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New caps could mean more SMSFs

The $1.6 million transfer balance cap coupled with the proposed change in contributions caps could lead to a spike in SMSF establishments in the immediate future, the partner of a chartered accounting firm has predicted.

HLB Mann Judd Sydney wealth management partner Jonathan Philpot told a media briefing in Sydney yesterday that uncertainty remained over how the $1.6 million transfer balance cap would be applied to individuals who had multiple superannuation accounts.

“If you’ve got four $500,000 [balance] super funds, which is the super fund where you say ‘well that’s now got to go back into super accumulation phase?’” he said.

It prompted HLB Mann Judd Sydney head of wealth management Michael Hutton to forecast: “I think this could lead to a little bit of a spur in self-managed super funds being set up because if someone does have four lots of super, it makes sense to get it all together so then you can control it, you can understand it, and [for example] say I’m at $1.8 million therefore I’ve got to put $200,000 aside.”

The accounting firm is in the process of advising its clients to maximise their contributions while the existing contributions caps apply, meaning if possible they can contribute a maximum of $540,000 in non-concessional contributions and $35,000 in concessional contributions before 1 July 2014 – a situation Hutton identified as another trigger for a surge in SMSF establishments.

“If people are putting the $540,000 in [their superannuation funds] this year, I think that’ll spur people to set up self-managed funds as well,” he said.

“I don’t know how the numbers will track [in terms] of monthly set-ups and whatever, [but] I’d expect to see an uptick in monthly set-ups of self-managed funds this year.

“That has been a bit stagnant for a while now, the number of funds being set up.”

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