With the bill containing the measure to extend the use of the bring-forward rules for non-concessional contributions from age 65 to age 67 failing to pass in the last two weeks of sittings for 2020, it is unlikely the measure will become law until at least February.
Following the delay with the measure, Australian Executor Trustees senior technical services manager Julie Steed said some SMSF professionals are considering some possible solutions for clients impacted by the delay who are in this age group and want to utilise the bring-forward rules.
“I know some practitioners have been advocating to just put one dollar more, so put $100,000 and then one extra dollar,” Ms Steed said.
“[That way], you’ve only got an excess of $1 but you’ve triggered the bring-forward. [However], this still puts advisers in such a difficult position because, for most licensees, you have to base your advice on current laws.”
BT head of financial literacy and advocacy Bryan Ashenden said for what was a relatively uncontroversial change, the delay in the passage of the bill continues to frustrate many clients.
“Delays like this can cause some confusion around the superannuation system, and it is worth noting that the Retirement Income Review report recently released by the government noted that older people are concerned about frequent changes to the superannuation system and that policy reforms can undermine confidence in the system even when it improves outcomes,” Mr Ashenden stated in a recent BT podcast.
There are a growing number of Australians inadvertently disadvantaged because of the delay, he said.
“If they have turned 67, and the bill ultimately passed, while they could still use the bring-forward rule, they would need to meet the work test,” he explained.
Mr Ashenden previously said he is hopeful there will be some kind of transitional relief available as a result of the delay to ensure Australians in this situation are not unfairly disadvantaged.
I have a letter from the Minister (Jane Hume)’s office confirming that should the bill not pass or pass with a later implementation date than the proposed 1 July 2020, excess contributions made prior to turning 67 can be withdrawn without tax or penalty. I live in hope these politicians will stop delaying this long promised measure.
Seriously, there is no question. The law remains as it is until it is changed. The Government won’t see this as a priority as it reduces tax revenue.