The 2022-23 Federal Budget, released last night, contains a number of measures aimed at easing Australians out of the twin economic calamities caused by COVID-19 and a series of natural disasters.
These include a $420 increase to the low and middle income tax offset, a one-off $250 payment for pensioners and concession card holders and a 50% reduction in the fuel excise for six months. There will also be a $7.1 billion cash injection into regional Australia which will go towards infrastructure projects in the Northern Territory, the Hunter region in NSW, north and central Queensland and Pilbara in Western Australia.
Small businesses (defined as those with an aggregated turnover of less than $50 million) will also be able to claim an additional 20% of monies spent on external training for employees in their next tax return. A similar deduction applies for costs incurred due to investment in technology, such as cybersecurity and portable payment devices.
In his speech announcing the Budget’s key measures, Treasurer Josh Frydenberg said the Government was “[looking] to the future”. He added that he was “optimistic about what can be achieved … as we emerge from the pandemic, we are building an even stronger, more secure and confident Australia.”
Frydenberg argued that many of the headline items in this year’s Budget were a clear vindication of the Government’s COVID-19 strategy, adding that “this is not a time to change course – this is a time to stick to our plan.” Notably absent from this plan, though, were any measures aimed at financial advice.
Perhaps that’s unsurprising given pre-election priorities, but this Budget follows a year during which Treasury has made its concerns about the health of the advice sector very clear. And there were some easy wins available – for example, some indication that the promised review of ASIC’s industry funding model would soon be underway.
Instead, ASIC will see a reduction in funding (from $658 million to $590 million) and headcount (1972 to 1849) over the next year, at a time when the regulator is supposed to be taking over both FASEA’s duties and the single disciplinary body.
Another opportunity might have been clarifying and standardising the tax treatment of financial advice. In its pre-Budget submission, the FPA noted that while ongoing advice fees are treated as tax-deductible, a fee-for-service arrangement in the initial preparation of a financial plan is not. This, the association argued, “provides a disincentive for Australians to seek financial advice which will assist them to actively plan, save and secure their financial future.”
Finally, we haven’t heard anything about the compensation scheme of last resort (CSLR) – how its funding model will eventually work, for example, or the final scope of the scheme. Despite having major implications for advisers, the CSLR appears to be firmly stuck in legislative limbo ahead of an election that still hasn’t been called.
Should all this be taken in the spirit of no news being good news? Maybe. But advisers will need some clarity sooner rather than later.
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