Maximising superannuation contribution caps, preparing for the Division 296 tax and increasing retirement savings will be key areas of concern for financial advice clients in the 2025 financial year, according to inquiries received by financial services firm BT.
Looking over more than 8000 questions received by the BT Technical Services team from advisers in the June quarter, BT head of financial literacy and advocacy Bryan Ashenden said cost-of-living pressures and continued interest rate rises were having an impact on the considerations of those arranging their finances.
“Retirees as well as those who are on the cusp of retirement are all consumers and many are impacted by cost-of-living increases. Understandably, back-to-basics budgeting is top of mind for these clients and their advisers,” Ashenden said.
Regarding SMSF clients, he advised using the contribution reserving strategy to grant trustees more control in managing their contribution caps, adding it could only be employed at the end of the financial year.
“The way this works is, put simply, you can make additional contributions to your SMSF in this financial year and make it count as a tax deduction, but you can elect to not have it count towards your cap until the next financial year,” he noted.
Additionally, he said it was unlikely the Division 296 bill currently before parliament was going to change before it is legislated and suggested financial planners use this time to engage with clients about managing the impacts of the tax before it comes into full effect on 30 June 2026.
“While the tax is not yet law, many advisers have been on the front foot and have already discussed this proposed change with clients. For those who haven’t, there is still ample time to do so,” he said.
“There is no one-size-fits-all formula for calculating the additional tax payable as there are certain circumstances that need to be taken into account.”
Boosting retirement incomes is also an ongoing concern for clients who may need to revisit their plans and adjust their risk profiles in light of record inflation, according to Ashenden.
“It’s important to consider your income needs and plan to enjoy an active life for longer. Right now, there are also short-term considerations as well as retirees might be finding that their well-planned budgets need to be revised,” he noted.
“The new financial year is a good time to review investment strategies. Investors might want to weigh up whether riskier but higher-return investments are appropriate for those who are investing for the medium to long term.”