H&R Block Ltd’s SMSF director Kimberlee Brown says if clients aren’t more proactive in educating themselves about which laws have been enacted, they risk organising their affairs “based on things that actually aren’t coming to fruition”.
“People have actually still been contacting me about the $500,000 lifetime cap on non-concessional contributions. Now, that was a proposed reform way back in May in the budget that’s obviously since been scrapped and we’re looking at these other things,” Ms Brown told SMSF Adviser.
“My concern is that people aren’t aware of what has been enacted and what hasn’t. There’s been lots of public debate about these reforms and lots of different options around that it’s really hard for people to know actually what is law and what isn’t.”
Ms Brown said confusion about which super laws have been enacted stem from clients only “hearing snippets of information”.
While advisers have to be proactive in contacting clients about super legislation, Ms Brown said the greater onus is on clients to better engage themselves in SMSF legislative requirements.
“[Advisers have] been very proactive in speaking to our clients and telling them now what is law, but my concern is that there may be people without the appropriate advice attempting to organise their affairs accordingly based on things that actually aren’t coming to fruition,” she said.
“We’ve still got people thinking that the May budget proposals are coming into play, so I hope that we see in the media and in that space, that after all this conversation and debate, what is actually happening and what isn’t happening, so people are making decisions based on the right information.”
Good point George
I’d like to know how a market linked pension (non-commutable) is going to be treated for the 1.6M cap? Will the excess be allowed to be commuted? If a client has both market linked and allocated pensions, will they be forced to commute part of the allocated pension? Perhaps a suggestion for a future article?
my understanding is that a MLIS will be assessed against the transfer balance cap, using the annual income amount multiplied by the clients remaining life expectancy ( i think using schedule 1B of SISA) , whereas a defined benefit pension will use the annual income multiplied by 16 to determine assessmnet against the Transfer balance cap.
How does that work when the income amount varies in line with the balance?
Isn’t the headline misleading? The example give, the $500k limit, was only a proposal. It wasn’t enacted and as such wasn’t law. Therefore no law has been scrapped. Please ensure that headlines are factual.