Super Guarantee rate increase and financial planner fees


Another announcement, another espresso and tea...

Now it makes a bit more sense… Why had the industry funds been making such a push for banning commissions, to the point where you could argue that their members’ funds were being used to pay for a campaign that didn’t actually improve the position of the members (because their members were already in funds that did not pay commissions..)?

The Government has released its “Stronger, Fairer, Simpler : A tax plan for our future” document in which it suggests that the 9% employee Superannuation Guarantee will be increased from 9% to 12%, to be implemented in steps starting from the 2013/2014 tax year.

The banning of commissions on investment accounts will take place from 2012, just in time for the increase in money going to superannuation.

A cynic would argue that this is no coincidence – the “industry funds” were trying to ensure that they kept a significant slice of the superannuation contributions pie. They may also come to the conclusion that the reason such changes were placed into the future and only apply to contracts after that date was to allow the Big 6 b(banks, AMP & AXA) enough time to alter their dealer group arrangements so that they did not have to take a big profit hit by marking down the value of those networks. Fortunately, i am no cynic and will assume that everyone was acting in everyone else’s best interests all the way through this debate.

Very, very, very good to see that the penalty on low income earners who make or have superannuation contributions made for them has finally been addressed. It always seemed ridiculous that those lower income people who had the 9% SG payment made on their behalf paid more tax on that income than they would have if they had been allowed to take it as cash. Early days yet but it seems the proposal is to have a rebate paid to your fund when your “adjusted taxable income” (ATI) is below $37,000.

Good also to see the ability for people with balances below $500,000 able to pay more money into their super later in their working lives. It does seem a little crazy to penalise everyone when the target of the concession cap reductions were the “rich”, who you’d have to assume would already have significant super balances. So now it seems that people with lower balances will be able to pay in more than everyone else. Such egalitarianism in a capitalist world!

The Government clarifies in its documents the areas that they will NOT be altering, and this will ease quite a few worried minds. If you are wondering just where some of this comes from, here is some information on the Henry Review and the key recommendations. If you have the time to look at it you will see why a lot of people were waiting for the Government announcements with baited breath!

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