Law firm outlines potential strategies for $3m threshold
Equalising spouse super accounts may be a useful strategy for those impacted by the proposed $3 million threshold, says an SMSF law firm.
Earlier this week, the government announced that it will impose a special rate of earnings tax of 30 per cent on earnings on super balances above $3 million.
The proposed measure is intended to apply from 1 July 2025.
In a recent article, SMSF documentation provider SuperCentral said individuals that are likely to be adversely impacted by the proposal may be thinking about what actions they can take between now and 1 July 2025.
Where there is one member of a couple with a balance below $3 million, clients may want to consider transferring the excess super balance from the larger super account over to the spouse with the lower balance.
One potential way of achieving this could be by withdrawing amounts from super and recontirbuting those amounts as contributions to the low balance spouse.
“[Where possible], they could also consider applying small business concessions as super concessions for the spouse with the lower balance,” the firm added.
“They may also consider whether to reduce the individual's super balance and instead hold wealth in other vehicles such as discretionary trusts or investment companies, or in housing investment for themselves or their children,” it said.
“However, withdrawing investments from super is generally a one-way street so any transfer of wealth out of the super system should be carefully considered.”
In the longer term, SuperCentral said the proposal is likely to encourage couples to equalise total super balances through contribution splitting, spouse contributions and non-concessional contributions for the low balance member.
The firm also noted that at this stage the measure is only a proposal and that it’s not clear what will happen between now and 1 July 2025.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
