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Issue 123, 24 March 2006
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Choice of fund extended by workplace
relations amendments: Minister
From 1 July 2006, up to 500,000 additional employees will be able
to choose a superannuation fund under amendments (released on
19 March 2006) to the superannuation guarantee law by the
Workplace Relations Amendment (Work Choices) (Consequential
Amendments) Regulations 2006, Assistant Treasurer Peter Dutton, has
advised. There is no time limit on when an employee can choose a new
fund, so they can take the time to carefully consider their options,
he said.
Mr Dutton said these changes will apply to employees working for
a corporation who were previously employed under a state industrial
award. Known as ‘notional agreement preserving state awards’,
these are old state awards that now have effect under the federal
workplace relations system. If employers are an incorporated
business and they have employees under a state award, they should
check whether they are now under one of these new federal workplace
agreements, he said. Employers and employees can get information on
WorkChoices on the web at www.workchoices.gov.au
or by calling the WorkChoices Infoline on 1300 363 264.
Employers affected by this measure will have to give an employee
who commences work on or after 1 July 2006 a Standard Choice form.
Existing employees can request a form after that date. The form can
be downloaded from the government’s Super Choice website at www.superchoice.gov.au
or by calling the Tax Office on 13 10 20 and quoting NAT number
13080. Questions related to choice of fund can also be directed to
13 10 20.
For more on this topic, see the Assistant
Treasurer’s press release No. 009, 19 March 2006.
This article first appeared in Thomson’s Super
News Alert. Super News Alert is published two
to three times weekly as developments occur. Addressing the
ever-increasing time-sensitive needs of practitioners, it is the
service for anyone involved specifically in superannuation matters.
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Case never stronger for overhaul
of FBT, says ICAA
The Institute of Chartered Accountants in Australia (the
Institute) believes that the case has never been stronger for an
overhaul of FBT. The Institute is calling on the Government to
reform FBT, which it says is fraught with increasing complexities,
economic inefficiencies and tax inequities. The Institute’s
recommendations were released in a report jointly produced by the
Institute and Associate Professor Neil Warren from Atax, Faculty
of Law, UNSW.
Institute Tax Counsel, Ali Noroozi, said that today, the
Commonwealth Budget is in substantial surplus, most recent tax
reforms are now well entrenched and the Government has given
simplification to the system a high priority. The Institute
believes that, in the context of this environment, the case for
reform of the FBT should be revisited. The report argues that
there are considerable economic efficiency, equity and simplicity
opportunities to be gained with the introduction of three major
reforms including:
- the transferral of FBT from the
employer to the employee;
- the valuation of all benefits at
cost; and
- the increase in the threshold
for exempt minor fringe benefits.
For more on this topic, see the ICAA
media release , 17 March 2006.
This article appeared in Thomson’s daily Latest
Tax News. With tax fast moving and ever changing — EVERY
DAY — practitioners rely on Thomson’s daily Latest Tax
News for quick, accurate, comprehensive information, no
compromises. When you need to know what’s new in tax and related
news every day, there’s only one place to look — LTN.
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SMSF clients account for 27% of
financial planning revenue
Clients with self-managed superannuation funds (SMSFs)
currently generate 27% of the financial planning industry revenue,
including advice on their personal assets, and this is expected to
rise to 34% by 2009, according to the 2005 AMP Capital SMSF
Planner Report.
The report, based on a detailed quantitative survey of 327
planners conducted by Investment Trends between October and
December 2005, found that financial planners expect growth in SMSF
assets to continue at 18% per annum over the next three years.
The report also revealed that 46% of planners saw SMSFs as a
large opportunity to add value through their services, and another
32% a small opportunity for their business. Only 13% felt
threatened by the advent of SMSFs, while 9% foresee no impact.
AMP Capital Investors Head of Private Clients, Mr Giles Craig,
said SMSFs were becoming an increasingly important part of
financial planners’ business mix. Many financial planners have
built their business models around advising SMSFs and have taken
advantage of the increased range of investment vehicles available
to their clients, Mr Craig said. The structure of SMSFs also
encourage a more active collaborative relationship between
financial planners and their clients, he said.
Similarly, Mr Craig noted that investors are now more aware of
their superannuation options, and with increased knowledge, comes
a higher level of engagement. These options empower investors, as
long as they receive high quality advice and information, Mr Craig
said.
However, Investment Trends Director, Mr Mark Johnston, stated
that the level of planners’ engagement with SMSFs is not
uniform. In particular, the research showed that, of the 72% of
financial planners interviewed who provide some SMSF advice, 22%
provide advice to more than 20 SMSF clients and are defined in the
report as ‘SMSF specialists’. The remaining 50% of financial
planners giving SMSF advice are considered SMSF generalists.
Mr Johnston noted that people with SMSFs are very valuable
clients as they typically have high super balances and personal
investments. For instance, SMSF specialist planners averaged 50%
higher funds under advice (FUA) than the industry as a whole, and
had 44% higher inflows in the last 12 months, Mr Johnston said.
For more on this topic see AMP media release ‘Financial
planners embrace growing SMSF market’, 9 February 2006.
This article appeared in Thomson’s Superannuation
& Financial Service Bulletin. Superannuation
& Financial Service Bulletin is a comprehensive and
informative superannuation news service, covering all
superannuation developments, from cases, new legislation, rulings,
Tax Office and APRA developments and major announcements to
detailed practitioner articles. Special coverage is given to newly
introduced legislation with contributions from business-focused
experts. (Also available as part of Australian
Superannuation Practice.)
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Superannuation assets hit $791 billion at
September 2005
According to APRA, total superannuation assets grew 6.7% during the
September 2005 quarter, bringing the overall value of superannuation assets
to $791.5 billion. That represents a 22.4% increase for the year to 30
September 2005.
APRA indicated that industry funds, once again, showed the strongest
growth during the quarter, with assets up 8.8% to $122.8 billion and retail
fund assets grew by 6.4% to $263.8 billion. Public sector fund assets grew
by 5.9% to $135.9 billion, while corporate fund assets rose 4.9% to $68.6
billion. Self-managed super fund (SMSF) assets grew 8.6% to $179.8 billion
(representing 23% of total assets).
As at 30 September 2005, APRA’s statistics indicate that there were
316,941 superannuation funds. Of these funds, 308,520 were SMSFs,
representing a 1.6% increase for the quarter.
Over the September quarter, contributions to funds with at least $50
million in assets were $13.7 billion, with employers contributing $9.1
billion and members contributing $4.4 billion. Other contributions,
including spouse contributions and government co-contributions, totalled
$116 million.
The overall return on assets (ROA) was 5.3% for the September 2005
quarter, made up of corporate funds (5.9%), public sector funds (5.7%),
industry funds (5.3%) and retail funds (5%).
The quarterly superannuation performance statistics are available on the
APRA website at www.apra.gov.au.
For more on this topic see APRA
media release No 06.03, 12 January 2006.
This article appeared in Thomson’s Superannuation
& Financial Service Bulletin.
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