Amendments to the proposed non-concessional contributions (NCC) cap change and how it will be implemented have provided a new opportunity for advisers to use opportunistic strategies for their clients, an SMSF technical expert has said.
The advice opportunity centred on the $1.6 million lifetime contributions limit and how it and the bring-forward provision would be implemented, SuperConcepts technical services and education general manager Peter Burgess told the Chartered Accountants Australia and New Zealand 2016 National SMSF Conference in Melbourne today.
During his presentation, Burgess illustrated how the contribution limits would work as an individual approached the $1.6 million maximum threshold.
“If a client’s [SMSF] balance was $1.35 million, they would still have $300,000 which they could bring forward, okay, it’s not just $250,000, they could actually put in the whole $300,000,” he noted.
“Which means you could actually [contribute up to] $1.65 million.
“If they have $1.395 million, they could still put in $300,000 and could actually get $1.695 million [into the fund].”
Similarly, if the client’s retirement savings balance was $1.495 million, they would still be able to contribute $200,000 to their SMSF to bring the balance to $1.695 million, he added.
He pointed out the flexible application of the rules illustrated how an opportunity for advisers had presented itself regarding contributions strategy.
“If your client is getting close to [a superannuation balance of] $1.4 million, $1.5 million or $1.6 million, then trigger the bring-forward [provision] before they tip over that threshold because you can actually get more money in under these bring-forward thresholds,” he said.
“What you don’t want to do is wait until they’ve just clicked over the $1.4 million or $1.5 million or the $1.6 million balance because you’re actually then going to reduce the amount of money they can bring forward.
“Do it just before they go over that threshold and you should enable your client to get the maximum amount into superannuation.”