Regulation changes mean more adviser queries

Yasmine Raso

Senior Journalist, Financial Newswire

21 September 2022

With several regulatory changes regarding downsizer super contributions, Commonwealth Seniors Health Card eligibility and high net worth (HNW) tax-free transfer amounts coming into effect in the next few months, advisers and BT’s Technical Services have had to field countless queries.

Tim Howard, Technical Consultant at BT, said the impending regulatory changes provide opportunities for advisers to assist their clients in understanding new rules and how they apply to their specific circumstances.

“Often, advisers are asking us about their clients on a case-by-case basis because the rules can be complex,” he said.

The income thresholds for the Commonwealth Seniors Health Card are set to be increased for the first time in 20 years. If legislation currently in Parliament passes, the income threshold for singles will increase to $90,000 from $57,761 and for couples will rise to $144,000 from $92,412 currently.

“Becoming eligible for the Commonwealth Seniors Health Card gives you access to valuable concessions, such as cheaper medicine under the Pharmaceutical Benefits Scheme,” Howard said.

“Visits to the doctors can potentially be bulk-billed and people can receive a refund of medical costs when they reach the Medicare safety net. Additionally, card holders may also receive economic support payments which were worth $1,000 across 2020 and 2021.”

It is expected a further 44,000 Australians will become eligible if the bill passes.

The same can be said for downsizer contributions to superannuation, with legislation expected to pass that will decrease the eligibility of age from 60 years to 55 years. More Australians will be able to contribute up to $300,000 to their super from property sales.

“Advisers with clients who are about to turn 55 years of age, and are planning to sell their home, may wish to consider the timing of the legislation,” Howard said.

The general transfer balance cap – or the amount of super than can be transferred to tax-free retirement income streams – is also expected to increase to $1.8 million from 1 July 2023, to align with rising inflation and the general pathway of the Consumer Price Index (CPI).

“High net worth individuals who aren’t in a hurry to start a pension may want to hold off until then,” Howard said.

“However, it’s worth noting that, with Australia’s inflation reaching its highest level in over 20 years, there is a possibility that the Federal Government could freeze the indexation of certain thresholds such as the transfer balance cap.”