This news particularly interests accountants in Sydney as they navigate the evolving financial landscape and consider the potential implications for their clients. The 2020-21 Federal Budget emphasised the importance of jobs, jobs, and jobs, particularly in light of the economic challenges caused by COVID-19, which have been described as the most severe global economic crisis since the Great Depression. With this, the Budget recently released an extra $98 billion in response and recovery support through the COVID-19 Response Package and the JobMaker Plan, highlighting the government’s commitment to addressing the economic impact.
The centrepieces of the Budget are a new JobMaker Hiring Credit for businesses and lower individual taxes.
Pleasingly, the Government committed to their election promise that there would be no adverse tax changes to the superannuation system. In addition, for the first time in several years, there were no measures explicitly relating to SMSFs in this year’s Budget.
However, the Government did announce a ‘Your Future, Your Super’ package to address APRA superannuation fees and poor performances. The four measures in this package are outlined below:
‘Stapled’ superannuation accounts – A new default system
From 1 July, the existing superannuation account will be ‘stapled’ to a member to avoid the creation of a new account when that person changes employment. Employers must pay super contributions to their employees’ existing superannuation fund if they have one unless they select another fund.
A ‘YourSuper’ portal
The Australian Taxation Office will develop systems so new employees can select a superannuation product from a table of MySuper products through the YourSuper portal. The YourSuper tool will provide a table of simple, super products (MySuper) ranked by fees and investment returns.
Increased benchmarking tests on APRA funds
Benchmarking tests will be undertaken on the net investment performance of MySuper products, with products that have underperformed facing stringent requirements. Products underperforming over two consecutive annual tests will be prohibited from receiving new members until a further annual test shows they are no longer underperforming.
Strengthening obligations on superannuation trustees – Large APRA funds
By 1 July 2021, super trustees of significant APRA funds must comply with a new duty to act in members’ best financial interests. Trustees must demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
This will affect those significant APRA funds to ensure they spend in the members’ best interests rather than SMSFs.
In addition to previous COVID-19 relief, there are further economic payments for pensioners.
The Government will provide two separate $250 economic support payments, to be made from November 2020 and early 2021 to eligible welfare recipients and healthcare card holders.
This includes the:
- Age Pension
- Disability Support Pension
- Carer Payment
- Family Tax Benefit, including Double Orphan Pension (not in receipt of a primary income support payment)
- Carer Allowance (not in receipt of a primary income support payment)
- Pensioner Concession Card (PCC) holders (not in receipt of a primary income support payment)
- Commonwealth Seniors Health Card holders
- eligible Veterans’ Affairs payment recipients and concession card holders.
The above is a brief review of the superannuation and pension-related parts of the budget. As always, if you have any queries, please get in touch with us to discuss.
Kreston Stanley Williamson Team
*Correct as of November 2020
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
