Keeping tabs on clients’ balances not exceeding the $1.6 million transfer balance cap may not be as challenging as the days of reasonable benefit limits (RBL), a technical expert has said.
“The ATO is the ultimate way of keeping track, but do some of you remember those RBL days?” netwealth head of technical services Keat Chew said during the independent platform provider’s Winning in the New Super Era event in Sydney last week.
“They got it wrong all the time, but technology has changed so it might be a lot better compared to before.
“I think there are three ways to keep tabs and keep track: it should be that you keep tabs, netwealth keeps tabs and the ATO keeps tabs, and together we make sure that the [client data and information] is clean.”
Chew recommended advisers aim for pension transfers slightly below $1.6 million to allow for any miscalculations.
“We’ve got to get it right at $1.6 million, but that’s quite hard so it’s best to make an allowance,” he noted.
“An easy way of avoiding going over is to think, let’s not target $1.6 million, let’s target $1.5 million perhaps, so if we’re wrong [about the balance] and it takes us to $1.58 million, at least we’re still below it.
“And you can always move whatever else is needed once we’re sure of the 1 July balance.
“If the excess contribution over $1.6 million is less than $100,000 and corrected within six months, then the ATO will let you off this time around.”
Under RBLs, which were introduced by the Labor government in 1996, limits were put in place on the maximum amount of retirement and termination of employment benefits a person could receive in their lifetime at concessional tax rates.
Withdrawals above the thresholds were subject to the full marginal tax rates.
RBLs were abolished from 1 July 2007.