-header.jpg)
Following the Labor Party’s resounding victory in the recent Federal election, clients are rightly concerned about what may happen to the taxation of their superannuation benefits.
We anticipate the reintroduction of the of the Bill containing changes to the Division 296 tax. Division 296 applies to persons with superannuation balances over $3 million. It adds a further 15% tax on a portion of the funds income and unrealised growth over the financial year. *
Our Recommendation
We advise clients to remain patient until the Bill is reintroduced into Parliament. At that time, we will carefully review the legislation for any amendments, with particular attention to the effective start date. This will provide clarity on the timeframe available to implement strategies to manage the new tax effectively. A well-considered plan will take into account your broader family group structure, the tax profiles of family members, and their financial circumstances. You will have until the end of that financial year to implement strategies to navigate the new tax.
For instance, if you are under 60, options for withdrawing superannuation benefits may be limited. However, if you are eligible to draw down benefits, you might consider transferring funds to a family member’s superannuation account, such as a child’s, to optimise tax outcomes. For those with a self-managed superannuation fund (SMSF), admitting a family member as a fund member could allow you to retain control of the capital within your existing investment framework.
Next steps
We will provide further updates as new information becomes available. In the meantime, please feel free to contact us if you have any questions or wish to discuss your specific circumstances.
* The Greens were pushing for the cap to be $2 million when debated in the Senate.
Written by
Paul Aliprandi, Senior Private Wealth Adviser
Paul Aliprandi is a senior private wealth adviser at Wilsons Advisory providing strategic planning and financial advice.
About Wilsons Advisory: Wilsons Advisory is a financial advisory firm focused on delivering strategic and investment advice for people with ambition – whether they be a private investor, corporate, fund manager or global institution. Its client-first, whole of firm approach allows Wilsons Advisory to partner with clients for the long-term and provide the wide range of financial and advisory services they may require throughout their financial future. Wilsons Advisory is staff-owned and has offices across Australia.
Disclaimer: This communication has been prepared by Wilsons Advisory and Stockbroking Limited (ACN 010 529 665; AFSL 238375) and/or Wilsons Corporate Finance Limited (ACN 057 547 323; AFSL 238383) (collectively “Wilsons Advisory”). It is being supplied to you solely for your information and no action should be taken on the basis of or in reliance on this communication. To the extent that any information prepared by Wilsons Advisory contains a financial product advice, it is general advice only and has been prepared by Wilsons Advisory without reference to your objectives, financial situation or needs. You should consider the appropriateness of the advice in light of your own objectives, financial situation and needs before following or relying on the advice. You should also obtain a copy of, and consider, any relevant disclosure document before making any decision to acquire or dispose of a financial product. Wilsons Advisory's Financial Services Guide is available at wilsonsadvisory.com.au/disclosures.
All investments carry risk. Different investment strategies can carry different levels of risk, depending on the assets that make up that strategy. The value of investments and the level of returns will vary. Future returns may differ from past returns and past performance is not a reliable guide to future performance. On that basis, any advice should not be relied on to make any investment decisions without first consulting with your financial adviser. If you do not currently have an adviser, please contact us and we would be happy to connect you with a Wilsons Advisory representative.
To the extent that any specific documents or products are referred to, please also ensure that you obtain the relevant disclosure documents such as Product Disclosure Statement(s), Prospectus(es) and Investment Program(s) before considering any related investments.
Wilsons Advisory and their associates may have received and may continue to receive fees from any company or companies referred to in this communication (the “Companies”) in relation to corporate advisory, underwriting or other professional investment services. Please see relevant Wilsons Advisory disclosures at www.wilsonsadvisory.com.au/disclosures.