SMSF Association head of policy and advocacy Tracey Scotchbrook said the timing of the Australian Taxation Office (ATO) announcement late last year that super funds and platform providers would, from 1 July 2024, no longer be permitted to claim a rebate for the GST component of adviser fees deducted from a member’s superannuation account, was unfortunate.
“Given all the focus at the moment on reducing the cost of advice, this announcement, which will have the effect of pushing up the cost of advice, is contrary to the government’s stated objective of enhancing the affordability and accessibility of financial advice,” she said.
“It is estimated this change in the treatment of GST on adviser fees will increase the cost of advice to impacted consumers by around 7 per cent and it is likely to impact many thousands of super fund members and their long-term retirement savings. The cost to the industry in terms of changes to systems and the supporting fee disclosure documentations should also not be overlooked.”
Scotchbrook added that to preserve the status quo and to support the advice industry which, in recent times, has been crippled by the rising cost of sector-based levies, the SMSFA is asking the government to amend the law to ensure the previous interpretation for the treatment of adviser fees is retained.
“This could be achieved by a relatively simple legislative amendment to preserve the approach adopted by industry and supported by multiple private binding rulings,” she said.
In the interim, the association is also calling on the Australian Securities and Investments Commission (ASIC) to join the ATO on their no-compliance approach. Noting the transitional period should be extended beyond 30 June to provide certainty and clarity, as both product issuers and financial advisers scramble to comply with this unexpected change and to identify, notify, and engage with impacted clients.
Last month, Financial Services Council (FSC) chief executive Blake Briggs called the changes a “perverse outcome” and pushed for the government to consult on a legislative change that would stop the increase.
“We have a government at the moment, with Stephen Jones as the relevant minister, championing affordable and accessible advice and reforms to try to bring down the cost of advice,” Briggs said.
“But at the same time, the ATO has made a very unexpected change in the treatment of GST on financial advice, which will immediately increase the tax burden when it takes effect in just a couple of weeks’ time.
“Our forecast is that this will cost Australians $250 million more in tax on financial advice, which just makes it unaffordable, it’s quite extraordinary.”
