The Government confirmed each of its pre-Budget announcements
with one exception, which was announced before the Budget. In
response to industry concerns regarding compliance costs, the
Government will not be going ahead with the proposal to limit the
higher cap on concessional contributions to super account balances
below $500,000. So, when the higher general concessional cap of
$35,000 comes in (around 2018), it will apply to all going
Of particular interest to life companies and retirees is the
Government's proposal to exempt from tax the assets held by
life companies to fund deferred lifetime annuities. By doing so,
the Government will provide these products with the same tax
concessions as other super pensions. This is a significant change
towards making these types of retirement products more attractive
to retirees. These products are purchased with an upfront payment
(or premium) but the income stream is not paid until a later date.
For example, the product may be purchased at age 60 but the income
payments do not start until age 70 after which they continue for
The Government will establish a Council of Superannuation
Custodians to ensure that future superannuation changes are
consistent with an agreed Charter of Superannuation Adequacy and
Sustainability. This seeks to answer one of the concerns of
industry that continued tinkering with the system undermines public
confidence in super.
As an incentive to remain in the workforce and continue saving
for retirement, super guarantee contributions will be an
entitlement for workers aged 70 and over from 1 July 2013.
From an asset management perspective the Budget was pretty
uneventful. However, the private equity industry will be smiling,
since the Government will make changes to the Venture Capital
Limited Partnerships and Early Stage Venture Capital Limited
Partnerships regimes to encourage increased investment. These
include changes to ensure capital account treatment for gains on
disposal of investments held for more than 12 months.
The financial advisory industry has known for some time that
from 30 June 2013, the exemption for financial advisors from the
tax agent services licensing regime will end. From that date,
financial planners will need to be registered with the ATO. The
Government will provide for a single online registration, the
budgeted cost of which is intended to be funded through the charges
the ATO will impose for registration.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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