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CFS highlights top-up strategies for super

CFS highlights top-up strategies for super

Miranda Brownlee
26 April 2017

SMSF practitioners should be utilising the tax deductions for personal contributions as a strategy for boosting their clients’ superannuation towards the end of the financial year, says Colonial First State.

CFS executive manager Craig Day says the deductions for personal contributions brought in under the super reforms provide a significant opportunity for clients to top up their super, particularly where they’re unable to use salary sacrificing.

“You may have a client that’s not particularly interested in doing a salary sacrifice arrangement or work for an employer that won’t do it,” Mr Day said.

“The client [may] work for an employer that reduces the client’s ordinary time earnings and uses the salary sacrifice amount to fund their own SG entitlements.”

Given that a salary sacrifice contribution involves diverting personal income into super, technically this is considered an employer contribution under SG law, Mr Day warned.

“So for those clients, you really don’t want to put in place salary sacrifice strategy for them because they’re ending up worse off,” he said.

“These new rules will potentially [allow clients to] start making personal deductible contributions instead of entering a salary sacrificing strategy that an employer may or may not have let them do.”

The new rules might also make it easier for practitioners to convince clients to contribute to super towards the end of the financial year, as some clients will be enticed by the tax deduction.

“So rather than this nebula 20-year retirement horizon, it all of a sudden becomes putting that money into super gives you a real tangible benefit in terms of the tax deduction coming through,” Mr Day said. 

CFS highlights top-up strategies for super
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