The government's announcement it would scrap a number of proposed tax laws has been heralded as "a win" for financial advisers, largely because future education grants for the sector will no longer be touched.
Yesterday, Treasurer Joe Hockey and Assistant Treasurer Arthur Sinodinos announced a plan to clean up a confusing cluster of 96 tax and superannuation measures put in place – yet never legislated – mostly by the Labor government.
Included in the $2.4 billion of unlegislated Labor tax measures not to proceed is a $2,000 cap on self-education expenses. Announced in April and touted to save the nation $520 million, this was an unpopular move among advisers.
The Institute of Public Accountants (IPA) was particularly vocal the proposed cap was backward-thinking and would result in mediocrity.
The accounting profession in particular needs to keep education updated, says IPA chief executive Andrew Conway.
“The new Government has been quick to revert what would have been a very bad policy."
The Financial Planning Association (FPA) also welcomes the decision as positive news for the financial community.
Ongoing education and training is crucial to keeping the ongoing trust, confidence and quality of services delivered to consumers, says FPA chief executive Mark Rantall.
“Today’s decision is a win for the education of financial planners and the millions of Australians they provide advice to.”
The Coalition also made a politically sensitive call and said the proposed 15% tax on superannuation earnings over $100k will be abolished.
The Financial Service Council believe this change is a step towards returning certainty and stability to superannuation policy, as the budget could never have withstood this spending.
“The former government’s $100,000 earnings tax on superannuation was rushed, complex and frankly, unworkable,” says FSC chief executive John Brogden.
“Over the past few years, the financial services industry has been drowning in regulation at the expense of developing new products and services for the benefit of consumers and increasing exports.”
Meanwhile, Industry Super Australia (ISA) has put an idea to the government that would let it retain the low income-earners super contribution rather than abolishing it outright.
This would involve an adjustment to the Paid Parental Leave Scheme and removal of the super co-contribution scheme.
ISA believes removing the rebate will negatively affect the 3.6 million lowest income earners and diminish retirement savings of those affected by up to $27,000 in current dollars.
It will also disproportionately affect women, who make up approximately two-thirds of those eligible for the low income-earners super contribution and who generally already retire with less, says ISA chief executive David Whiteley.
“ISA believes that the government and super industry should exhaust every possibility to find a solution. Where’s there’s a will, there’s a way.
“The reality is that until every Australian receives a tax concession on their super contributions, no other changes to the taxation of super will be accepted by the community at large.”
The government has indicated it intends the bulk of legislation to be progressed should be passed by Parliament by 1 July, 2014.