The different treatment of participants in the superannuation sector in legislation should be removed from policy settings, the SMSF Association (SMSFA) has told the government, while calling for the inclusion of accountants in the provision of advice.
In its pre-budget submission, the association noted the separate treatment of parts of the superannuation sector in recent policies was of concern and called for equal treatment across the board.
“Sector neutrality is a vital element of superannuation policy. Different legislative outcomes should be strongly discouraged,” the SMSFA stated.
“It must only be considered where it is fundamental to the delivery of equitable treatment under the law due to the unique characteristics that apply across the sector participants.”
The submission specifically noted the difference in relation to the deductibility of financial advice fees for members of SMSFs in comparison to Australian Prudential Regulation Authority (APRA)-regulated fund members.
While welcoming Quality of Advice Review (QAR) reforms to improve the deductibility of fees for financial advice on superannuation, the SMSFA highlighted the proposed changes exclude SMSFs.
“The proposed reforms are built upon the existing legislative framework and seek to repeal the existing provision and replace them with a clearer and modernised legislative framework,” the submission stated.
“Whilst these are important reforms, what has been overlooked in this process is the need for the inclusion of an equitable legislative solution for members of SMSFs. SMSFs do not have a comparable provision within the superannuation law.
“This gap in the superannuation legislation has created a divide between members of APRA funds and members of SMSFs.
“When we compare the pair, one group of members can elect to have the superannuation account pay for the financial advice that relates to their interest in the fund, the others are prohibited from doing so.”
The SMSFA also called for the provision of advice by accountants to be part of any discussion concerning access to financial advice, noting it was absent from the QAR final report and recommendations.
“A legislative solution is needed to remedy the legislative misalignment between the provision of accounting and tax agent services and financial advice,” the submission said.
“There is also a need for a fit-for-purpose licensing regime for qualified accountants. The limited licensing model is a dying model. It is not fit for purpose and most accountants, regardless of their qualifications, are unable to enter the advice regime due to the operation of the professional year.
“Qualified accountants have a role to play in helping to fill the advice gap that exists between financial advisers and the proposed advice regime that will apply to APRA-regulated superannuation funds.
“This vital middle ground has been overlooked throughout the Quality of Advice Review and financial advice reform agenda that has followed.”
The Association also gave its support to simplifying the indexation of the transfer balance cap and reducing other thresholds, positions which were also put forward by The Tax Institute and the Institute of Financial Professionals Australia.
