The SMSF Academy’s Aaron Dunn says it will not always be appropriate to apply the CGT relief for SMSF clients, adding that SMSF practitioners need to consider the potential timing of other members moving into retirement phase and the amounts they have that will be applied against their transfer balance cap.
“[For example], you don’t want to apply for the CGT relief in the future if the fund’s going to be 100 per cent in pension phase,” Mr Dunn said.
This may also be the case with certain TRIS members.
“They might lose their exemption now, but if they’re going to start a TRIS and they have $1.2 million TRIS now and they’re three years from retirement, well, they’re going to be 100 per cent tax exempt in the future, assuming they’re going to be under the $1.6 million cap. So don’t get trigger happy with CGT relief amounts,” Mr Dunn said.
However, if the client does have a TRIS that is greater than the $1.6 million, it will be in the client’s best interest to apply the CGT relief, Mr Dunn said.
“In the future, they’re going to be restricted as to what they can actually move into retirement phase,” he said.
“The relief now is going to maximise the tax exemption that’s available to [the] fund and produces a lower notional gain for them.”