‘Cluttered, unnecessarily complex’: IFPA pushes tax, super reform in pre-budget submission

The Institute of Financial Professionals Australia (IFPA) has provided nine tax recommendations and 17 proposals to Treasury to help “reduce complexity, improve fairness, and support long-term financial confidence”.

According to the Institute, along with various other professional bodies in the space, Australia’s current tax and superannuation systems and rules were no longer a reflection of how Australians lived, worked or retired.

“Australia needs genuine, broad-based tax reform, warning the current system is no longer fit for purpose and is contributing to weak productivity, growing deficits and intergenerational unfairness.”

From its multiple recommendations, IFPA doubled down on the ‘broad based tax reform’ call as well as suggesting addressing bracket creep on personal tax, Div 7A changes, disclaimer of trust distributions, repealing or amending s100A, instant asset write-off permanency, repealing the luxury car tax, and increasing the GST registration threshold for NFPs.

Though these ideas and proposals were nothing the Treasury and the government hadn’t seen before, IFPA made note it was important to continue making points of necessary and meaningful changes.

Frank Drenth, IFPA head of tax policy, said recent reform efforts had fallen short and a key priority for the Institute was addressing bracket creep.

Strong sentiment around bracket creep was expressed on the basis that it continued to push Australians into higher tax brackets without real wage growth.

“The September 2025 Tax roundtable acknowledged the problem, but it was a highly controlled process that failed to deliver clear reform options. We need a comprehensive review of the tax and transfer system, with no options ruled in or out from the start,” he said.

“Personal tax thresholds should be indexed or personal tax rates adjusted to prevent stealth tax increases on working Australians. Bracket creep is quietly doing the heavy lifting for revenue, but it comes at the cost of fairness and confidence in the system.”

To effectively address bracket creep, the IFPA submission suggested doing it “explicitly” on an annual basis as the revised stage three tax cuts went some way to addressing creep, yet there were still record personal taxes being collected at a federal level.

The two very modest tax cuts legislated for 1 July 2026 and 1 July 2027 were nowhere near enough to compensate working individuals who were seeing more and more of their earnings being taxed at higher rates, IFPA said.

“These are practical reforms that would boost productivity, reduce complexity and let businesses and charities focus on growth and service delivery rather than tax traps.”

The submission also included superannuation reform suggestions to cut red tape and reduce accidental breaches, including consolidating multiple superannuation thresholds at the $2 million general transfer balance cap and fixing inconsistent indexation rules that create confusion for members, advisers and ATO.

Natasha Panagis, IFPA head of technical services, said years of incremental change had left the system “cluttered and unnecessarily complex”.

In the submission, it was argued that there needed to be changes to super death benefits, Div 296, income rules, price and accessibility of financial advice, and abolishing the work test for claiming deductions on personal contributions.

“Australians shouldn’t need to navigate a maze of rules to manage their super. Aligning thresholds and fixing indexation would go a long way to restoring simplicity and certainty,” Panagis said.

“The death benefit framework hasn’t kept pace with modern life. Many Australians have close, enduring relationships with siblings, parents, extended family or even non-family members who are effectively treated as family, yet the super system still doesn’t recognise these relationships.”

“As for Div 296, if this tax proceeds, it must be credible, equitable and workable. In its current form, it is none of these.”