Stricter Payday Super Reforms Announced
The government has unveiled additional details for its Payday Super Reform, scheduled to come into effect on July 1, 2026.
The revamped Superannuation Guarantee (SG) charge framework is designed to ensure employees are fully compensated for any delays in receiving their superannuation payments. It also encourages employers to promptly catch up on any missed contributions and introduces harsher penalties for employers who deliberately or repeatedly fail to comply.
Businesses will be held accountable for this updated SG charge if employee super contributions are not received by their respective super funds within seven days of payday.
“This allows enough time for payment processing and enables swift action against employers failing to meet their obligations,” said Treasurer Jim Chalmers and Assistant Treasurer and Minister for Financial Services Stephen Jones in a joint statement.
SMSFs More Likely to Transition to Retirement Phase After 65
Self-managed superannuation funds (SMSFs) are far more likely than APRA-regulated funds to move into the retirement phase once members turn 65, according to the latest Class Annual Benchmark Report for 2024.
The report found that 93% of SMSF members aged 65 and over have transitioned their super balances into the retirement phase, compared to just 48.8% of APRA fund members. This shift brings tax advantages, as members in retirement phase enjoy tax-free super fund earnings.
The report analyzed nearly 30% of Australian SMSFs and also revealed that in the 2023 financial year, SMSF members aged 60-64 were 2.7 times more likely to use Transition to Retirement Income Streams (TRIS) or Retirement Phase Income Streams (RPIS) compared to members of APRA-regulated funds.
Vanguard Penalized $12.9 Million for Greenwashing
Vanguard Investments Australia has been ordered by the Federal Court to pay a $12.9 million penalty for making misleading claims about the exclusionary screens in its environmental, social, and governance (ESG) investments.
“This is a significant ruling, with the highest penalty for greenwashing conduct to date. Greenwashing poses a serious threat to the integrity of Australia’s financial system and remains an enforcement priority for ASIC,” said Sarah Court, Deputy Chair of ASIC.
Vanguard admitted that its Ethically Conscious Global Aggregate Bond Index Fund misled investors by claiming to exclude issuers involved in industries like fossil fuels, when this was not always the case. The penalty aims to serve as a strong deterrent against misleading ESG claims in the market.
Tax Deductibility of Financial Advice Fees Clarified
The Australian Taxation Office (ATO) has confirmed that financial advice fees related to tax advice are deductible if provided by a Qualified Tax Relevant Provider (QTRP). This clarification came in the ATO’s final determination (TD 2024/7) on the tax deductibility of advice fees.
While the ATO reiterated that fees for initial advice are capital in nature and not deductible, it confirmed that ongoing financial advice fees can be deducted.
“With this clear guidance, a significant portion of typical advice fees should now be deductible, which could make financial advice more affordable for many Australians,” said Sarah Abood, CEO of the Financial Advice Association of Australia (FAAA). The FAAA plans to issue further guidance to help advisers engage with clients and accountants on this matter.
Australians Underprepared for Retirement as Super Balances Fall
Research from the Association of Superannuation Funds of Australia (ASFA) shows a slight decline in average superannuation balances. In 2022, the average balance for men aged 15 and over was $182,667, while women had an average of $146,146. Significant gender disparities remain, with men aged 60-64 holding a median balance of $205,385 compared to $153,685 for women.
Further research reveals that only 51% of Australian adults, including around 60% of those aged over 65, have sought any information about retirement planning.
“It’s alarming to see such low engagement with retirement planning resources. Many Australians risk being financially worse off in retirement simply because they lack the necessary guidance,” said ASFA CEO Mary Delahunty.
Report Criticizes ‘Super for Housing’ Proposal
A report by Corinna Economic Advisory, authored by Saul Eslake, has criticized the proposal to allow the use of superannuation for housing, arguing that it would drive up housing prices and reduce retirement incomes. The report was commissioned by the Super Members Council.
“We have decades of evidence showing that policies allowing Australians to pay more for housing inevitably lead to higher home prices without increasing homeownership,” said Eslake. The report also warns that this policy could impose significant long-term costs on the federal budget.
$17 Billion in Lost Super Yet to Be Claimed
The Australian Taxation Office (ATO) has announced that nearly $17.8 billion in lost and unclaimed superannuation remains unclaimed.
“We’re encouraging Australians to check if they are entitled to any of the $17.8 billion in lost or unclaimed super,” said ATO Deputy Commissioner Emma Rosenzweig. Since 2021, the ATO has reunited or paid out $6.4 billion in lost super.
Retirees may also have unclaimed super, with the ATO holding $471 million on behalf of people aged 65 and over.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au