One solution will not fit all clients under the new superannuation rules, warns ING technical services manager Andrew Lowe.
“I don’t see a one-size fits all with the rule changes, but I do see lots of opportunities for advisers helping clients before June 30,” he said.
With contributions of up to $1 million per person before June 30, Lowe said there were clients looking to sell some assets they hold to transfer into superannuation.
“The clients who can put cash into a fund have very few problems, but those with assets to sell have to be more careful,” he said.
“Selling shares could trigger Capital Gains Tax (CGT), and they could be worse off triggering this event despite the attraction of low tax in a superannuation fund.”
The other problem for clients with assets such as property is the time it will take to sell the asset and then transfer the money, again before June 30.
“Selling a property now (in March), and with settlements that could be 90 days, will leave little time to transfer the money.”
Lowe also warned clients wanting to transfer either shares or property straight into the fund that the adviser needs to look at the trust deed and find out if the fund can buy assets from a related party.
“Then there is the problem of the type of property — commercial or residential,” he said.
“If it is commercial and the member is still going to occupy the premises, then there is probably no problem, but it is the opposite if the property is a beach house or a unit a relative lives in.”
However, Lowe said ING has been looking at clients with assets that will take time to dispose of borrowing the money to transfer to the superannuation fund before June 30, and paying off the loan post July 1, when the funds of the sale come in.
However, he said all transaction costs, such as agent’s fees and brokerage for shares, have to be taken into consideration when weighing up the benefits of selling assets to generate funds for superannuation.
“Despite some of the difficulties, I still believe there will be a significant inflow of funds into superannuation before June 30,” Lowe said.
“I also suspect there will be significant investment back into shares and property after July 1, as people look to invest this money.”
