Super Client Strategies Part 1 – Pension Changes Strategy

Author: Jason Roccasalvo, Partner, TAG Financial Services

Our 5 Part – Super Client Strategies, are designed to be used with your clients straight away. In Part 1, we focus on pension changes and how this can be used effectively and successfully.

The markets have seen a significant reduction in capital, and no one has been spared.

For those with clients in pension mode, the reduction in the annual minimum through until 30 June 2021 is a welcome relief. However, many clients may still be concerned more deeply about their savings. For these, what can we as advisers look towards?

For those with clients who have utilised all of their Transfer Balance Cap, with amounts also in accumulation mode, a timely commutation given the extent of uncertainty in society will reduce the current “strain” on their cash, and allow clients to draw only what they need, and not be forced to take an amount which may be greater.

Timing this commutation could mean that for many clients their Transfer Balance Account would become negative, potentially allowing members in time to re-commence when a pension with greater certainty about their futures and cash flows, and again with timing may actually allow members to increase the proportion of their super in pension mode, and provide long term benefits such as:

  • Larger ECPI %
  • Increased tax-free income within the Fund.

However, not every case is the same and before ceasing a pension you must consider items such as:

  • Pro rata minimums – have these been taken,
  • Consider the taxable/tax-free split of member balances and the mixing of these, as everything will form part of the same member account,
  • Consider the impact on a death benefit and the suitability of the BDBN,
  • TBAR reporting will need to be completed (on both the commutation and commencement),
  • Impact on Centrelink/other government benefits e.g. a new pension may not be grandfathered, and
  • The impact a ‘non pension’ period of time will have on the client’s tax position in the current financial year.

Yes, there are more things to consider and be aware of before commuting a pension, however for suitable clients, this strategy implemented in a timely manner, can provide significant longer term benefits.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Summary of Announcements for Businesses: COVID-19

by Tony Rule, Partner, TAG Financial Services

There have been a number of announcements made by various government departments and industry over the last two weeks, but particularly on Friday and the weekend.  The following summary brings together the main points from those announcements to the extent that they affect small and medium sized businesses.

The key message from all stakeholders is that they want businesses wherever possible to continue to employ people and to continue to operate “as normal” as much as can be done.  This must be achieved in a new reality for most businesses where income will be significantly disrupted or eliminated.  They are trying to build an environment where money continues to flow through the economy whilst trying to limit the movement of COVID-19.

Business owners need to act now to determine what their current cash balances are, which of the initiatives are available to them and then budget their expenditures to cover an extended period of business disruption.

Australian Federal Government Announcements

The Federal Government have released two stimulus packages (one on 12 March 2020 and the second on 22 March 2020) with measures for both businesses and individuals.  We have set out below the key points for businesses under cash initiatives, tax initiatives and other initiatives.

Reduced Obligations & Cash Initiatives

Reduced Obligations – “Cash Flow Boost”

The second stimulus package announced that small and medium sized enterprises (SME’s) with turnover less than $50m will receive a tax free credit to their ATO Account of between $20k and $100k split equally over the March and June BAS’s to retain staff and continue to operate.  The first credit will be based on 100% of PAYG withholding on the March 2020 BAS to a maximum of $50,000 and the second credit will be based on 100% of the PAYG withholding on the June 2020 and September 2020 BAS’s to a maximum of $50,000.

This announcement supersedes the credit of between $2k and $25k to their ATO account that was to be based on 50% of the PAYG withholding amounts on the March 2020 BAS (in the first stimulus package).

Australian Taxation Office deferrals

In conjunction with the first stimulus package, the Australian Taxation Office announced that “we will work shoulder-to-shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure”.

Options available to assist businesses impacted by COVID-19 include:

  • Deferring the payment date of amounts due on BAS’s (including PAYG instalments), income tax assessments, fringe benefits tax and excise by up to 6 months,
  • Allowing businesses to move from quarterly to monthly lodgement of GST reporting to access GST refunds quicker,
  • Allowing businesses to vary PAYG instalment amounts to zero for the March 2020, December 2019 and September 2019 quarters creating a refund of these payments,
  • Remitting any interest and penalties incurred on or after 23 January 2020 relating to tax liabilities, and
  • Allowing businesses to enter into low interest payment plans.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

Loans

The second stimulus package also announced the Coronavirus SME Guarantee Scheme where the Government will guarantee 50% of new loans issued by eligible lenders to SME’s to get access to working capital to help them get through the impact of the Coronavirus.

Some parameters to be provided to these lenders are:

  • Maximum total size of loans of $250,000 per borrower,
  • Loans will be up to 3 years, with initial 6 months repayment holiday, and
  • Loans will be unsecured.

Lenders still need to go through their normal credit assessment processes.

Apprentices

SME’s with fewer than 20 full time employees with one or more apprentices or trainees will be eligible to a wage subsidy equal to 50% of the wage for each apprentice or trainee for the 9 months to 30 September 2020 (first stimulus package).  The subsidy will be up to a maximum of $21,000 per apprentice/trainee ($7,000 per quarter).

Tax Initiatives

Instant Asset Write-off

The instant asset write-off is immediately increased from assets acquired for less than $30k to assets less than $150k for SME’s with a turnover of less than $500m (up from a turnover of less than $50m) for assets bought and installed by 30 June 2020 – (first stimulus package).

Accelerated Depreciation

Provide accelerated depreciation for SME’s with turnover less than $500m to deduct an additional 50% of the asset cost as depreciation in the year of purchase (where is not eligible for the Instant Asset Write-off) where the assets are purchased and installed by 30 June 2021 (first stimulus package).

Other Initiatives

Distressed Businesses & Insolvency

The Government will introduce amendments to temporarily relieve financially distressed businesses by increasing the threshold at which creditors can issue a statutory demand and the time a company has to respond to that demand.  They will also provide temporary relief for directors from any personal liability for trading while insolvent (to help companies deal with unforeseen events arising from COVID-19). This is from the second stimulus package.

Victorian State Government

On 21 March 2020, the Victorian Premier Daniel Andrews and the Treasurer Tim Pallas announced a $1.7b economic survival and jobs package.

The Victorian Government will provide full payroll tax refunds for the 2019-20 financial year to SME’s with annual payroll less than $3m.  Payments will commence in April 2020 with the maximum refund equating to $113,975.

Those businesses will also be able to defer any payroll tax payable for the months of July, August and September 2020 to 1 January 2021.

Other initiatives include:

  • Commercial tenants in Government buildings can apply for rent relief,
  • 2020 land tax payments will be deferred for eligible small business,
  • The Victorian Government will pay all outstanding supplier invoices within five business days,
  • Liquor licensing fees for affected venues and small businesses will be waived,
  • Establishing a $500m Business Support Fund to help businesses in hospitality, tourism, accommodation, arts and entertainment, and retail survive and keep people in work,
  • Establish a $500m Working for Victoria fund to help workers that have lost their jobs find new opportunities and facilitate job matching to help Victorians find short-term or casual roles.

Reserve Bank

On 19 March 2020 the Reserve Bank announced initiatives to support the Australian economy during the disruption caused by COVID-19 including:

  • The official cash rate has been dropped to 0.25% and will not be increased until progress is made towards full employment and inflation is in the 2-3% band.
  • Provide a term funding facility to the banking system at 0.25% designed to encourage lending to SME’s over the next 3 years totaling $90b.

Australian Banking Association

On 20 March 2020 Anna Bligh, the CEO of the Australian Banking Association announced that “Australian Banks will defer loan repayments for small businesses affected by COVID-19 for 6 months”.

She also advised that “banks are putting in place a fast track approval process to ensure customers receive support as soon as possible”.

No information was provided about whether a loan to a business owner (such as borrowing on a home to help finance a business) would be counted as a loan repayments relating to small business or not.

If you have any questions, please contact us on 03 9886 0800 or via email.

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

We note that at the time of writing there is little detail associated with announcements by the various Government and Industry Bodies relating to bracing for the impact of Covid-19 on the economy.  These announcements have not yet been legislated, and our inclusion of details in this document is purely based on media releases associated with these announcements.  Accordingly, we take no responsibility for any difference between the comments made above and the final legislation associated with these announcements.

COVID-19: Superannuation Announcements

by Jason Roccasalvo, Partner, TAG Financial Services

The Federal Treasurer announced yesterday (22 March) the following measures that have a direct impact on superannuation:

Pension Reductions

The immediate reduction of pension minimums for the 2019/20 and 2020/21 financial years.

Some may recall a similar measure during the GFC between 2009 – 2013.

The announced reduction is a 50% reduction, reducing minimum percentages to:

Age NEW reduced minimum Previous minimum
Under 65 2% 4%
65-74 2.5% 5%
75-79 3% 6%
80-84 3.5% 7%
85-89 4.5% 9%
90-94 5.5% 11%
95+ 7% 14%


Early Release of Super

Individuals in financial stress as a result of the Coronavirus (COVID-19) will be able to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

Eligible individuals will be able to apply online through MyGov for access of up to $10,000 of their superannuation before 1 July 2020.

They will also be able to access up to a further $10,000 from 1 July 2020 for another three months.

They will not need to pay tax on amounts released and the money they withdraw will not affect other Government payments such as Centrelink or Veterans’ Affairs payments.

If you have any questions, please contact us on 03 9886 0800 or via email.

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Draft legislation to expand contribution eligibility

The Federal Government recently released draft legislation to change the work test requirements for older Australians. The draft legislation proposes to increase the work test age from 65 to 67.

This will mean that, for example, a 66 year old will now be able to make a non-concessional contribution, or a personal deductible contribution, without the need to satisfy a work test.

Additionally, along with the removal of the work test for 65 & 66 year olds, the bring-forward age eligibility will be lifted as well (from 65 to 67).

While the legislation is now open for consultation, this presents greater strategic opportunity for advisers to:

  • Continue to help clients boost retirement savings by contributing more to super
  • Assist in managing personal tax obligations (via personal deductible contributions)
  • Employ strategies such as withdrawal and re-contribution strategies


For more information, call us on 03 9886 0800 or email us at super@tagfinancial.com.au.

 


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

Superannuation Guarantee Amnesty

On 6 March 2020, the government introduced superannuation guarantee amnesty (SG amnesty) received royal assent.

An employer will be able to benefit from this one-off amnesty by disclosing and paying previously unpaid super guarantee charge (SGC) for quarters starting from 1 July 1992 to 31 March 2018. In addition, payments of SGC made to the ATO after 24 May 2018 and before 11:59pm 7 September 2020 will be tax deductible.

TAG Partner, Jason Roccasalvo said that this can really benefit the self-employed and small business owners.

“This is a great opportunity to review your super payments and check you don’t owe any outstanding super. As a business owner you have an obligation to ensure all payments are timely and accurate. In some instances we have found clients who have accidentally forgotten to pay themselves superannuation.”

Action Needed:

  • Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 don’t need to apply or lodge again.
  • Employers who come forward from 6 March 2020 need to apply for the amnesty.

The amnesty applies for a period of 6 months from royal assent. The clock is now ticking.

The ATO has said, “The ATO will continue to conduct reviews and audits to identify employers not paying their employees SG. If we identify these employers before they come forward, they will not be eligible for the benefits of the amnesty.”

Find more information on the ATO website – https://www.ato.gov.au/Business/Super-for-employers/Superannuation-guarantee-amnesty/

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

BGL Partners with TAG

BGL has partnered with TAG Financial Services to release a Fact Find Document Pack in Simple Fund 360.

TAG Financial Services have partnered with BGL to release a Fact Find Document Pack in Simple Fund 360.

TAG Partner, Jason Roccasalvo explains, “our partnership with BGL produces great results as we combine our technical, day-to-day knowledge with BGL’s cutting edge products.”

To read more click here.

 

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Liquidity Issues with Super Funds on Death

Many trustees of super funds invest in assets which have limited liquidity – classic example being in property.

Where a Limited Recourse Borrowing Arrangement (LRBA) is utilised for a SMSF to borrow to buy a property, the death of a member can place significant strain on the liquidity of the fund.

Where such a fund is a ‘mum and dad’ fund and the beneficiary is a spouse, this can be managed by providing a death income stream rather than a lump sum. However, even that may not resolve the liquidity issue within the fund. Consider if the deceased member was the main ‘breadwinner’ of the family, contributing to the fund to assist with the cash flow required to service the debt on the property. In these circumstances, the need to have insurance on the members of the fund at appropriate levels is critical.

Death cover in this circumstance will alleviate the financial pressures within the fund by either allowing the surviving member to retire debt and, if designed properly, having sufficient liquid investments in order to continue to fund pension payments to the surviving beneficiary, until an appropriate decision can be made in relation to the fund’s assets.

Additional complexities arise with the transfer balance cap limitations around death benefits.  Previously, a death benefit had no maximum value.  Now there is an implied maximum as a result of these reforms – effectively linked to the recipient’s personal transfer balance cap amount.

Example
Jason and Sarah each have a retirement phase income stream, both commencing with the full transfer balance cap of $1,600,000. At Jason’s death, his balance is $1,900,000, while Sarah’s balance is $1,800,000. Sarah can commute all of her income stream, and effectively her transfer balance cap would become -$200,000. This means that she can receive a death benefit income stream from Jason of up to $1,800,000 – any amounts in excess of this would need to be paid as a death benefit lump sum.

The more complex issue comes when the deceased member does not leave behind a beneficiary that satisfies the definition of a “tax dependent” and therefore the death benefit must be paid as a lump sum. Similar complexities are also potentially involved where the Fund has membership by non-family members (i.e. business owners who have a Fund together and use it to purchase the business premises together). The trustees of the fund must therefore pay out the death benefit in the form of a lump sum as soon as is practicable.

Some options for consideration in these circumstances, to help trustees pay a lump-sum include:

  • Increasing the fund membership. In the case of a fund with mum and dad, when one passes away, there is the potential that up to 3 children will be able to become members in the fund. If they have superannuation balances of their own that they roll into the fund, then this can potentially assist with the cash flow to pay out either some (or all) of the death benefit.
  • It might be worth considering having the death benefit paid out by virtue of the cash created by the insurance proceeds and then immediately re-contribute these back into the Fund as a Non-Concessional contribution for the children. A withdrawal and re-contribution strategy of sorts where the death benefit is capable of being paid in a manner consistent with the legislation (i.e. an interim and final payment)
  • The Trustees could simply transfer the property out to the beneficiaries as a lump sum benefit in-specie in satisfaction of the death benefit. Simplest method, but perhaps not the most tax effective long term.

Naturally, the tax and cash flow of the fund and beneficiaries would need to be considered with any of these options and explored fully before final conclusions are made.

An illiquid asset may form part of a properly considered and formulated investment strategy. The ATO’s increased scrutiny and literature on investment strategies, combined with recent case law, indicates that these documents need more than an “obligation” mindset.

Like a business, understanding the entry and exit strategy is important in a fund context. The entry and exit costs on property assets are high (consider stamp duty, solicitor, advertising, estate agent costs). Further, proper consideration to the Fund’s cash flow needs while owning the asset is crucial to avoid forced sale.

Trustees unsure of how to complete an investment strategy should seek the assistance of a licensed adviser.


For more information, call us on 03 9886 0800 or email us at super@tagfinancial.com.au.

 


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

Making up on lost time – with unused concessional contributions cap

Announced and legislated prior to 30 June 2017, members had to wait an additional 24 months to effectively see the commencement of implementation of “catch up” contributions.

The measure is available to individuals with total superannuation balances (TSB) of less than $500,000, who can increase their concessional contributions cap in the financial year by applying previously unused concessional contributions cap amounts from one or more of the 5 previous financial years.

As this measure started effective 1 July 2018, it is only available for use for individuals commencing the 2019/20 financial year.

An individual has unused concessional contributions cap for a financial year if they did not fully utilise their concessional contributions cap that year.

The amount of the unused concessional contributions cap is the difference between the individual’s concessional contributions and the concessional contributions cap.

The following example is extracted from the Explanatory Memorandum:

Example – Unused concessional contributions cap
In the 2018-19 financial year, Layla’s employer made concessional superannuation guarantee contributions of $10,000 on her behalf to her superannuation fund.

Layla did not make any deductible personal superannuation contributions to her fund. The concessional contributions cap for the 2018-19 financial year is $25,000. Layla’s unused concessional contributions cap amount for the 2018-19 financial year is therefore $15,000.

This means that, provided Layla’s total superannuation balance is less than $500,000, she has the ability to make concessional contributions of $40,000 (i.e. the $25,000 cap, plus the unused 2019 contribution of $15,000).

This measure is likely to be most favourable to those individuals looking to top up their super prior to retirement, or in situations where an individual has realised a large capital gain personally and is able to offset this.

Take the example above of Layla. Assume she sells an investment property on 1 February 2020, and makes a capital gain (after discounting) of $90,000. Layla’s employer already contributes $10,000 per annum.

Assuming no other action, Layla is liable for income tax of approximately $33,300 on the gain.

However:
Layla could elect to make personal deductible contributions of $30,000 to bring her total concessional contributions up to $40,000 (i.e. up to the “catch up” threshold). Additionally, Layla could elect to make a concessional contribution of a further $15,000 under a reserving strategy at the end of the financial year.

This would allow Layla to claim $45,000 in personal deductible contributions while staying within her concessional cap. She would be able to reduce the tax payable on the gain by $16,650, and while her superannuation fund will pay contributions tax of $6,750, Layla is still $9,900 ahead as a result of the strategy.


For more information, call us on 03 9886 0800 or email us at super@tagfinancial.com.au.

 


Come along to our next TAG Super Seminar to find out about the best super strategies- happening in Melbourne, Sydney, Brisbane and Adelaide. Find out more.


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

Deciding Which Pension to Commute

Deciding Which Pension to Commute When There Are Multiple Pensions and the Total Super Balance Is Over $1.6 Million

Many of our clients will have commenced multiple pensions within their self-managed superannuation funds. This may have been done to quarantine tax-free components, or simply to commence pensions after contributions had been made.

Where a member has multiple pensions, and the total of these pensions will be over the Transfer Balance Cap when a member satisfies a condition of release, a decision will need to be made regarding which pension is the best one to commute to bring the total pension balance within the new limit.

You may also see this situation where a client already has a pension (or multiple pensions) and also has an accumulation balance, where a client has multiple transition to retirement pensions (not in retirement phase), or where a client would make a contribution (say a Small Business CGT contribution, or downsizer contribution) – and be faced with a decision over which pension to keep – a bit like choosing your favourite child!

As a general rule of thumb, it has been suggested that when choosing between one or more pensions to commute and roll back into accumulation phase, the pension with the higher proportion of taxable component should generally be commuted, provided that the anticipated pension payments from all remaining pensions are lower than the fund’s overall growth.

This is due to the fact that the only way to increase a tax-free component is either to make non-concessional contributions, or via the earnings in a pension. As an example, say your client had a pension of $1,000,000, which was 50% tax-free and 50% taxable. The fund received $50,000 of earnings. In the pension account, the tax-free component would increase by $25,000 and the taxable component would increase by $25,000.

 

In comparison, if the $1,000,000 with the same tax-free and taxable components was in accumulation phase, then the entire $50,000 of earnings would be allocated to the taxable component.

Over the long term, this has quite a significant impact on the growth of the accounts and ultimately, the amount of tax paid by any non-dependents receiving a death benefit, such as adult children.

Whilst the general rule of thumb is to leave the higher tax-free pension, consideration needs to be given as to the yield in the fund in comparison to the minimum pension requirement. If the earnings are less than the minimum pension requirement, it may well be worth commuting the tax-free pension. It would be of benefit to provide an analysis of this to your clients, taking into consideration different potential earning rates.

Example

John is 60 years of age and currently has two account-based pensions in place, the first pension has a balance of $800,000 and is 100% tax-free. The second pension also has a balance of $800,000 and is 20% tax-free.

John makes a small business CGT contribution of $500,000 on 31 January 2020.

Should he look to commence a pension with this contribution, John is going to be over his Transfer Balance Cap by $500,000, and therefore needs to make a decision as to which pension he commutes. His alternatives are as follows:

  • Commute the pension that is 100% tax-free;
  • Commute the pension that is 20% tax-free; or
  • Commute both pensions and re-commence a new pension for $1,600,000 (which will mean the new pension is approximately 70% tax-free).

As John is 60 years of age, the minimum pension requirement for the next 5 years is 4%. This will then increase to 5% until age 74, 6% to age 79, 7% to age 84, etc.

The following graph assists in making a decision as to deciding whether to keep the tax-free pension in the pension phase, depending on whether the fund’s earnings rate is a 5% (bottom line in graph), 6% (middle line in graph) or 7% (top line in graph).

 

At a 5% earning rate, when John turns 79 years of age, it is no longer worthwhile for him to have the tax-free pension in pension phase. This is compared to if the fund earned 7%, it is worthwhile for John, well into his 90s.

 

 

 


For more information, call us on 03 9886 0800 or email us at super@tagfinancial.com.au.

 


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

Super Update – Ability to Contribute from Age 65

For SMSF members who are over 65 years of age and no longer working, there are very few options available for them to contribute to superannuation. Members of this age are no longer able to use the bring forward provisions (subject to the circumstances below), and they must satisfy a work test in order to be able to make any non-concessional contribution. With the new rules surrounding the total superannuation balance, if their balance is over $1,600,000, then the ability to be able to contribute non-concessional contributions is removed entirely.

Downsizing Post Age 65
The most viable option for a member over the age of 65 who is not working, irrespective of their total superannuation balance, is the ability to make a “downsizing” contribution. Essentially, a member (or spouse) must sell a property which has been owned for at least ten years, and either the member (or spouse) is able to claim a full or part main residence exemption on the sale. In these circumstances, both individuals could contribute up to $300,000 each to super as a non concessional contribution.

Contributions Post Age 65
For members who are between 65 and 74 years of age and no longer working, there is also an opportunity to contribute to superannuation if their balance is less than $300,000. In the first year that these members no longer satisfy a work test (so long as their balance is below the maximum threshold), they are able to contribute either concessional, non-concessional or catch up contributions.

Example 1
Nicole is 66 years of age and has $280,000 in her self managed superannuation fund. She has decided that on 1 October 2019, she is going to permanently retire from gainful employment. Nicole will have the ability to make a concessional contribution of $25,000, a non-concessional contribution of $100,000 or utilise the catch up contribution provisions (if not previously utilised) until 30 June 2021.

Increase in access to bring forward for 65 66 year olds
Announced as part of the 2019 Federal Budget, this strategy allows additional contributions to be made to super (subject to transfer balance cap restrictions) and means that strategies (such as withdrawal and re-contribution strategies) can be employed for longer. The increase in access to the bring–forward rules are also accompanied (assuming legislated) by a corresponding increase in the age to which the work test applies. If legislated, these rules will apply from 1 July 2020.

Note that while these rules have essentially lifted the “bring forward” and work test age thresholds up to 67, there is no corresponding increase to the downsizing contribution age threshold (which will remain at 65).


Example 2
Assume from the above example that Nicole is retired, aged 66, and her superannuation balance is $550,000. She sells her main residence for $900,000. She is able to make both a non-concessional contribution of $300,000 under a bring-forward arrangement, and also make a downsizing contribution of $300,000.

Example 3
Assume instead that Nicole does not sell her house. Her superannuation balance is currently 100% taxable. Even though Nicole is retired, aged 66, she could elect to undertake a withdrawal and re-contribution strategy which would make her balance 54.55% tax free, and represents $45,000 in current value savings to her estate.


For more information, call us on 03 9886 0800 or email us at super@tagfinancial.com.au.

 


Come along to our next TAG Super Seminar to find out about the best super strategies- happening in Melbourne, Sydney, Brisbane and Adelaide. Find out more.

 

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.

Shaping the Practice of Tomorrow – CA Podcast Series

 

Recently, Michelle was involved in the CA Catalyst podcast program – talking with David Boyar, Founder and MD at Sequel CFO  who has been interviewing all manner of people with a view to providing accountants with information and inspiration about how to approach their work, businesses and clients using innovation, technology and leadership.

“I was thrilled to be involved in the program. The podcasts are insightful and most importantly extremely useful– what a great initiative from David!

I invite all my accountant and/or financial planning colleagues to get on board and listen to these and get involved in the community.  A great way to spend your travel time to and from work.” – Michelle Griffiths

Listen to the podcasts here

Superannuation – What to Expect in 2020

After a couple of quiet years in superannuation legislative reform, 2020 is shaping up to be a pivotal year:

Federal Government’s Retirement Income Review
The Federal Government’s Retirement Income Review will get underway, which promises to determine the facts about Australia’s retirement system, which will consider the sustainability and purpose of the aged pension and superannuation system.

FASEA
The looming deadlines for FASEA will approach for advisers, and we should see a significant increase in certainty around what this new frontier will mean for advisers.

Super guarantee – salary sacrifice integrity
From 1 January 2020, if an employee has salary sacrificed to super, the sacrificed amount cannot count towards the employer’s compulsory super contribution obligations.

Limiting vacant land deductions
In the 2018/19 federal budget, the government announced that it would limit deductions for expenses associated with holding vacant land. These restrictions remove tax deductions for vacant land from 1 July 2019 for individuals, trusts which are not widely held and to SMSFs. However, the restrictions do not apply to companies, managed investment trusts, public unit trusts or superannuation funds other than SMSFs.

Redundancy and early retirement scheme
To link it to changes in the Centrelink Age Pension age, the age at which someone can access the tax-free amount for a genuine redundancy and early retirement scheme payment has been increased from age 65 to 67.

 

High Income Earners and Super Guarantee
From 1 January 2020, eligible high income earners with more than one employer may elect to nominate which wages/employer are excluded from the Super guarantee – this will help avoid excess concessional contributions tax.


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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page.