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Building bigger SMSF balances questionable

Growing a substantial superannuation balance within an SMSF might not be the best decision going forward due to further uncertainty over future legislation, according to an SMSF expert.

“I’m not sure that building bigger balances in SMSFs is the best thing anymore,” Grant Abbott SMSF founder Grant Abbott said during an SMSF strategies webinar today.

“Why? These [superannuation] changes came out of the blue.

“And when is the next change and in what direction will they be in?

“I’m not sure that if I had a 40-year-old [client] who’s just come into a significant start-up with huge possibilities of large upside whether I’d tell him to put a large amount into superannuation.”

Abbott said advisers should start to consider balancing SMSFs with family trusts.

“It’s the first time I’ve sat back and considered whether it’s worthwhile running a surplus and building up to that $1.6 million balance, or is it better to add some freedom and flexibility in a family trust outside super,” he said.

“Particularly with a family trust, we have access to it at any time.”

Following the release last month of two out of the three tranches of draft legislation, he said getting to the $1.6 million pension transfer limit was still a bonus, but questioned what would happen if the SMSF was already over that figure.

“Do you take it out or roll it back? And that is the big question,” he said.

In August, specialist trust deed provider SuperCentral warned against the belief that family trusts might be a preferred investment vehicle over SMSFs altogether.

It said the tax treatment of earnings within an SMSF remained more advantageous than that of a family trust.

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