Call for reform on family asset transfers
Accounting firm HLB Mann Judd has recommended the Federal Government examine the current taxes levied on the transfer of assets between generations as part of its impending taxation review to allow for easier retirement planning.
“With longer life expectancies, these days people are transferring assets under their will to their children when they are in retirement themselves,” HLB Mann Judd Sydney managing partner and tax adviser Tony Fittler said.
At the moment families who initiate intergenerational asset transfers are liable to pay stamp duty and capital gains tax (CGT) on the transactions unless they qualify for concessions under the small business CGT rules.
Often the situation means families will have to make a choice to either sell off other assets to fund their CGT obligations, or defer the transfer until the parents pass away, a situation where CGT and stamp duty no longer apply.
“If the Federal Government changed the CGT rules, so that they were the same for intergenerational transfers as they are on death, it would enable parents to help their children financially at a time when they really need it,” Fittler said.
However, Fittler explained he is not advocating for CGT and stamp duty on family assets to be scrapped altogether, but rather levied only when the items in question were sold to an external third party.
“If intergenerational transfers qualified for the same relief that apply to asset transfers on death, the children could defer CGT until assets were sold to a third party,” he said.
“So our suggested reform will not reduce the tax paid either in CGT or stamp duty, but simply postpone it until an asset is sold outside the family,” Fittler added.
Recommended for you
Compared to four years ago when the divide between boutique and large licensees were largely equal, adviser movements have seen this trend shift in light of new licensees commencing.
As ongoing market uncertainty sees advisers look beyond traditional equity exposure, Fidante has found adviser interest in small caps and emerging markets for portfolio returns has almost doubled since April.
CoreData has shared the top areas of demand for cryptocurrency advice but finds investors are seeking advisers who actively invest in the asset themselves.
With regulators ‘raising the bar’ on retirement planning, Lonsec Research and Ratings has urged advisers to place greater focus on sequencing and longevity risk as they navigate clients through the shifting landscape.
