Financial advisers are returning to issues around strategies for clients, rather than dealing with COVID-19-related social security measures, with changes to superannuation contributions and indexation being key areas of advice for clients, according to BT Financial Group.
BT Technical Services technical consultant Tim Howard said his team received more than 2000 adviser queries from January to March, with bring-forward contributions and the indexation of the transfer balance cap the topics most frequently canvassed.
The ability for clients to bring forward non-concessional contributions into their super was the most pressing issue for advisers due to the uncertainty surrounding the passage of the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 through parliament, according to BT.
The bill, which remains stalled in the Senate, has led to advisers having to establish scenarios for clients about to turn 67 where their non-concessional limit may remain at $100,000 or increase to $300,000 – where their total super balance is below $1.4 million – if the bill is passed with its retrospective start date of 1 July 2020.
“While it is unlikely that the [bring-forward] age increase will be opposed, nonetheless the delay serves as a reminder to be cautious about providing clients with any advice outside of what is the law at the time,” Howard said.
He also noted the impact of the indexation of the general transfer balance cap from $1.6 million to $1.7 million on 1 July 2021 was still unclear to some advisers.
“There’s confusion around how much of the increase applies to each client as the indexation takes into account the highest transfer balance cap amount a client has previously attained,” he said.
He added other indexation-related changes from 1 July 2021 were also a leading area of questions from advisers and included inquires about the concessional cap increase to $27,500 and non-concessional cap to $110,000, as well as the planned superannuation guarantee rise to 10 per cent.
“The indexation of various thresholds is all due to existing legislation and not any recent changes,” he said.
“Existing legislation provides guidance on the indexation requirements, without providing an actual dollar figure. Fortunately, the ATO has just updated their key super rates and thresholds web page, which provides advisers with additional certainty around the dollar value of these various indexation outcomes.”
The questions were a return to those received prior to the COVID-19 pandemic and “from our conversations with advisers, the dominant theme is they are getting back to business – to what the business of advice looked like before COVID”, he said.
“Most of the additional social security measures have ended as expected and advice priorities are once again on longer-term retirement planning and building wealth,” he said, adding this extended to property-related issues as well.
The technical team noted that as property values have started to rise, tax planning related to the sale of real estate held within SMSFs was also a key topic of inquiry, with advisers asking about transferring property into a client’s SMSF or out of a fund to use it personally in retirement.
