No need to navigate the complex CGT landscape for SMSFs alone

SMSF members have a one-off chance to take advantage of transitional capital gains tax relief that applies to super reforms coming into place this year.

The rules are intricate, however, and advisers must understand whether applying them is the best way forward for clients. In some cases, it may be best not to use this provision.

TaxBanter’s Darren Wynen explored this dynamic in a session titled Latest CGT issues for SMSFs.

Here’s the background: The federal government introduced transitional rules to allow for CGT relief as a concession subsequent to the removal of the tax exemption for transition-to-retirement income streams and introduction of the $1.6 million transfer balance cap.

“My session walked practitioners through how those rules work and provided them with an understanding of whether choosing the relief would give the right outcome to their clients,” Wynen explained.

It was a must-attend session, given the CGT relief measures are some of the most complex among the reforms to the super system announced at last year’s federal budget.

“Make sure you understand the rules before you apply them for your clients,” Wynen said. “Try not to artificially structure clients’ affairs to generate a tax advantage now.

“Consider carefully the right response if assets are unsegregated, because you’re potentially activating a tax bill now when you don’t know what’s going to happen in the future,” he added.

For example, let’s assume one member has a large pension in retirement phase and the other is still in accumulation phase. Then, down the track, both members are in retirement phase. It may be better for the client not to choose the CGT relief now, as no tax may arise when the asset is eventually sold.

All this detail and more was explained at the conference, drawing on case studies as the underlying material on which the session was based.

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One philosophy but many models to solve the retirement advice challenge

One philosophy but many models to solve the retirement advice challenge

Advice firms running multiple advisers, and licensees overseeing hundreds or thousands of them, are finding that the hardest part of retirement advice is not the technical work but agreeing on a consistent way to do it. Tying together the disparate elements of a solid retirement plan can present real challenges in the absence of a clear philosophy.

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