SMSF practitioners should be revisiting strategies for members who are planning to use the bring-forward rules as they will soon operate under a new set of caps, potentially allowing a larger contribution to be made, according to a technical specialist.
Heffron SMSF technical and education services director Leigh Mansell said the recent indexation of the general transfer balance cap, and its flow on effect to non-concessional contribution (NCC) caps, could be used to move up to $430,000 into an SMSF by the end of the 2024 financial year.
Speaking during a recent webinar, Mansell said if SMSF advisers had clients planning on using the $300,000 bring-forward provisions, they may want to reconsider using those from the start of the next financial year and only make an NCC in this financial year.
“If you’ve got anybody that had pre-existing plans to trigger a bring forward this year, given that we’re moving into a new realm of what the annual general NCC cap is, maybe these clients would be better off doing something slightly different,” she said.
“What would happen for them – if they had a three-year bring-forward period and three-year bring-forward amount – would be essentially locking the bring forward over the 2021 to 2023 financial years.
“They may be better off only putting in $100,000 of NCC and not deliberately triggering the bring forward, but then triggering it next year. If they did that they might be able to get $430,000 into their fund instead of $300,000 in a relatively small window of time.”
She said this strategy was limited to SMSF members who had a total super balance of less than $1.48 million as at 30 June 2021 and would still work for those who may only be able to lock in two years of bring-forward contributions for a total of $320,000 using the strategy mentioned above.
“This is something for advisers to consider when giving consideration to their clients’ account balances and how they are moving at the moment and where they will land at 30 June 2021,” she noted.
“If you’ve got existing NCC bring-forward plans in place, you might want to go back and revisit them and rejig them and trigger next year instead of this year.”