Argyle managing principal Peter Bobbin said he often still comes across accountants who don’t understand that while super members can only transfer $1.6 million into pension phase, once in pension phase, the value of this money can increase beyond $1.6 million.
“Every day I'm finding someone, accountants may I stress too, who believe you get $1.6 million in your super that's tax free — full stop. What they don't know, or don't seemingly understand is that the rule is not $1.6 million in super that's tax free as a pension, that's just the maximum amount you're allowed to put in,” he explained.
“The example I give [to explain this], is if I have $1.6 million in super, and that's all I've got in super, so it's wholly in pension account, and I walk down to Randwick racecourse and put it on the four and the fifth. If I win I’ve then doubled the money, so I've now got $3.2 million in tax-free super.”
Alternatively, if the same person was to incur a loss of $800,000 they’ll then only have $800,000 in pension phase, he said.
“People are also making estate planning decisions and they have a complete misunderstanding of how the new rules operate,” he warned.
“They're planning their super strategies on premises that are simply wrong, and estate planning consequences will flow from that.”