1 July changes may prompt trust deed updates
SMSFs with more prescriptive trust deeds may need to make updates in order to take up some of the new opportunities commencing in July.
Speaking in a recent webinar, Smarter SMSF chief executive Aaron Dunn said there are some substantial changes happening from 1 July this year, including the removal of the work test for voluntary contributions between for those aged 67 to 75 years. The work test will still apply for those wanting to claim a deduction for personal superannuation contributions.
“There’s going to be a range of opportunities that open up for clients from 1 July 2022 that will really put the focus on non-concessional contributions [and that] recontribution process,” he said.
With clients now able to make contributions right up till 28 days after the month in which they turn 75, there is now a much wider window for optimising contributions.
“If we are able to look at contributions all the way through to 75, then there is going to be much greater interaction and interplay between the contributions going into super and pensions being run and whether you’re going to be taking amounts out by commutation and refreshing them and running multiple pensions,” he explained.
Mr Dunn also noted that there is also an age reduction for the downsizer that will occur from 1 July, with the eligibility age dropping from 65 down to 60.
Before employing any of these strategies for SMSF clients, Mr Dunn stressed that one of the critical things to check is whether the client’s trust deed is still up to date.
“There are changes that are coming on 1 July, and some deeds may be prescriptive and therefore may require an update before you take up some of these opportunities,” he said.
“Be aware of what you need to do and go back to your deed to ensure that you can do it.”
Where SMSF clients do need to update their deed, Mr Dunn highlighted the importance of ensuring that the constitution links up to the deed.
“Make sure you have a linkage between the constitution to the deed, because if you don’t have that, you are going to come up with a number of challenges,” he cautioned.
“We recently did some deed updates for an adviser, and what was clear was that the constitution as a result of the updates wasn’t connecting in decision making around what our constitution would have ordinarily done. So you’re not just looking at one layer, you need to look at both the fund at an operational level with the deed, but also the trustees and what they will be able to do under the powers of the constitution.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
