“The advice we received is that the measure would be very complex to administer and result in large compliance costs,” said Assistant Treasurer Arthur Sinodinos at a joint media conference with Treasurer Joe Hockey in Sydney yesterday.

The scrapping of the widely contested tax restores some stability to the SMSF market, the Financial Planning Association’s Dante De Gori told SMSF Adviser.

“With all proposals… it’s very hard to provide clear advice when you don’t know if it’s actually going to become law or not,” Mr De Gori said.

“What today’s announcement does is it creates certainty for the market, it creates [certainty] for advisers in providing advice for their clients, whether they’re SMSF or otherwise.”

The SMSF Professionals’ Association of Australia (SPAA) also supports the scrapping of the tax, with chief executive Andrea Slattery telling SMSF Adviser it would have been “unworkable, inefficient and costly”.

“It actually affected retrospectively people’s planning ability, because it taxed people’s earnings already in the pension phase,” Ms Slattery said.

“We were also concerned that depending on the investment earnings of the fund, the proposed tax would potentially apply to many more than the estimated 16,000 funds with $2 million of assets or more,” she added.

The government also announced yesterday it will not proceed with Labor's proposal to put a $2,000 cap on the amount people can deduct as self-education expenses.

The Institute of Public Accountants (IPA) has welcomed this move, with chief executive Andrew Conway saying the cap was “backward in thinking”.

“The new government has been quick to revert what would have been a very bad policy. For the accounting profession the need to keep up to date is paramount and is amongst the highest of all professions,” he said.

SPAA was also critical of this policy, labelling it “short-sighted and self-defeating”.

“It would inhibit professionals, including those in financial services, [from] maintaining and improving their knowledge to better serve their clients,” Ms Slattery said.

“Ultimately, this proposed policy was going to have a negative effect on consumers and SPAA is happy to see it abandoned.”