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Downsizer and bring forward combination creates new opportunities for super strategy

 

With the recent bring-forward measures passed along with further extension proposed in the federal budget, its combination with potential downsizer rule changes creates a different perspective for the SMSF strategy when it comes to implementation.

 

         

In the recent federal budget, the government had announced the proposal to bring the eligibility for “downsizer contributions” forward to 60 from 65. These are the contributions people can make on selling their home as long as they meet a range of conditions. 

The second proposal is extending bring-forward opportunities from 65 to 74. This would also further add to the recently passed measures to the bring-forward rules which extended the bring-forward age up to 67.

In a recent technical update, Heffron managing director Meg Heffron said that what is particularly interesting is that, historically, the two kinds of contributions have been mostly mutually exclusive and now they won’t be.

Previously, bring-forward contributions could only be initiated up until the year in which the individual turns 65 and downsizer contributions are only possible after 65.

Ms Heffron noted that in the future, they may well happen at the same time and the order could be important.

“For example, let’s imagine the new rules are in place as planned for 2022–23. At June 30, 2022, Trish is 61 and has $1.4 million in super. There have been no changes to any caps or thresholds for being allowed to use the bring-forward rules since July 1, 2021,” she said in a blog.

“That means anyone wishing to use the bring-forward rules to contribute three years’ worth of non-concessional contributions at once must have had less than $1.48 million in super at the previous June 30. It looks like Trish meets this requirement.

“Trish intends to sell her house and would also like to transfer some shares she owns personally into the fund as an in-specie contribution using the bring-forward rules.

“In Trish’s mind, the two events are not connected, but in fact, timing is everything.”

If Trish sells her house and makes a $300,000 downsizer contribution in 2022–23, Ms Heffron said she may find that her total super balance rules her out of making large non-concessional contributions the following year (2023–24).

By contrast, if she makes both contributions in 2022–23 she’ll be fine because her 30 June 2022 balance will be low enough to allow the normal three-year bring-forward allowance.

“Equally, she could use the bring-forward rules in 2022–23 and even sell the house in 2023–24 (making a downsizer contribution that year) because — fortunately — the size of her June 30, 2023 balance doesn’t matter when it comes to making a downsizer contribution,” Ms Heffron explained.

“Remember that Trish won’t have a lot of choice when it comes to the year in which her downsizer contribution is made — the contribution must be made within 90 days of settlement. So, she may be locked into a particular financial year based on when she sells the house. But what if the house settles in May 2023? Then she has choices — and they may really matter, depending on her contribution plans for 2023–24.”

Another crucial area in which the new rules would collide with existing ones in a different way is preservation (this is the rule that keeps super locked up until retirement), according to Ms Heffron.

“Traditionally, preservation has not been an issue for downsizer contributions. They weren’t available until age 65 and, at that point, super is entirely unpreserved in any case. But what happens now if a downsizer contribution is made at 60?” she noted.

“Unless there is an explicit change to the preservation rules to prevent this, the downsizer contribution will be preserved like any other superannuation contribution.

“Like any other contribution, it could still be used to provide a pension, but unless the member has retired (or met another condition that frees up super), the pension will be a slightly more restrictive one known as a ‘transition to retirement’ pension.

“This is nothing new or unique to downsizer contributions. What is unique is that the changing of the age at which they become available will mean downsizer contributions bump into other superannuation rules in ways that may be unexpected.”

 

 

Tony Zhang
21 June 202
smsadviser.com

 

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Retiring on your own terms is not always easy to achieve, however it is evident that those who plan for retirement are more likely to do so. Results also show that obtaining professional help during the pre-retirement years further improves the probability of attaining your retirement objectives.

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Retirement planning is about the lifestyle you will have after you stop work and receiving employment income.  Planning focuses on issues such as how much superannuation is enough, taking a super pension, claiming the Age Pension, making superannuation contributions while receiving a pension from a super fund, estate planning and looking after your family.

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Superannuation

Superannuation is mandatory but taking an early and active interest in your retirement planning is critical to ensuring your benefits are maximised by the time you retire.  Many will have a superannuation scheme through employment but increasing numbers are starting their own Self-Managed Super Fund (SMSF).

For many, simply relying on employer contributions may not be enough to provide the lifestyle you desire at retirement. We can assist in building strategies to ensure your retirement goals are met and your required lifestyle is maintained throughout retirement.

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Self Managed Super Funds

Self-Managed Superannuation Funds (SMSFs) offer a good strategy option for many individuals, families and small business owners to build tax effective wealth and to protect assets over time. SMSFs are becoming popular for those who are ready to take control of their own super investments as they give you ultimate control and flexibility to manage your retirement benefits.

It must be noted though, that you will have increased responsibilities as a trustee of the fund. As a SMSF Trustee you need to keep up to date with all required regulations and keep up with the fast paced financial markets.

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Your estate is made up of everything you own. This includes your home, property, furniture, car, personal possessions, business, investments, superannuation and bank accounts.

Having an estate plan is extremely important.  Having a will is just the first step in your estate plan. It is critical to consider what outcomes you would like for your estate and to ensure a plan is in place to achieve those outcomes, both including and beyond the terms of your will.

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Tess Uncle

B.Sc, M.Com, CA, DipFP

Tess has over 22-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last seven-years, Tess has turned her attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

Tess’s mission is to bring the ethics and integrity of her Chartered Accounting background to the area of wealth management.

As a woman in a male dominated field, Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities.

Using her depth of knowledge and experience in tax and accounting Tess is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2004 – Graduated Masters of Commerce from the University of New South Wales
  • 2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2007 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

Schedule a Meeting with Tess


Adam Roberts

B.Bus, B.Sc, CA, DipFP

Adam has over 18-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last seven-years, Adam has turned his attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

Adam’s mission is to bring the ethics and integrity of his Chartered Accounting background to the area of wealth management.

Combining traditional accounting and financial services has been a welcome move for Adam, allowing him to operate and advise in the financial sector that has been a long time personal passion.

Using his depth of knowledge and experience in tax and accounting Adam is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2005 – Graduated Bachelor of Science from the University of Western Sydney
  • 2005 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2007 – Graduated Bachelor of Business from the University of Western Sydney
  • 2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2010 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

Schedule a Meeting with Adam


Advisory Cadetships

What is an Advisory Cadetship?
An Advisory Cadetship enables you to commence your career whilst attaining the necessary university qualifications by studying part-time.

How does it work?
Generally, our cadets complete a relevant business or accounting degree at the University of New South Wales, the University of Technology Sydney, Macquarie University, or the University of Western Sydney.

The Firm provides 3-hours paid study leave per week to attend university. This can either be taken at the one time or broken between days depending on the individual’s requirements. In addition, the Firm provides paid study leave for both mid-semester and end-of-year exams.

We take the work life balance very seriously at Wybenga Financial and our cadets are encouraged to have a fulfilling life outside the office. A typical day will have you arriving at the office at around 8.30am with most days concluding at 5.30pm.

What are the benefits of an Advisory Cadetship with Wybenga Financial?
Our cadets benefit from the following:

  • Career path – on completion of their degree our cadets have significant practical experience which will assist them in advancing their careers
  • Work helps your studies – by working full-time our cadets are able to apply their practical knowledge in the university subjects
  • Camaraderie with other cadets – the Firm has a number of cadets at various stages of their career
  • Mentoring – cadets are paired with a senior staff member who oversees their progress and training both at work and with their studies
  • Communication and feedback – the Firm has an open door policy which enables all cadets to interact with all members of staff including Directors
  • Culture – the Firm promotes a friendly social culture with a number of functions throughout the year
  • Modern environment – including ‘socialising’ areas such as pool table and break out area
  • Training – ongoing support and technical training. We also provide internal and external training on a monthly basis
  • Remuneration – working full-time provides a market salary and independence with salaries being reviewed every 6-months

What happens when I complete my degree?
The completion of your degree is the first step of what we hope to be a long and successful career with us. The next step is the commencement of a Diploma of Financial Planning followed by completing the requirements to become a Certified Financial Planner (CFP).

There are always progression opportunities for the right cadets and we are dedicated to the long term development of our staff.

Who should apply?
Current Year 12 students or first/second year University Students who:

  • want to commence their career in financial advisory;
  • are due to commence or are currently completing a part-time business or commerce degree at university with an advisory major;
  • want to gain valuable hands-on experience while completing their qualifications;
  • are looking for a friendly working environment;
  • are team players who display initiative;
  • have a commitment to self-development;
  • possess excellent personal presentation and communication skills; and
  • are motivated and mature minded.

How do I apply for an Advisory Cadetship?
To apply for a Cadetship position at Wybenga Financial send us your details. Please also include in your covering letter why you wish to do a cadetship, include relevant qualities you possess, main interests / achievements, and any previous employment.

Interested candidates should initially forward a resume/covering letter of no more than 3-pages. Please provide full details of contact information (telephone or e-mail).

What if I have more questions?
For further information about our Cadetship program, please send your enquiry to .