Budgetary measures such as the $500,000 lifetime cap on non-concessional contributions are effective from 7.30pm on budget night and take into account all contributions made since 2007.
While not yet law, ignoring this particular budgetary measure could result in penalties for trustees who over-contribute in the event that this budget measure does pass.
Even though these measures are not yet legislation, advisers could be liable for advice they give that doesn’t take into consideration these budgetary measures, said managing director of The Fold Legal, Claire Wivell Plater.
"In fact, I would be expecting every adviser with ongoing advice clients who are on a TTR or using a top-up strategy to be very busy from the minute the budget hit the streets. If they fail to tell their clients to stop making non-concessional contributions that could impact their lifetime limit, they could be liable," Ms Wivell Plater told SMSF Adviser.
Best practice for SMSF professionals is to take these budgetary measures into consideration when they’re advising their clients, Colonial First State’s executive manager Craig Day told SMSF Adviser.
"Essentially any proposal in the budget could be implemented in full, including the effective dates, it could be implemented with minor modifications […] or implemented with major modifications," Mr Day said.
Because SMSF professionals are working with incomplete information, it’s imperative that trustee clients are made well aware of the risks and challenges of implementing any strategies that could potentially be on the chopping block if the Turnbull government is re-elected.
“Put all the options on the table, make sure the client fully understands what those options are and the implications of those options,” Mr Day said.
“Make sure you as an adviser have full and detailed file notes of your conversations, to substantiate that the client was fully aware of the risks involved in their decisions to proceed,” he added.