Advisers need not worry about having to monitor the extent to which a client has unused concessional contributions with regard to the new carry-forward contributions rule due to administrative assistance that will be provided by the SMSF regulator.
Speaking at Class Connect 2019 in Sydney yesterday, Heffron SMSF Solutions managing director Meg Heffron noted this issue may have posed a problem for advisers now that the unused portion of a person’s concessional contributions cap can be used for a future period of five years if their total super balance is below $500,000.
“The challenge for us will be to know how much [unused cap] we’ve got, right? It was easy in the old days, wasn’t it? [If you were asked] how much can I put in as salary sacrifice this year, [the answer would be] ‘well you can put in up to $25,000’,” Heffron said.
“What do you tell your clients this year? How do you know [the unused amount they can contribute]? I think it was going to be rather hard work.
“Luckily the ATO plans to make [this information] available online via the tax agents portal from September. That’s the latest I’ve heard [and I] don’t know if we’ve had an update.”
While she praised the helpful nature of the ATO’s online information facilities, she pointed out the system was not without its problems for advisers.
“Who in this room [looks after] super funds, but are not a personal tax agent? A lot of us,” she noted.
“So there’s no solution for us. Nobody cares about us. So we are going to have to ask the individual’s personal tax agent how much of [their unused concessional contributions cap] they have left.”
Individuals have had the ability to carry forward the unused portion of their concessional contributions cap since 1 July 2018, making the 2020 financial year the first in which they can take advantage of this provision.
It has prompted calls for people to revisit their contributions strategies, beginning in the current financial year.