COVID losses could pay off in FY21

Addressing a recent ifa webcast, AMP technical strategy manager Fabian Bussoletti said due to the way total super balance was measured, clients would potentially be at an advantage for the 2021 financial year due to their losses in the previous year.

“Something that is unique about the [2020] financial year, given the volatility we’ve had in markets, there will be clients whose total super balances have been impacted adversely, so for some of those clients there’s a number of strategies based on your total super balance measured at 30 June but applied in the next financial year,” Mr Bussoletti said.

“For some of those clients we may not have considered certain strategies because of what we expected their super balance to be, but given their reduced total super balance, if that brings them below one of the key thresholds, there might be some opportunities we can talk to those clients about that we had previously discounted for them.”

One of these opportunities included the ability to make use of previously unused concessional contribution amounts, which Mr Bussoletti pointed out was beginning to become useful to clients who could now access up to two years’ worth of contribution amounts since the introduction of the catch-up measures in 2018.

He added that when looking at contribution options for clients in the new financial year, it was also useful to consider new opportunities that may have become available to them as a result of a reduction in hours at work.

“Given the current financial situation there will be clients whose income has reduced to lower than what they expected it to be, and because of that they may now find themselves eligible for the government co-contribution or spouse contribution tax offset – things that we may not have spoken to them about because of where we expected them to be,” Mr Bussoletti said. 

“So there’s some new opportunities there as well.”