FPA welcomes tax cuts for low to middle-income Australian households, more super flexibility, and post-Royal Commission clean-up funds
The Financial Planning Association of Australia (FPA) welcomes measures to bring forward tax breaks for low and middle-income workers, introduce greater flexibility into the superannuation system, and an ongoing investment in reducing misconduct in financial services.
FPA CEO, Dante De Gori CFP® said: “The budget is now projected to be in surplus from the 2019/20 and the tax breaks will mean low and middle-income workers earning between $48,000 and $90,000 will be eligible to receive $1,080 on top of tax relief they received last year through an extension of the Low and Middle Income Tax Offset.
““The proposed tax cuts along with Treasury estimates that 94 percent of Australians will not pay more than 30 cents in the dollar in taxes will have a positive impact on the financial health of many, many Australians and ease short-term cost of living pressures.
“That said, Australians on lower incomes continue to find it hard to save for their retirement. We would have liked to see this budget address the need for a Low Income Superannuation Contribution Scheme in addition to the tax concessions, to boost retirement saving potential and in turn, reduce future pressure on the age pension and support better financial futures for all Australians,” said Mr De Gori.
Right steps in superannuation
The FPA welcomes proposed changes to the superannuation system to improve flexibility for older Australians, but believes more detail is required to close the persistent gender gap in retirement savings.
“It has become harder and harder for Australians to understand and add money to their superannuation. We welcome the flexibility which will be provided from July 2020 for people aged 65 and 66 to contribute to super without meeting the work test of 40 hours over a 30-day period. This will greatly assist Australians in preparing for the upcoming rise in age pension eligibility to 67 from 2020-21,” Mr De Gori said.
The notable increase in the age limit for spouse contributions to super from 69 years to 74 years will be of particular advantage to women. At present, people aged 70 and over cannot receive third-party contributions.
"The FPA notes Australian women are still at an enormous disadvantage when it comes to superannuation, and we're disappointed not to see more measures to address the gender retirement gap in this Budget than increasing the spouse contribution age limit. In 2019, women still have a substantially different experience of retirement than Australian men. The retirement framework should be equitable for all Australians,” Mr De Gori said.
FPA welcomes post-Royal Commission clean-up budget
“The FPA broadly supports the Government’s plan to implement the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommendations over the next five years. However the $606.7 million required will primarily be recovered from ASIC’s industry funding model and will add to the significant increases in advice costs to the mums and dads of Australia.
“We believe implementing the Royal Commission recommendations is necessary for the protection of consumers, but are concerned by how much it will cost,” said Mr De Gori.