CFS reveals Federal Budget hot topics for advisers

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Money matters are top of mind for many Australians and Colonial First State’s team of technical superannuation experts is helping ensure financial advisers don’t miss any of the essential information from the 2020-21 Federal Budget handed down by Treasurer Josh Frydenberg.

Data from enquiries made by financial advisers to CFS revealed the top three topics regarding the Federal Budget measures were:

  • Your Super, Your Future announcement, specifically how the annual super fund performance tests will work
  • Personal tax cuts and how they will work for low and middle income individuals
  • Business tax initiatives and how the temporary full expensing rules work.

CFS Technical Services Manager Craig Day said the technical support team had received a number of questions from advisers keen to understand how the new budget measures may benefit their clients.

“There’s plenty of good news for many Australians in the Budget including tax cuts, additional support payments for Age Pension and welfare recipients as well as tax initiatives to help businesses off set their tax losses against past profits.

“Getting on top of the detail of the budget and understanding what the different measures mean for different people in different situations is incredibly important, especially in the current environment.

“Advisers were keen to find out more about how personal tax cuts would work for low and middle income individuals. It’s important to note that while this group will benefit from both the stage two tax cuts and the retention of the Low and Middle Income Tax Offset (LMITO), this will only apply for this financial year as the LMITO will cease to apply from 1 July 2021,” Mr Day said.

Business tax incentives were also a key focus for advisers and their clients. They were interested in how to invest in their business and get a full deduction for the cost of any depreciable assets, such as new software or IT equipment, that they use or install ready for use by 30 June 2022.

Mr Day said, “The temporary loss carry-back measure will allow an eligible business to access their losses earlier and generate a cash refund to provide a needed cash flow boost.

“An eligible business is able to carry back its losses from 2019-20, 2020-21 or 2021-22 to offset previously taxed profits from the 2018-19 year onwards. However, an eligible company with losses in 2019-20 will need to wait until it lodges its tax return for the 2020-21 income year before it can receive the cash refund. ”

Commenting on the Government’s Your Future, Your Super package, Mr Day noted, “This will be an important announcement to watch with some advisers querying whether the annual performance tests could lead to some MySuper funds (and certain choice funds 12 months later) reviewing their investment strategies and potentially leading to increased fund consolidation as funds seek to merge to gain scale, reducing costs.”

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