The Financial Planning Association of Australia (FPA) has welcomed many of the Government’s proposed superannuation reforms following the release of draft legislation to enact the budget super changes.

Dante De Gori, CFP®, FPA CEO, said the FPA supported many of the changes in the first tranche of draft bills, released yesterday – but expressed disappointment at ongoing uncertainty around superannuation.

“The FPA welcomes policies that are in the best interests of Australians over the long term. The introduction of increased tax offsets for spousal contributions, the introduction of a low income super tax offset (LISTO) and the removal of complex rules that make it difficult for Australians over 65 to continue contributing to super will support Australians in building their retirement benefits and help improve outcomes for lower income earners,” said Mr De Gori.

However, Mr De Gori highlighted FPA members’ concerns around ambiguity on superannuation changes.

“While not covered in this tranche of reforms, our members who provide advice to millions of Australians have continued to highlight the issues caused by some of the proposed changes such as the $500,000 life time cap on non-concessional contributions backdating to 2007; the reduction of concessional contribution cap to $25,000 and taxation of earning on transition to retirement income streams,” said Mr De Gori.

“In light of this draft legislation, the FPA encourages financial planners to work with clients to help them understand these changes and plan accordingly. Consumers who are uncertain about these changes should seek advice from a qualified financial planner who is a member of a reputable professional body” said Mr De Gori.

The Tranche 1 proposals are:

Proposal FPA response
Objective of Super Disagree with proposed objective. FPA proposes that objective of super should be:
‘To provide income and capital in retirement to provide a comfortable standard of living.’
Tax deductions for personal super contributions Supportive of measure and additional flexibility this provides to Australians building their retirement benefits.
Improve super balances for low income spouses Supportive of increased threshold for receiving a tax offset for making spouse contributions.
Introduce a low income super tax offset (LISTO) Supportive of important measure to increase super balances of low income Australians by refunding contributions tax.
Harmonisation of contribution rules for those aged 65-74 Supportive of removal of complex rules which make it difficult for Australians over 65 to continue contributing to super.