One element of the legislation requires "inactive low-balance ac- counts" (that is, superannuation accounts with balances under $6,000 that have had no contributions for at least 16 months) to be rolled over to the Australian Taxation Office (ATO) every six months (on 31 Oc- tober and 30 April each year). The ATO will then direct these pro- ceeds into an "active" superannuation account that the member holds.
The first tranche of rollovers happened on 31 October 2019 and will continue to occur every six months. An unintended consequence of this legislation is that some TPD claimants will have a significantly higher tax rate when they access these funds.
Tax treatment of disability superannuation withdrawals
When a TPD claim held through superannuation is approved, the proceeds are then paid into the member's superannuation account and combined with their existing balance. When meeting the TPD definition, the member also meets the superannuation "permanent incapacity" condition of release (these two definitions are aligned), meaning their superannuation becomes unrestricted, non-preserved and they have full access to their superannuation/TPD money.
If the member then makes a withdrawal from their superannuation account before preservation age (between 55 and 60, de- pending on when a person was born), they will pay tax at a rate of 22% on the taxable component. When accessing funds under permanent incapacity, there is a 'tax-free uplift' calculation applied, which means a portion of the superannuation withdrawal amount will be tax free (see Figure 1).
Madison Financial Group is set to be owned by Clime Investment Management, after a share sale deed was signed yesterday, as first reported by Financial Standard early this morning.
The Financial Planning Association of Australia (FPA) wants a professional registration for individual advisers to replace the current system.
The much-anticipated sale of Madison Financial Group was finalised Tuesday evening, with the buyer paying about $5 million, Financial Standard understands.
There are some bright spots in the market for financial advice jobs, according to Kaizen Recruitment, despite over 1000 advisers leaving the industry since the start of 2020 and only about 50 joining.
|Brought to you by|
|Read the latest news and white papers. Get the FS Advice Weekly Newsletter.|
HEALTH & FINANCE INTEGRATED PTY LTD
There's a lot of talk about the value of financial advice and how
advisers can prove that value. For William Johns, the real value
of advice is in it's ability to empower those left disempowered by
systems. Elizabeth McArthur writes.
Do you think advice associations are doing enough to support advisers?