An SMSF technical expert has stressed the importance of keeping a member’s transfer balance account (TBA) information up to date and warned practitioners against downplaying this discipline based on a client’s current circumstances.
Accurium senior SMSF educator Anthony Cullen revealed to attendees of the firm’s latest webinar: “I’ve spoken to some clients and advisers and sometimes there’s this view that [is expressed where they say:] ‘Oh well, my clients are so far below their transfer balance cap, it doesn’t matter if we get a couple of things [relating to their TBA] wrong here or there because they’re never going to utilise their [full] transfer balance cap so it doesn’t matter.’
“[But] that’s all based on your knowledge of the client right here, right now. It’s not potentially taking into account what might happen in the future.”
Cullen pointed out significant changes are constantly being made to superannuation legislation and regulations, such as the changes to the work test, that are subject to the total super balance threshold and can potentially open up new strategies for SMSF members.
In these circumstances, inaccurate TBA information can adversely penalise the client, he said.
“What happens if I receive some inheritance from my parents or win Lotto or whatever it might be. I might want to inject that money into super because I’m under [age] 75. Now a couple of years ago I might not have been able to get that money into super, [but as professionals you need to have] a better idea where [a client’s] balance sits in relation to the cap,” he suggested.
According to Cullen, situations where a member who is nowhere near utilising their transfer balance account cap but suddenly receives a substantial death benefit is another scenario where a precise knowledge of a client’s TBA at all times would be vital.
“We do need to get this right. Don’t judge things just based on how they look today. Consider what they might look like going forward as well,” he advised.