Superannuation was not subjected to the glare of the spotlight in last night’s federal budget as strongly as it has been in recent years, however, a collection of smaller changes will still provide opportunities for clients, particularly for those with SMSFs, according to industry executives.
A handful of minor changes to social security, estate planning and aged care were also announced in the 2018 budget.
Each will affect a small section of financial planning clients, some in significant ways, according to wealthdigital technical manager Rob Lavery.
“Overall, the budget is good news for clients and their advisers,” Lavery said.
“The proposals present opportunities to accelerate towards a client’s goals.”
RSM Australia business advisory services director Brad Eppingstall said the budget will provide stability for superannuation.
Eppingstall said it was a win for stability, larger families and well-managed SMSFs.
“Industry consultation on the [three-yearly SMSF audit] measure will provide more detail on what constitutes a good compliance record, but it may extend beyond the SMSF itself and demand that the SMSF trustees have good compliance records, including having all their personal tax affairs in order,” he noted.
“The fact that the government has taken a firm stand on franking credits suggests this may become an election issue.
“Overall, these changes can be described as tweaks rather than reforms and they’re aimed at simplifying the super system and giving people more options to manage their retirement savings.
“There are no real losers in this budget when it comes to superannuation, suggesting this budget was developed with an election in mind.”
Meanwhile, the Financial Planning Association (FPA) welcomed measures to simplify income tax and introduce greater flexibility into the superannuation system, including proposed changes to restrictions on SMSFs and creating more options in retirement income products.
“Increasing the maximum number of allowable members in SMSFs and small Australian Prudential Regulation Authority funds from four to six reduces the need for many families to run multiple funds,” FPA chief executive Dante De Gori said.
“Removing complexity saves significant cost in managing retirement savings.”
Moreover, FPA members have been urging the government to create greater flexibility and more options in retirement income products to better support the varied financial needs of older Australians.
“More flexibility for retirement income streams is a measure our members have been requesting over the past 10 years,” De Gori said.
“Financial planners have been critical of inflexible payment options and structures around retirement income streams for their clients.”
The budget included additional funding for regulations where the Australian Securities and Investments Commission will receive $10.6 million and the Tax Practitioners Board will receive an additional $20.1 million over four years.
The FPA acknowledges the need for better-funded regulators, which are currently severely under-resourced.
Additional funding means better protection for consumers and fewer delays for FPA members who rely on their services, though the industry body noted the profession will ultimately bear higher levies and fees.