Aaron Dunn, chief executive of Smarter SMSF, has said in the most recent SMSF Adviser podcast that many of the discussions around the proposed legislation are a byproduct of the uncertainty of what will be passed when Parliament resumes at the end of July.
“You may have a client that has more than $3 million in their fund, but as has been pointed out in other articles, if they don’t meet a condition of release, the law is not going to allow them to be able to reduce the value by withdrawing money out of the super fund,” Dunn said.
“You might decide to roll some money over, but that’s not going to fix the problem because it’s linked to your total superannuation balance and the ATO will aggregate those balances there. It’s going to come back to the strategic building blocks that get put in place for the client and that may be that if they’re over age 60 and retired or 65 and they’ve got access to money, then there may be the ability to undertake withdrawals.”
However, he continued, advisers need to help those clients assess where that money is going and what they are going to be doing with it, as well as the marginal tax rates or other relevant tax rates.
“Then you have your investment strategy considerations, and ultimately, as clients are getting closer to or above that $3 million amount, looking at the volatility of those is going to be quite significant,” he said.
“In the instance of someone wanting to invest in a start-up or speculative type asset, it’s not really going to matter if they’ve only got a couple of hundred thousand, unless it is going to be that speculative and might jump that much.
“But I think again, it’s understanding the strategic issues and opportunities and then the investment strategy issues and opportunities and understanding where and how you might actually hold those.”
Dunn added that every client will have their own unique set of circumstances, and that makes it imperative that those clients who may be affected by the legislation get the relevant advice so they understand what their decisions will look like.
“Just because a client might have to pay it [Division 296 tax], doing nothing could be the best outcome for them as well, but unless you know that that’s the case, you don’t have the ability to make that informed decision.”
“For me, the key message is to be informed to allow clients to make the right decision based on what the government ultimately lands on and at this point in time we don’t know what they’ve ultimately decided other than what we hear and what historically the government tried to get through in the former Parliament.”
