Winding up SMSFs top of mind for advisers
How to wind up an SMSF is one of the top inquiries BT’s technical services team has been fielding from advisers during the July to September 2023 quarter.
Also popular were questions around superannuation and the indexation of pension thresholds.
The BT Technical Services team fields around 2,000 questions from advisers every quarter.
Tim Howard, technical consultant for BT, said the September quarter saw a marked rise in the number of inquiries from SMSF advisers on the implications of winding up SMSFs.
“SMSFs may need to be wound up for many reasons, such as a relationship breakdown, and it’s good for trustees to be across the exit strategy and potential costs involved as their circumstances change,” he said.
Adviser questions have revolved around transferring SMSF assets to public offer funds or to a member.
“Most listed assets can often be transferred in-specie to a public offer fund,” Mr Howard said.
“Other investments can be purchased from the fund by the fund’s members.”
Carry-forward concessional contributions have also been a hot topic for advisers, Mr Howard added.
“As the measure started from 1 July 2018, an individual could only look back to the ‘start’ and carry forward one previous year from FY2020, then two years from FY2021 and so on,” he said.
“From July 2023, clients can look back and carry forward their unused concessional contributions for the previous five financial years.”
He added that clients are eligible to carry forward unused concessional cap amounts from previous years, and effectively increase their contribution caps in later years.
“They can do this if they have a total super balance of less than $500,000 at 30 June of the previous financial year, and have unused concessional contributions cap amounts from up to five previous years,” he said.
“Advisers may wish to remind their clients that unused cap amounts are available for five years and expire after this time.”
He said if a client has an unused cap amount from the financial year ending 2019, and does not use that amount by the end of June 2024, it will expire.
There were also a high number of questions around total super balance and bringing forward a non-concessional contribution.
“The BT Technical Services team are seeing a high demand for BT’s non-concessional contribution (NCC) calculator, which helps advisers cross-check clients’ eligibility to bring forward an NCC,” Mr Howard said.
He said a client’s total superannuation balance can impact eligibility.
“For example, a client’s NCCs across three years can total $330,000 if their TSB is below $1.68 million; or two years, $220,000, if below $1.79 million as at 30 June of the previous financial year,” he continued.
“Advisers also need to consider the trigger age (less than 75 years on 1 July), the timing of the acceptance by the trustee (must be before the 28th day of the month following the client’s 75th birthday), and using the client’s remaining cap space in following years.”
He said the calculation can be complicated and advisers are asking questions on calculations more frequently, especially since the work test no longer applies for these types of contributions.
