The SMSF Association has called on the federal government to revisit and change the legislation pertaining to the treatment of the goods and services tax (GST) on adviser fees.
As per an ATO announcement late last year, from 1 July 2024 a rebate will no longer be available for super funds and platform providers for the GST charged on financial advice fees and deducted from a member’s account.
According to the industry body, the legislative amendment will result in a rise in the cost of financial advice and comes at an inopportune time for Australians.
“Given all the focus at the moment on reducing the cost of advice, this announcement, which will have the effect of pushing up the cost of advice, is contrary to the government’s stated objective of enhancing the affordability and accessibility of financial advice,” SMSF Association head of policy and advocacy Tracey Scotchbrook noted.
It is estimated the cost of receiving financial advice will witness a 7 per cent increase stemming from the amendment and as such the savings of superannuation members will be significantly diminished.
Further, it is anticipated administrative expenses for the industry will also jump due to the legal modification as existing processing systems will need updating, as will reporting regimes currently in place.
“To preserve the status quo and to support the advice industry, which in recent times has been crippled by the rising cost of sector-based levies, we are asking the government to amend the law to ensure the previous interpretation for the treatment of adviser fees is retained,” Scotchbrook said.
“This could be achieved by a relatively simple legislative amendment to preserve the approach adopted by industry and supported by multiple private binding rulings.”
For the time being, and in anticipation of the time it is expected to take for the industry to adapt to the new GST rebate rules, the SMSF Association has asked the Australian Securities and Investments Commission to mirror the ATO and resist allocating any compliance resources to policing the issue.
