Legislative changes complicate RBLs

POTENTIAL changes in legislation have made dealing with reasonable benefit limits (RBLs) for superannuation more complex, despite Government claims it is simpler, saysTower Trustmanager superannuation services Peter Burgess.

Speaking at the convention on Thursday, October 9, Burgess warns: “One piece of legislation is proposing to cap the tax on excessive benefits and that is going to complicate things for advisers.”

Currently, all excessive RBLs are taxed at 48.5 per cent, however, the Government is proposing to tax the post component at 39.5 per cent.

“The key point for the advisers will be when the lower limit applies,” he says.

“This is a classic example of the adviser having to go that step further when dealing with superannuation and estate planning by having to work out what proportion is post benefits and what is taxed at 48.5 per cent.”

Burgess focuses on three areas in his conference address — impending changes in legislation, the latest reasonable benefit limit strategies, including RBL compression techniques, and the pitfalls for financial advisers when dealing with benefit limits and estate planning.

In his presentation, Burgess warns that financial advisers can make mistakes when creating complying lifetime pensions for clients out of a self-managed or smallAPRAregulated superannuation fund.

“The advisers should make sure 50 per cent of the member’s total reasonable benefit limit is received into a lifetime complying pension account,” he says.

“Advisers should maximise the reasonable benefit limit value of the client’s lifetime complying income stream relative to its actual capital value.”

Burgess says he will also be explaining the use of strategic reasonable benefit compression strategies using lifetime income streams for self-managed superannuation funds.