Superannuation checklist and other advice considerations

ARTICLE

20 September 2022

5 mins read

With the new financial year underway, now is a good time to talk to clients about their contributions to help reduce tax and/or increase savings.

It can never be too earlier within a financial year to be having those conversations with clients about how much they can contribute to their superannuation to reduce tax and/or increase their superannuation savings.

The information below is a checklist that provides a summary of the key superannuation and insurance planning considerations that advisers should consider for clients in the financial year 2022/23.

Superannuation Considerations

Superannuation measures	Clients impacted	Key actions
Track the concessional contributions (CC) cap	Clients with salary sacrifice arrangements in place Clients that make personal deductible contributions	Refer to the “Concessional contribution checklist” to track the CC cap for clients Review insurance owned in super to confirm whether it is still appropriate given the CC cap Consider alternative investment structures and strategies for CCs that exceed the cap Adjust salary sacrifice arrangements and personal deductible contribution levels for
Salary sacrifice vs personal deductible contributions	All clients that are eligible to make a personal contribution	Consider whether employee clients should salary sacrifice or make personal deductible contributions Review whether clients should make any personal deductible contributions towards the end of the financial year to use up their remaining CC cap Check the maximum deduction that a client should claim to avoid exceeding the CC cap
Personal deductible contribution check list	All clients that are eligible to make a personal contribution	Ensure client meets all the basic conditions for deductibility: Client is aged 18 to <75 Client makes a personal contribution to a complying super fund Client submits a valid ‘notice of intent’ (NOI) to claim a deduction for the personal contribution to the super fund trustee NOI must be given before the earlier of: The day the client lodges their tax return for the year in which the contributions were made, and The EOFY after the year in which the contributions were made The trustee acknowledges the NOI form A deduction claimed for a personal contribution cannot create a tax loss Meeting the work test¹ For the 2021/22 financial year and earlier: the work test must have been met when making personal contributions unless certain conditions are met to qualify for the work test exemption². From 2022/23 onwards: The work test does not need to be met for a trustee of a superannuation fund to accept personal contributions or a NOI. However, for the deduction itself to be considered valid by the ATO, the individual must have met the work test or be eligible for the work test exemption. Ensure NOI form is submitted and acknowledged by trustee prior to client: Rolling over to another fund (e.g., where client is funding a super life/TPD policy by paying for insurance premiums via a rollover from another super fund) Withdrawing funds Commencing an income stream Splitting contributions with their spouse Completing their tax return Ensure deduction amount will not take client over the CC cap for the year
Catch-up concessional contributions	Clients with a total super balance (TSB) of less than $500,000 as of 30 June 2022 Adviser Tip: with average 30 June 2022 super balances down a greater number of clients may have inadvertently become eligible under the rules.	Check clients expected concessional contributions (including SG) amounts for 2022/23 up to $27,500 Review whether the client should: Make unused CCs in 2022/23, or Carry unused CCs forward for a future financial year if client plans on selling an asset in the future and is likely to incur a capital gain (this will allow the client to use a larger CC cap to manage their CGT liability) Refer to the Concessional contribution checklist
Div. 293 tax threshold for very high-income earners ($250,000+)	Clients with total income for surcharge purposes plus CCs (“low tax contributions”) that exceed $250,000	Review salary sacrifice and personal deductible contribution strategies to avoid clients paying extra tax of 15% on the lesser of: The excess over $250,000, or The CCs (except excess contributions)
Downsizer contributions of up to $300,000 limit per individual	Clients who are over 60 and have disposed of a property that has been their residence at some time in at least 10 years of ownership. Up to $300,000 of sale proceeds can be contributed to super contributions are exempt from the $1.7 million TSB limit in the financial year their made	Review the client(s) position against the eligibility rules (refer to ATO) Consider future financial year concessional and non-concessional contribution strategies downsizer contribution will count as part of a client(s) TSB in future financial years. Adviser Tip: The timing of the downsizer contributions is important not to put the client above the TSB limit on anticipation contributions in future years.
Non-concessional contributions (NCC) cap of $110,000 or $330,000 under the bring-forward rules	Clients with available after-tax funds wanting to make NCCs	Refer to the Non-concessional contributions – decision tree to track NCC cap for clients Ensure clients do not make any further NCCs once their TSB equals or exceeds $1.7m as at 30 June in the previous financial year (i.e., 30/06/22) From 1 July 2022 if the client is under 75 years of age they can make or receive personal contributions and salary sacrificed contributions without meeting the work test, subject to existing contribution cap limits. They may also use the bring-forward rules
Restricted bring-forward rules where TSB exceeds $1.48m	Clients with TSB at 30/6/22: Less than $1.48m = $330,000 bring-forward cap $1.48m < $1.59m= $220,000 bring-forward cap $1.59m < $1.7m = $110,000 bring-forward cap $1.7m+ = nil NCC cap	Ensure clients with a TSB of $1.48m or more at 30/6/22 stay within their reduced NCC bring-forward caps Ensure clients do not make any further NCCs once their TSB equals or exceeds $1.7m as at 30/6/22 Consider making NCCs to the client’s spouse’s super fund to equalise super balances (if lower)

_{¹ Individuals must be able to show they were gainfully employed for 40 hours or more in any 30-day period in the financial year.}

_{² Individuals aged 67-75 who had a total superannuation balance below $300K on 30 June 2021 and did not meet the work test in 2021/22 but did meet the work test in 2020/21 may be eligible the one-off work test exemption to claim a deduction on personal contributions.}

Insurance measures

Insurance measures	Clients impacted	Key actions
Review insurance needs	Clients who experience the following life changes: Changes to family situation (marriage, relationship breakdown, loss of a loved one, the birth or adoption of a child, or adult children becoming financially independent, leaving the family nest, etc) Borrowing funds or reduction in debt levels Changes to income (earning more or reduction of income) Health and lifestyle have improved since time of application (i.e., quit smoking, no longer work in a high-risk occupation or participate in high-risk activities) Clients who have a self-managed super fund (SMSF) as it is mandatory for SMSF trustees to consider insurance when formulating or reviewing the fund’s investment strategy	Ensure client’s type of insurance and the amount insured for remains appropriate to meet their needs Refer to ASIC’s life insurance advice checklist as it provides a list of issues to consider when giving life insurance advice

Estate planning measures

Estate planning measures	Clients impacted	Key actions
Review super death benefit nomination forms	Clients who have experienced the following life events: births, deaths, marriages, separation, divorce, inheritance or receipt of large sums of cash, child turns 18, insolvency or bankruptcy, enter or cease dependency or interdependency, etc	Ensure client’s review their death benefit nominations when their circumstances change to ensure nominated beneficiary is consistent with client’s estate planning objectives Explain how directing super death benefits to the estate (by nominating the legal personal representative as beneficiary) can have advantages for clients intending to use testamentary trusts
Type of death benefit nomination form: Binding vs non-binding vs non-lapsing nominations	All clients with super funds	Check the client’s nomination form (i.e., is it binding, non-binding or non-lapsing) and determine whether it suits the client’s circumstances when it comes to flexibility vs control: Flexibility (non-binding) – provides guidance to the trustee and deals with family circumstances, tax and law at the time of death Control (binding) – this binds the trustee to follow the nomination and may also be non-lapsing (unless revoked or amended)
Review binding death benefit nomination (BDBN) conditions	Clients with a BDBN	Ensure the client’s BDBN form meets all the following conditions for it to be valid: Person(s) mentioned are super dependants of member Proportion of benefit paid is readily ascertainable (i.e., Total adds to 100%) BDBN is in writing in the approved form Signed and dated by the member in the presence of 2 witnesses who are not beneficiaries in the notice, and Updated every 3 years (unless non-lapsing nomination)
Insurance-only super funds	Clients who hold cover through an insurance-only super fund and have another super fund with their accumulated super benefits	Clients need to establish and maintain two beneficiary nomination forms as each fund has their own set of rules when paying death benefits

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