Advisers should encourage their SMSF clients to act now on legitimate strategies and not allow them to be dissuaded from pursuing their desired course of action due to a fear of proposed legislative change, according to a specialist superannuation lawyer.
“This fear that people have [of legislative change] – tell them ‘don’t worry about it’,” Rockwell Oliver managing principal Peter Bobbin told the recent Chartered Accountants Australia and New Zealand National SMSF Conference 2014.
“Don’t worry about the apparent constant change in superannuation, in fact, the proper way to look at it is if you like something, do it now. Don’t not do it out of fear.”
Bobbin said advisers and trustees should have confidence in approaching the situation in that manner because the history of superannuation had shown only one detrimental amendment made to the system, the introduction of capital gains tax on super assets, was applied retrospectively.
“For all the others it was prospective. It was going forward,” he said.
“So if you like something that exists today in superannuation, you should be saying to the client: ‘Get it done. Do it now. Adopt it immediately. Get the advantage of the current rules.’”
Advisers had to help their clients accept the superannuation system would be in a constant state of change and trying to anticipate what might happen in the future and plan a strategy around that speculation was flawed, he said.
He cited the amendment to the legislation giving individuals the ability to make a $1 million contribution to superannuation before 1 July 2007 as a classic example of trustees postponing action in a situation they never could have adequately planned for the eventual outcome.
“How many of you would have known about the change to contributions and the introduction of contributions caps?” he said.
“So how many people might have been holding off contributing to super prior to the 2006 May budget because of this fear of changing the superannuation rules?
“Then the 2006 May budget comes along and said you can only put your $1 million in [your super fund] before 1 July 2007.
“And the client thinks ‘great that’s an opportunity’. Well that wasn’t an opportunity, it was a limitation.
“Help people to understand, yes, it’s in a constant state of change, but the change is prospective.”