The Financial Planning Association of Australia (FPA) welcomes a number of necessary changes to superannuation and aged care outlined tonight in the 2021 Federal Budget.
“The FPA supports a commitment by the Government to reduce the number of regulators in financial advice by confirming the wind down of FASEA by 31 December 2021, and putting increased caps on ASIC’s spending,” FPA CEO Dante De Gori said.
“The practical changes announced to superannuation will provide all Australians with greater flexibility to maximise their retirement. The FPA welcomes the Government’s decision to introduce flexibility but not substantial changes to superannuation. Superannuation should not be constantly tinkered with, a position the FPA has consistently held,” Mr De Gori said.
“There is still significant regulatory change this year with the finalisation of FASEA deadlines, implementation of Royal Commission recommendations, changes to the super system, as well as dealing with the current pandemic and outcomes of the economic environment caused by it.
“This is a positive budget for the economy, with a focus on jobs, growth and supporting the disadvantaged. We will be working closely with members to ensure they understand the finer details of the Budget and the opportunities it presents to engage with their clients.”
In particular, the FPA supports the following budget measures:
- Removing the work test: The Government will allow people aged 67 to 74 years (inclusive) to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice superannuation People aged 67 to 74 years will still have to meet the work test to make personal deductible contributions.
- Downsizer contributions: The Government will reduce the eligibility age to make a downsizer contribution to superannuation from 65 to 60 from 1 July 2022. The scheme allows a one-off, post tax contribution of $300,000 per person from selling a house with contributions – not counted towards the non-concessional cap.
- Improved flexibility for Self Managed Super Funds with an ability to commute legacy pension products from a SMSF which will allow for members to move to modern and more flexible pension options in their SMSF. SMSFs will also have additional flexibility to remain open and receive contributions when the members move overseas for extended periods of up to five years.
- The removal of the $450 per month minimum income threshold under which employees do not have to be paid the superannuation guarantee. This measure will boost the superannuation savings of lower income Australians, 63 per cent of whom are women.
- COVID-19 Response Package: The Government announced it was extending the 2020/21 COVID-19 package for small business to allow full depreciation of assets in the relevant financial year and a refund of tax paid in prior years where a tax loss is made.
- The $17.7 billion on aged care reform over five years, including $6.5 billion for 80,000 additional Home Care Packages over the next two years; $798.3 million for informal carers for older Australians; 7.8 billion for a new funding model for residential aged care, with a $10 per person per day supplement of the Basic Daily Fee and $117.3 million to support structural reforms, including implementation of a new Refundable Accommodation Deposit (RAD) Support Loan Program.