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While the details in tranche three of the super reforms were largely expected, Perpetual has warned accountants on the more complex aspects that need to be flagged with clients.
SMSF practitioners and their clients will need to operate with greater diligence in light of some of the recent changes to super, particularly in regards to the bring-forward rules and changes to the non-concessional contribution caps, according to Perpetual head of strategic advice, Colin Lewis.
“Advisers and clients are going to have to be very aware of what they’re doing going forward so they don’t end up contributing too much,” he said.
Mr Lewis said they need to understand how the bring-forward arrangements are going to work, particularly with the transfer cap of $1.6 million.
“The complexities going forward are going to be the transitional cap just to start with just for the next couple of years,” he said.
“For example, if somebody triggers, say the bring-forward this year or perhaps triggered it last year, if they don’t utilise the full $540,000 by the 30th of June next year, they’ve got to be mindful that the bring-forward cap amount is being re-calculated, it’s going to be a transitional cap that will apply.”
“People will have to ensure that they don’t fall into the trap of thinking, ‘Well if I’ve got a bring-forward of $540,000 and don’t fully utilise it, then I’ve still got the ability to contribute the balance’ ... that is not going to be the case going forward.”
Once the transitional period has passed, Mr Lewis said each year people will be tested against the general transfer balance cap of $1.6 million which means that not only do they have to be mindful of what the unused portion of their non-concessional cap is, they need to measure that against what their balance is at 30 of June, the year before.
“If they are over the $1.6 million or over, then they won’t be able to use any unused portion of the non-concessional cap, that is something new that hasn’t applied to date, because we haven’t had this threshold determining eligibility to do a non-concessional contribution.”