Tax deductibility on financial advice is currently not on the government’s agenda despite recent calls from industry associations, Minister for Financial Services, Superannuation and Corporate Law Chris Bowen announced at an industry event yesterday.
He said tax deductibility on advice would be expensive and that such a considerable amount of money could be spent on other things, making note of the recent proposal to increase the superannuation guarantee (SG) to 12 per cent.
Bowen said while there would be an annual cost of $3.6 billion a year to increase the SG from 9 to 12 per cent, the retirement incomes of all working Australians would benefit.
He also tried to alleviate concerns about impending changes to the industry by saying that significant change now would lead to fewer minor changes in the long term.
“There is a need to avoid annual changes to our superannuation system on budget night or elsewhere,” Bowen said.
“Having gone through this very significant reform package it would be appropriate to have a long period – five years, ten years – where those types of changes are minimised.”
On the topic of commissions on risk insurance, Bowen said he did not want to exacerbate the underinsurance problem in Australia further.
“There are good arguments validly made on both sides of the argument as to whether commissions on insurance should be banned or not,” he said.
“We have to identify the size of the problem and whether the size of the problem is outweighed by the benefits of reform in this area.”
Bowen said he had an open mind and that both sides of the argument were made with good intentions.
He said he didn’t feel he had enough information to make the decision, which was why there would be ongoing consultation to make sure the industry got it right.
