The number of SMSFs in Australia could increase as a result of the housing downsizing measure contained in this year’s federal budget, a chartered accounting firm has said.
HLB Mann Judd Sydney superannuation director Andrew Yee said at a recent industry forum this may well happen as the downsizing measure could open superannuation up to individuals who, up until this point for a number of reasons, had not participated in the retirement savings system of the country.
“People who have never had super in their life previously, are over 65 and have not been able to meet the work test, suddenly can now put $300,000 into super [if they sell their existing residence],” Yee said.
“If it’s a husband and wife, you could have a $600,000 self-managed super fund and that’s quite a reasonable fund.
“So in that respect it could actually boost the numbers of self-managed super funds. But we don’t know the details yet.
“We’ve got a lot of clients who are wealthy, but have never thought about super and have never had a chance to put money into super, so this is a measure they can actually utilise to move some of their money into super.”
The downsizing measure contained in the budget allows individuals who sell their place of residence because they are looking to move into a smaller property to contribute a maximum of $300,000 toward their super fund irrespective of whether they already have a balance of $1.6 million.
In regard to the super reforms contained in the 2016 federal budget, Yee said the capital gains tax (CGT) relief provisions are continuing to challenge both advisers and their trustee clients.
“We’re getting a lot of questions from our SMSF clients about the CGT relief and how that applies, and how it applies to them, and how to get the best use out of it they can, and what will happen if they use this method or that method and whether it will disadvantage them in the future,” he said.
“That’s quite complicated not just for everyday people but for advisers as well. They’re still struggling to get their heads around those rules.
“So you can imagine how much difficulty clients are having understanding it, so that’s a real challenge at the moment.”
