SMSFs warned against major portfolio changes before election
While both major parties have floated policy changes for superannuation, SMSF professionals should avoid making any significant changes to portfolios until there is further clarity in the form of legislation, says an advice firm.
Hewison Private Wealth director Chris Morcom said that, in the lead-up to the election, there’s not a lot that SMSF professionals need to be doing right now.
“Any announced proposals still have to be legislated and passed by both houses of parliament which creates an element of uncertainty,” Mr Morcom said.
“I wouldn’t be making any significant changes to client strategies just at this stage. The obvious things to be looking at though are the impact of the opposition’s announced policies around franking credits and the impact of that on SMSFs and to a lesser extent the changes on capital gains tax.
“What I’m looking at [with my clients] is portfolio construction and identifying alternatives to franked income that still meet the client’s objectives and don’t adversely impact the outcomes of the client’s SMSF portfolio."
Mr Morcom said this may mean looking at the client’s property allocation and fixed income and whether there’s alternatives there.
“Or perhaps looking at a different mix of international versus Australian equities as well,” he added.
“It’s certainly not something we’d take any action on until there was certainty with actual legislation [though].”
The opposition might win the election, but they potentially won’t have control of the Senate, which means that they have to negotiate any proposed legislation through the Senate.
“If the Senate is hostile to their legislation, then they may have to give some ground on that legislation, and it might be that the form of the legislation changes so that there’s no adverse implications for many SMSF members. So, there’s no point in making any changes right now until that whole process is worked through, and that could take quite a lot of time,” he said.
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.