Technical issues related to COVID-19 relief for SMSFs and the status of property in a fund were among the leading areas of concern for financial advisers in the September quarter, according to BT Financial Group (BTFG).
BTFG stated its technical team typically receives more than 2000 queries from financial advisers each quarter relating to superannuation and investments, but the resurgence of COVID-19 in parts of Australia and changes to super were among the top five questions in the September quarter.
The firm noted the extension of COVID-19 relief for SMSFs and pointed advisers to the changes to residency status announced in the budget for SMSF members trapped overseas due to travel restrictions, as well as rental relief, first announced in November 2020, and in-house asset relief, which were all extended to apply to the 2022 income year.
The recontribution of early release super payments was also a key area of concern, with BT technical services technical consultant Tim Howard noting advisers were not fully up to speed with regulations around early release recontributions.
“Some advisers are pleasantly surprised to learn that their clients can recontribute the amounts they had withdrawn under the COVID-19 early release of super program and that those recontributions will not be counted towards their non-concessional contributions cap,” Howard said.
“What’s more, clients have until 30 June 2030 to make the recontributions and so have a long period in which to get their retirement savings back to where they were.”
He added property ownership and usage inside an SMSF remained an area of ongoing questions and while advisers were aware SMSF clients cannot make use of any property owned by their fund, they appear to be seeking confirmation of those facts.
“Advisers are asking for certainty around what the alternate solution may be, although they may already know the answer,” he said.
“They are double checking with us, as clients who are about to retire are regularly asking advisers whether they can move into the property owned by their SMSF.
“Those clients mistakenly believe that because they have met a condition of release, they can access the money in their SMSF or live in a property owned by the fund. The latter is not the case as the property would almost always cause an in-house asset issue.
“To be able to live in it, title to the property must be transferred out of the fund. Stamp duty would need to be paid and capital gains tax may be payable. Overall, the tax consequences, in many cases, make this solution cost prohibitive.”
He said recent superannuation changes were also leading topics for questions, with the indexation of the transfer balance cap and the removal of the excess concessional contributions charge featuring in the top five questions asked.
