Hugh Elvy
The InstituteofChartered Accountants’ (ICA) has used a pre-Budget submission to call on the Federal Government to allow gearing in superannuation funds and to allow individuals to make the maximum deductible superannuation contribution regardless of how income is earned.
Rather than limiting borrowing to instalment warrants, the ICA has also recommended that the Government consider allowing funds to borrow up to a total of 50 per cent of assets, mirroring the use of gearing in other investment vehicles.
It has also called for superannuation guarantee (SG) contributions to be temporarily used by university graduates to pay off Higher Education Loan Program (HELP) debts accrued for an undergraduate degree.
Hugh Elvy, manager, financial planning and superannuation, at ICA, suggested that allowing SG contributions to be used for this purpose in the first three-years of employment or until the debt is paid off would enable HELP debts to be repaid sooner, making greater after-tax income available for investment sooner.
It has also called for a review of the SG legislation, in particular the Superannuation Guarantee Charge Act, which comprises the penalty regime, “to ensure [it] is equitable by targeting those employers that fail to comply at all”.
An overarching theme of the ICA submission is a streamlining of the financial reporting requirement.
It calls for a reduction in the double-handling and potential inefficiencies brought about by numerous government agencies that touch on superannuation, including the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Australian Taxation Office, Australian Transaction Reports and Analysis Centre and the Australian Bureau of Statistics.
“The Institute advocates the Government undertake a review of information requirements of regulators, in consultation with the sector, with the objective of identifying and eliminating inconsistencies and expediting the move to the provision of data in a single format,” it said.
