Pressure on for timely record-keeping

A specialist superannuation lawyer has warned financial advisers and accountants to ensure their SMSF clients have up-to-date fund information to determine whether their pension balances are over the $1.6 million transfer balance cap at 30 June this year.

“You’ll need to focus on your big-end clients, those who are close to the $1.6 million cap or over it,” DBA Lawyers director Daniel Butler said during a recent webinar.

“It’s [whether the balance] is $1.6 million [or over] as of 30 June and we won’t know those figures until nine months after.

“So you’ve got to start now preparing for your clients so that they know their information pretty closely after 30 June.”

Butler stressed it was particularly important trustees knew how close they were to the cap at the financial year end so they could take advantage of the transitional relief granted by the ATO in regard to breaches of $100,000 or less.

“There is a bit of leeway [for breaches of the transfer balance cap] and the leeway is [for breaches up to] $100,000 from 1 July to 31 December,” he noted.

“That will not result in an excess transfer balance if you have a pre-1 July pension. So only for pre-1 July pensions, where you’re either the primary or reversionary beneficiary, you won’t get hit up with that extra tax.”

While the time frame for ensuring compliance is tight, he said the volume of clients who might be around or over the transfer balance cap was estimated to be minimal.

“Fortunately, or unfortunately, there are only, by Treasury numbers, less than 1 per cent of all super fund members [who will be] affected by this $1.6 [million cap] and quite a number of those will be in industry funds or other retail-type funds,” he added.

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