SMSF advisers should take a look at older clients who may have stalled contributions strategies as indexation changes may allow them to complete those plans, a technical expert has said.
Heffron SMSF technical and education services director Leigh Mansell said advisers should get in contact with clients who have reached their contribution caps or total super balance (TSB) as they will be able to benefit from the indexation to non-concessional contributions.
“A group to revisit are those you might have on the back burner because they used to have or they’ve got more than $1.6 million in TSB and so you put them on the back burner because you thought ‘no more non-concessional contributions for them’ because they’ve got too much money within the super system,” Mansell said during a recent webinar.
“Given that the threshold for non-concessional contributions is moving to $1.7 million for next year, you might want to get that group of clients off the back burner and have another look.
“If they are over $1.6 million but under $1.7 million, then being able to make non-concessional contributions has reopened for them next year.”
She said other clients on the back burner may include those who are aged 65 to 66, not working and not eligible for work test exempt contributions, but should not be forgotten as they had access to their superannuation having met a condition of release.
“These people have the opportunity to turn around and make additional contributions to super and if you go through what you would normally do for clients in terms of making contributions, these particular people could do that,” she said.
“They could turn around and add money back into super by recycling it, that is, taking out taxable money and putting in tax-free money, and the endgame for that would be making things concessionally taxed for their beneficiaries when they die or there might be some tax concessions for the clients themselves.”
She added under these conditions SMSF members could also equalise balances between a couple, move external wealth into the superannuation system or gain a tax deduction to minimise their own personal tax position this year.
“So tip number one is to dust off some of those older clients that you might have put on the back burner because now their window has reopened to make some contributions,” she said.