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The Financial Planning Association of Australia (FPA) welcomes the stimulus for Australian consumers, greater certainty for retirees and additional support for small business owners outlined in the 2020-2021 Federal Budget.
While the Budget did not include any changes to the Superannuation Guarantee, it did outline the government’s Your Future, Your Super reforms, which are estimated to save Australians $17.9 billion over the next decade.
A positive outcome for all Australians
The reforms are designed to hold super funds to account for underperformance, increase transparency and accountability within the sector and ensuring super works better for consumers.
Dante De Gori CFP®, CEO of the FPA, said he is pleased to see the government holding super funds and trustees to account.
“While we are yet to see the finer details of how the super reforms will play out, the FPA welcomes the government’s efforts to hold the right people accountable for fees and costs to ensure the best interests of super fund members are upheld. This means those which fail to produce good returns for members will be publicly listed as an underperforming fund,” he said.
“This is a good outcome for our members and their clients and it’s an opportunity to rebuild confidence in superannuation. The reforms will ensure superannuation trustees’ actions are consistent with members’ retirement savings being maximised.”
“The FPA supports the announcement that superannuation accounts will follow workers when they change jobs, reducing the number of duplicate accounts held by employees which will reduce $450 million a year in unnecessary fees,” said Mr De Gori.
From 1 July next year, an existing superannuation account will be ‘stapled’ to a member. Further, future enhancements will enable payroll software developers to build systems to simplify the process of selecting a superannuation product for both employees and employers through automated provision of information to employers.
Supporting Australians through COVID-19
The FPA welcomes the federal government’s decision to commit further response and recovery support, bringing the Government’s overall support to $507 billion, including $257 billion in direct economic support.
While early release of superannuation has been critical for many Australians but so too has the advice and services of financial planners who have been instrumental in supporting hundreds of thousands of Australians through this crisis. The FPA would like to thank all of its members who have helped their clients through these challenging times.
Supporting small business owners
FPA members who own their own business and the thousands of SME clients they serve will benefit from a major stimulus program announced in the 2020-201 Budget to drive investment. To support new investment and increase business cash flow, the Government is providing a temporary tax incentive, which will be available to around 3.5 million businesses (over 99 per cent of businesses) that employ around 11.5 million workers.
The incentive will apply to around $200 billion worth of investment, including 80 per cent of investment in depreciable assets by non-mining businesses.
From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
“This is a great outcome for small business owners, allowing them to invest write-off business investments and effectively providing a significant cash flow benefit,” Mr De Gori said.
“The FPA believes this could drive greater efficiencies for Australian business owners – many of whom are clients of FPA members – enabling them to expand, employ more staff and ultimately help our country recover from this.