SMSF trustees and members who were unable to take advantage of the new bring-forward contributions provisions before the end of the financial year may be better off using them in the new year, according to a technical expert.
BT head of financial literacy and advocacy Bryan Ashenden said the changes to the provisions, which will enable individuals aged 65 and 66 to make up to three years of non-concessional super contributions under the bring-forward rule, were a hot topic for advisers contacting the firm after the measures passed through parliament in mid-June.
Ashenden noted many advisers questioned what they would be able to do as they had been providing advice based on the laws as they stood at the time and if they would have time to check if additional contributions were relevant for their clients, as well as make the contribution before 30 June.
“If you did miss out on the opportunity, has that provided a bit of a benefit for your clients?” Ashenden asked today during a BT Academy webinar.
He said a 66-year-old, turning 67 in the next financial year, will now have access to the bring-forward provisions in that year and even if they had made a $100,000 contribution this financial year, the indexation of the total superannuation balance and growth of their balance may open up the opportunity to use the three-year bring-forward rules.
“Given these, there is the potential that they might be able to do a three-year bring-forward contribution on or after 1 July 2021, and if that is the case, we’ll also be using the new contribution threshold limits of $110,000 per annum, so potentially that’s a $330,000 contribution,” he said.
“This means in a very short period of time, clients will potentially have the opportunity to contribute up to $430,000.”
He added that while the bring-forward rules will apply up to the year in which someone turns 67, if a contribution goes in after that birthday, they would still need to meet the work test.
“If clients missed out on the three-year bring forward and are only being able to contribute $100,000 this year and $110,000 in the next financial year, bear in mind we still have the proposal from the government that most likely from 1 July 2022 the work test will actually be removed for any of those non-concessional contributions until age 74,” he said.
“So, while there might have been missed opportunities in this financial year, in some situations it actually could have turned out that it ended up being for the benefit of the client, but that will be based on their own particular individual circumstances.”