Last minute Super contribution - financial adviser

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Orion, 27th Jun, 2018.

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  1. Orion

    Orion Well-Known Member

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    As a result of selling two negatively geared properties, I'm set to pay a bit of income tax this year.

    Instead of this, I'm thinking it would be wise for me to contribute some into Super.

    1. Am I right in saying anything I put into Super is only taxed at 15% (up to a certain limit?)

    2. How does one do this? (do I call my employer and ask them, or make a manual BPay style payment and deal with it in my tax return).

    3. Should my 'full service' financial adviser be telling me to do this? Because they've haven't...
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    You've probably never expressed an interest in doing this before, so they haven't had a reason to tell you. They almost certain did provide you with information on what to do when the super fund was set up though.

    This would be a good opportunity to take advantage of the services you're paying for. Your financial planner should be able to tell you how much you can contribute and what the tax implications will be.
     
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  3. PandS

    PandS Well-Known Member

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    you need to do salary sacrificed up to 25K including your compulsory contribution
    the money taken out pre-tax and you get tax at 15% in Super
    contact your payroll office and see what they can do or point you to the right direction

    could be tough only a few days to go till end of FY not much time for paperwork and red tape
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Asking the employer at this time is futile since the use of salary sacrified now may be ineffective. And you DONT wnat to do that anyway...You want to personally claim the deduction. A personal contribution may allow you to top up to the $25K limit (from all sources) And then you must comply with the deduction notice requirements.

    Contact the fund NOT the employer or you will lose a signifcant advantage.

    You should call the adviser and discuss with them. They will assist you. You know they dont read minds ? They cant possibly know what you are doing.
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If you are going to do this you should probably do it by today as it is wed and the 30th is on Sat
     
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  6. Orion

    Orion Well-Known Member

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    OK, so it seems like my expectations are incorrect here.

    My financial advisory firm also has an accounting department which I also use - both 'full service', both thousands of dollars per year - over $10k between them.

    Am I really being unreasonable thinking between the two they'd have an idea of what tax I'm foretasted to pay and pick up on things like this and make suggestions?

    Why would anyone want to pay the top rate of marginal tax on their income when they can reduce it to 15%? I thought it's a reasonable expectation. Many of my work colleagues don't even know about the 15% thing, I only know because I'm somewhat financially literate.
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Accountants and financial planners arent mind readers and dont sit there thinking about each clients possible issues as we get quite busy. But we always welcome your requests. Call them. If they are like me I would want you to call. I have had this discussion with many clients already.

    There are limits to the 15%...For example if your assessable income for the year is very high ($225K+) the final tax rate on concessional contribs of $25K may be 30%, not 15%. (Div 293 tax) Still a saving, but reduced.

    If you had an IP I would have suggested prepaid loan interest two months ago to offset a CGT tax issue on top. That could bring fwd more deduction to offset the CGT also. Some calcs would have assisted to indentify a benefit - Remembering too the Div 293 impact may even have been avoided sometimes. (Think of $3750 saved)
     
  8. Mike A

    Mike A Well-Known Member

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    Actually for 10k per annum they should be thinking and discussing those things with you. Thats the difference between a 550 fee and a 10k fee. If they arent go to a firm that does have systems and processes for that.

    My two largest clients one a 65k fee and one 33k fee we did all those things in june. They didnt call me i organised the meetings. they are paying for ultra premium service and expect that.

    Yes i cant read their mind but at those fee levels one would expect a monthly call and discussion initiated by me to analyse their mind. A 10k fee should involve 2 discussions per annum. One at tax planning time. And this should not be client initiated at all. The accountant should initiate this.

    Your expectations are exactly where they should be for greater than 10k fee in total. You have been let down. Simple as that.
     
    Last edited: 27th Jun, 2018
  9. Orion

    Orion Well-Known Member

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    A bit of a chicken and egg though here - how can someone ask for something they don't know about...?
     
  10. Mike A

    Mike A Well-Known Member

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    It isnt chicken and egg. For the fee you are paying thats premium level service. That involves thinking for the client. Sorry been let down.
     
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  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I think both positions are correct and Orions above comment is a good illustration. I wouldnt liklely be liable for not advising on something I dont know about to be fair. But I dont want that for any client. The solution IMO is a open door. Any client should expect to receive support at any time. We prioritise all inbound contacts as a priority (existing clients)...I learned that from a guy I worked for who was the antichrist of timely response to client questions. Mike knows what I mean !!

    But tax advisers arent mind readers. I would have been in contact before year end if you were a $10K client anyway but two weeks before may also be too late. However, the advice you are after is financial tax advice and tax advisers cant give financial advice (contributions) BUT can co-ordinate with their financial advisers as we do here so benefits are maximised. If you were a $1K tax client and a $9K financial advice client then the financial adviser should have already been in contact to address potential contribution strategies. We send a message to all clients about things to consider but cant possible predict each clients issues so we ask them to contact us if they need advice. A lot do.

    The key issue is if you believe you need advice or assurance then ask. Anytime. We endlessly tell out clients we welcome ALL enquiries at any time and dont count them or charge extra etc. It means we have removed the cost concern and we feel it does mean better questions and client support when THEY need it. Not when we need fees at year end. In most cases questions are simple. If they arent we will advise an extra cost and 98% accept it.

    Some clients see year end tax planning as a costly extra add on and avoid it like the plague. We dont pad our fee estimate with allowance for it but tell clients its available. Its not likely a free service as for the time involved is generally billable.
     
  12. Marg4000

    Marg4000 Well-Known Member

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    IF you had told your financial advisor you were intending to sell two properties this financial year, I would have expected to then discuss with them the tax implications and any action you could take to lessen tax. If they didn’t offer, I would have asked.

    Best time to get advice is before you actually sell (or buy).

    And don’t leave it till the last few days in June to act. Many accountants have their time in June booked weeks ago.
    Marg
     
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  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Ahhh - Thats where a conundrum occurs Marg. Financial advisers cant offer tax advice on how to reduce tax. Only advise on the tax impacts of the financial advice IF they gave advice. And tax advisers cant recommend contributions but can discuss the tax benefits the taxpayer may achieve. It why a firm that does both can be a well co-ordinated team. That how we work.

    If there was a major CGT event then the CGT taxable amount should have been estimated / calculated by now. And the tax estimate with and without strategies given financial and tax advice. I recommend well in advance so all options can be considered (eg prepaid IP loan interest) But in 75% of cases we only hear about the CGT profit after the event. And 60% of taxpayers dont want to make more contributions due to preservation, age etc. They see the extra super as a benefit off their own home loan or in a offset for longer term interest savings / equity
     
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  14. Orion

    Orion Well-Known Member

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    This is a great policy. The last time I asked for advice from my accountant, they had to defer to a more senior internal specialist and get back to me. I ended up getting my response via email and a surprise $300 - 400 bill for an hour of the senior's time...

    It's not a good setup - I don't know what to ask for in many cases, and when I do, I get hit with an unexpected bill. Creates a situation where I don't feel like I'm covering every angle and am afraid to ask. In the future, I'll refuse to pay any bills like that that haven't been quoted. In fact, I'm considering other options right now.

    I agree - a premium rate financial adviser should have some kind of a checklist with one of those items 'is it worth making an additional super contribution this FY'.

    I called them and spoke to them, they said they didn't consider it this FY due to cash flow concerns. Not really happy so far, I'm not even sure what my taxable income forecast is so unsure if it's worth even doing. To be fair I've had a fair bit of change happen (big property sales), but still, not totally happy here.
     
  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Hmmm. Thats not good. We dont have a checklist, thats a sign of concern IMO. Its called professional advice...Ask the right questions and eliminate the concerns. Can I do it ? Yes / No. How much benefit = $X.

    Not sure what to ask ? The adviser sgould know when you call and explain you have a CGT sale and concerns for tax. They should walk through an estimated tax position and some strategies. Run some calcs etc. Its still not too late but quickly becoming so.

    Perhaps its time to put them to the test and speak to someone to find better adviser/s. Certainly one that offers both tax and financial planning. Thats where a free consult or a eager adviser can spend some time and the choice to switch wont come with a cost. Worry that they escalated to a senior adviser in firm. Maybe firm is too big for the style of advice you need ?
     

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