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GST rebate changes worsens cost of advice: SMSFA

Abolishing the rebate for the GST component of adviser fees from July 1 can aggravate the cost of financial advice, according to the SMSF Association (SMSFA).

In a few weeks' time, superannuation funds and platform providers will no longer be able to claim a rebate for the GST component of adviser fees deducted from a member's super account.

SMSFA head of policy and advocacy Tracey Scotchbrook said the timing of the Australian Taxation Office (ATO) announcement from last year was unfortunate.

Given all the focus on reducing the cost of advice, this announcement, which will have the effect of pushing up the cost of advice, is contrary to the government's stated objective of enhancing the affordability and accessibility of financial advice, Scotchbrook said.

The change is estimated to increase the cost of advice to impacted consumers by about 7% and it is likely to impact many thousands of super fund members and their long-term retirement savings, Scotchbrook added.

The SMSFA warns of other costs associated with changing systems and fee disclosure documentations.

"To preserve the status quo and to support the advice industry, which in recent times has been crippled by the rising cost of sector-based levies, we are asking the government to amend the law to ensure the previous interpretation for the treatment of adviser fees is retained," Scotchbrook said.

"This could be achieved by a relatively simple legislative amendment to preserve the approach adopted by industry and supported by multiple private binding rulings."

The association is also calling on ASIC to join the ATO on its "no-compliance approach."

"Noting the transitional period should be extended beyond June 30 to provide certainty and clarity, as both product issuers and financial advisers scramble to comply with this unexpected change and to identify, notify and engage with impacted clients," the SMSFA said.

Read more: SMSFASMSF AssociationATOTracey ScotchbrookASICAustralian Taxation Office