Mark Chapman, director of tax communications for H&R Block Australia, told SMSF Adviser the original draft legislation was quite different to the current draft and any strategies put in place for that version won’t necessarily be effective in relation to the current version.
“And indeed, the current version itself is still in draft, and it may well change further before it’s actually passed by Parliament, so that does basically illustrate how constrained taxpayers are, and indeed should be, about actually doing anything to get around this legislation,” he said.
“Quite simply, the legislation could change, so you have got to be very, very careful about planning based on this current draft legislation. We really need to wait until things firm up a bit more before we advise taxpayers to do, or not do, certain things.”
Chapman warned it is “fundamentally dangerous” to be restructuring affairs on the basis of draft legislation.
“Really, it’s a case of understanding your exposure at the present time based on the draft legislation, as it is,” he said.
“[That means] working with your advisers to model your current and projected total super balance across all your different super interests for the 30 June 2026, and beyond. It’s reviewing your asset mix and liquidity, but any action such as withdrawing super to invest outside super does need to be carefully timed, because it could end up triggering unintended tax consequences and breach superannuation rules.”
Chapman continued that acting too early and pulling money out of superannuation to avoid any tax impost could be an “expensive mistake” as exiting super early runs the risk of giving up decades of concessional treatment.
“Basically, once money comes out of your superannuation you don’t get those tax concessions back. So while you might well be impatient, and you might well be feeling the temptation to do something at the moment, you have got to basically just sit tight,” he said.
“You can analyse what your potential exposure could be but don’t do anything until the legislation actually does emerge in a final form. Often the super legislation is actually implemented in a completely different form to what it was proposed.
“We’ve already seen the legislation has been changed fundamentally from the first version and it is highly likely there will be other changes. It is well worthwhile just keeping calm and not doing anything because making irreversible decisions based on draft law is very rarely good advice.”
