What are advisers asking ahead of EOFY?

Downsizer contributions, the superannuation guarantee and the COVID-related measure on minimum pension drawdowns are among the top enquiries by advisers this end of financial year.

Fielding over 2,000 queries from advisers each quarter, BT’s technical team said it had seen greater adviser focus on the downsizer contribution, as well as more complex tax and estate planning queries especially for self-managed super funds (SMSFs).

Downsizers

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Clients looking to sell their homes might be unaware that the eligibility age for making a downsizer contribution into super would be coming down in the new financial year, to 60 years. Prior to 1 July 2022, a person had to be 65 years or older to make a downsizer contribution.

BT technical consultant, Tim Howard, said: “Placing some of the sale proceeds into super can be a tax-effective strategy for empty nesters. From 1 July, more Australians may access this strategy, with the eligibility age for making a downsizer contribution lowering”.

To be able to contribute proceeds from the property sale into their super, clients would need to have owned their home for 10 years or more. A downsizer contribution – up to $300,000 maximum – would not count towards any of the contribution caps and could still be made even if a person had total super savings greater than $1.7 million.

A client’s spouse could also make a downsizer contribution to their own super, of up to $300,000 from the same proceeds, even if they were not an owner of the property.

Business owners making Super Guarantee payments

BT’s technical team said advisers might wish to remind their business clients with employees that the superannuation guarantee (SG) would be increasing to 10.5% in the new financial year.

“Furthermore, the $450 minimum threshold is disappearing. Currently, if an employee receives under $450 (before tax) in salary or wages in a calendar month, their employer does not have to pay the SG for them. From 1 July, employers must pay the SG regardless of how much employees are paid.”

Couples

Clients planning to make spouse contributions as part of their tax strategy should be reminded to do so before EOFY.

Howard said: “Clients who typically benefit from this strategy are in a relationship where one person is in a high-income bracket, and the other person has a lower level of personal income.”

“The person with the higher income is generally better off maximising their personal contributions first, as this is likely to reduce their taxable income. That person can then consider making an after-tax contribution into their spouse’s super fund to receive the spouse contribution tax-offset.”

Other queries made to the BT technical team included superannuation members making personal contributions into super, SMSF trustees accepting personal contributions into super and the level of cash in client accounts on wealth management platforms.




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