Legislation update
Legislating the objective of superannuation
Document: Consultation paper
Content: Treasury released for consultation a draft objective of superannuation: “The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
The government sought stakeholder feedback on the framing of the draft objective of superannuation, including the benefits of the objective and its practical application.
Stage: The consultation process has now been completed.
Effective: The consultation process ran between 20 February and 31 March 2023.
Superannuation account thresholds
Document: Better Targeted Superannuation Concessions
Content: The government announced its intention to apply a 30% concessional tax rate on future investment earnings of super account balances over $3 million. This would effectively double the current 15% tax rate, that would still apply to balances up to $3 million.
The government expects the change to impact 80,000 people or 0.5 per cent of Australians with a superannuation account.
Stage: Consultation is expected to be released before supporting legislation is introduced.
Effective: The change is proposed to take effect from 1 July 2025.
Quality of Advice Final Report
Document: Quality of Advice Review – Final Report
Michelle Levy provided the Quality of Advice Review final report to the government on 16 December 2022. The report is designed to improve the accessibility and affordability of quality financial advice.
The report contains 22 recommendations including:
- Broadening the definition of Personal Advice to include any personal interaction or communication when holding information pertaining to the customers financial situation, needs or objectives.
- General Advice to remain a financial service but remove the general advice disclaimer.
- Only Relevant Providers can provide advice for which the client pays a fee for service and commissions are payable.
- Introduce a 'good advice' duty to ensure advice provided is fit for purpose and in all circumstances would be considered 'good advice'.
- Simplify the existing statutory best interests duty.
- Family situation and social security entitlements must be taken into account when providing superannuation advice.
- Easing of superannuation advice fee rules and consent arrangements.
- Statement of Advice to become optional and only provided upon the client's request.
- Provide option to make all information contained within the Financial Services Guide available online.
- Amendments to the definition of wholesale client and consent rules.
Stage: The government is considering its response.
Housing affordability legislation
The government released three bills into parliament to legislate its commitment to aiding investment into social and affordable housing by institutional investors, including super funds.
The bills include:
Housing Australia Future Fund Bill 2023: establishes the $10 billion Housing Australia Future Fund (HAFF) which will allocate $330 million to deliver 30,000 social and affordable homes.
National Housing Supply and Affordability Council Bill 2023: establishes the council to provide research and advice to the government to develop housing supply and affordability policy.
Treasury Laws Amendment (Housing Measures No.1) Bill 2023: amends the National Housing Finance and Investment Corporation Act 2018 (NHFIC Act) by replacing references to the NHFIC with ‘Housing Australia’, introduces an annual review process to allow the government to monitor the effectiveness of Housing Australia, and amends other legislation to enable the operation of the HAFF from commencement.
Stage: The Bills were referred to the Senate Economics Legislation Committee which provided a report on 22 March 2023.
Regulatory update
ASIC Indigenous Financial Services Framework
Published: 14 February 2023
The Framework sets out four key learnings that will inform ASIC's work with First Nation consumers:
- First Nations peoples had unique, established economies before colonisation that continued today and should be understood, respected, and maintained
- First Nations peoples have been prohibited and excluded from participating in the Australian financial system.
- Financial wellbeing affects all aspects of First Nations peoples’ lives.
- First Nations peoples have many different versions of financial success that need to be accepted and empowered.
Technical update
Transfer Balance Cap indexation
From 1 July 2023, The Transfer Balance Cap is due to be indexed by an increment of $200,000, rising from $1.6 to a total of $1.9 million.
Individuals who commenced a retirement income stream prior to this date will receive a proportionate increase to their available cap between $1.6 and $1.9 million, as long as they have not previously exceeded the cap, in which case no indexation will be applied.
Find out more at ato.gov.au