The Financial Advice Association Australia (FAAA) has recommended the thresholds in the Better Targeted Superannuation Concessions Bill and the indexation of them be aligned with the general transfer balance cap (TBC) thresholds.
In its latest submission regarding the proposed Division 296 tax, the FAAA noted the bill proposes the large superannuation balance threshold, currently set at $3 million, and the very large super balance threshold, currently set at $10 million, be tied to the consumer price index in $150,000 and $500,000 increments respectively.
Under the revised Division 296 tax proposal, superannuation balances above the large super balance but below the very large super balance will have a tax rate of 15 per cent apply on earnings, with an additional 10 per cent tax rate to apply on earnings above the very large superannuation balance.
The FAAA pointed out the exposure draft explanatory materials indicate the timing of the indexation of the general TBC and Division 296 thresholds may not be aligned.
“The FAAA recommends, for simplicity reasons, that these thresholds be indexed at the same time,” FAAA chief executive Sarah Abood stated in the submission.
The financial planning body suggested this could be achieved by defining the large superannuation balance threshold to be 1.5 times the general TBC and the very large super balance threshold to be five times the general TBC.
“This proposal will help the financial advice profession and the superannuation industry generally by having a consistent ratio between the three thresholds, removing a small but important amount of unnecessary complexity, consistent with the government’s goal to remove onerous red tape that adds to the cost of advice with no benefit to consumers,” the submission explained.
The FAAA also took the opportunity to reiterate its calls for financial adviser access to the ATO Portal given the number of thresholds advisers will now need to monitor.
“Streamlined adviser access (subject to appropriate protections) will reduce cyberthreats, the risk of inappropriate financial advice and administration time and costs,” it said.
