Few Budget surprises in financial services
In circumstances where the Federal Treasurer, Josh Frydenberg had announced many of the Government’s key financial services measures ahead of the Budget, the industry tonight welcomed its overall steady approach to policy, particularly with respect to superannuation.
Both of the major superannuation industry organisations – the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) – welcomed the changes announced by Frydenberg and confirmed in the budget papers.
However the two organisations were more pleased by what the Government did not do, than what it actually announced.
For its part the Financial Services Council (FSC) welcomed much of the Budget content but expressed disappointment that the Government had failed to reform non-resident withholding tax for managed funds in the Asia Region Funds Passport.
"This means Australia will remain uncompetitive in our region, and Australia will not be competing with Asian funds on a level playing field," the FSC said. "The withholding tax on managed funds raises little money, but harms our competitiveness within Asia, putting Australia’s fund managers at a major competitive disadvantage in the region."
ASFA chief executive, Dr Martin Fahy described the Budget as bringing stability to superannuation and enhancing confidence in the retirement funding system.
He said the Budget introduced a number of positive superannuation measures. These include:
- Greater flexibility in contribution rules for superannuation fund members aged 65 and over
- Permanent tax relief for merging superannuation funds
- Increased funding for the ATO to ensure on-time payment of superannuation liabilities by larger businesses and high wealth individuals
- Funding for the Fair Work Ombudsman to address sham contracting arrangements designed to avoid payment of statutory obligations such as the SG
- Delay in the start of new opt-in arrangements for insurance within superannuation from 1 July 2019 to 1 October 2019, which will allow funds more time to engage with fund members who are affected
Fahy said that changes made to superannuation tax settings in the Government’s 2016 Budget in particular, had made the superannuation system sustainable and equitable.
“The Government has today taken the opportunity to reaffirm their commitment to retirees by leaving the system alone,” he said.
AIST chief executive, Eva Scheerlinck said the changes to the rules for voluntary super contributions in the 2019 Federal Budget were good news for older members who could afford to make additional contributions to their superannuation savings, but would have minimal impact on the retirement outcomes of most Australians.
“The vast majority of members of profit-to-member superannuation funds will not benefit from these changes,” she said. “Most ordinary working Australians cannot afford to make extra contributions and can only dream of having the money to pour an extra $300,000 into their super fund in a single year.”
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
