Profile Blog


The corporate regulator has warned of a rise in scammers targeting Australian investors by pretending to be associated with well-known domestic and international financial service firms.



The high-yield bond scams usually occur after an investor completes an online enquiry form expressing interest in receiving investment advice, often via a third party or comparison site.

Scammers pretend to be associated with well-known domestic and international financial service firms and send professional-looking fake prospectuses with unrealistically high returns.

ASIC also notes that other common tactics include falsely claiming investor funds will be pooled to invest in government bonds or the bonds of companies with AAA credit ratings, and falsely claiming the purchase price of the bonds is protected under the Commonwealth Governments Financial Claims Scheme.

ASIC acting chair Karen Chester has urged investors to be wary of claims that are “too good to be true”, noting that money lost to such scams are hard to retrieve, especially if scammers are based outside Australia.

“Interest rates globally are currently extremely low and expected to remain so for some time. If you see or receive offers of high-yield bonds, they are either high-risk or they may simply be bogus and a scam,” Ms Chester said.

“Investors searching for income-generating investments are at risk of being duped into buying these imposter bonds. Any prospectus offering incredible returns in today’s economic environment is likely to be just that: incredible.

“ASIC warns investors to be sceptical and make proper inquiries before investing.”

Ms Chester has also urged Australian investors to be careful with sharing their personal information online.

“We remind investors to check that they are actually dealing with the company they think they are dealing with,” she said.

“Do not share personal information online unless you can verify who is using the information and how it will be used. We are seeing a rise in suspicious websites that are simply lead generators for scammers.

“Ensuring investment products are true-to-label is front and centre for ASIC. While true-to-label covers all aspects of the investment product being offered, the foundation stone is basic truthfulness, and none more so than that the product issuer is actually who they say they are. This conduct is beyond not being true-to-label; it’s bogus-to-label.”



Jotham Lian 
29 January 2021


With the recent indexation of the general transfer balance cap causing discussion around its complexities, technical experts take a deeper look into what will happen on 1 July.



From 1 July 2021, the transfer balance cap will be indexed to $1.7 million, which has introduced complexities around the member’s personal transfer balance cap (personal cap). Both Heffron and the SMSF Association have called for a need for a rethink in the method.

In a blog SuperGuardian analysed, looking at the winners and losers, the positives of the new transfer balance cap are clearly there for those still in accumulation with less than $1.7 million. 

“Similarly, those in a transition to retirement income stream who are yet to trigger a condition of release to move them to retirement phase will also be smiling, plus of course the peripheral benefits for those chasing spouse contribution rebates and government co-contributions,” SuperGuardian said.

“However, for those that have already used their full cap, there is little joy, and for those who have used part of their cap, welcome to the world of the indexed personal transfer balance cap.”

SuperConcepts executive manager SMSF technical and private wealth Graeme Colley said that the complexities start when anyone who has commenced a pension will have their own custom transfer balance cap, as only a proportion of the indexation increase will be added to their personal transfer balance cap. 

“This will also be an education exercise for each and every client who has used a small amount of their transfer balance cap,” Mr Colley said.

“However, for those who have used up all of their transfer balance cap of $1.6 million, no indexation will apply from 1 July 2021.”

SuperGuardian said for those that have already started a pension with $1.6 million, “it will be about thinking whether they are eligible to make more contributions because of their total superannuation balance and then whether it is worthwhile putting those extra contributions into the fund.”

“The problem with contributing once you have maxed out the cap is that all earnings on the contributions form part of the taxable component, so there may be some estate planning considerations. There are certainly some contribution strategies worth contemplating, but let’s save that for another post.”

“For those who previously started a pension for less than $1.6 million, there is the allure of indexing your personal transfer balance cap based on the unused cap space.

“While this sounds exciting, it really doesn’t leave much scope for indexation if the previous pension was commenced with any amount just shy of $1.6 million. Sure, if someone commenced a pension for $800,000, then they are going to get at least half of the indexed amount, but it’s critical people understand how the indexation works.”

BT head of technical services Bryan Ashenden said that where a person has already commenced a superannuation retirement income stream before 1 July 2021, their transfer balance cap will be increased proportionately, by reference to the amount of the gap they have between the amount assessed to their cap and the existing $1.6 million general cap. 

So, for example, if a person has $1.2 million assessed currently to their transfer balance account, this is a gap of $400,000 — or 25 per cent of the permissible amount. 

“A person in this position would, from 1 July 2021, receive an increase to their individualised cap amount of $25,000 — or 25 per cent of the cap increase of $100,000 — bringing their personal transfer balance cap limit to a new limit of $1.625 million from 1 July 2021,” he said.

“However, to complicate matters that little bit more, the gap — or ‘unused cap amount’ — is determined based on the highest amount that has ever been assessed to the person’s individual transfer balance account.

“So, for example, if a person had previously maxed out their cap with a superannuation pension commencement value of $1.6 million, but has subsequently withdrawn as a lump sum $200,000 from their pension, even though the amount assessed to their cap will have reduced by that same $200,000 (given a current transfer balance account balance of $1.4 million), they will have no ‘unused cap amount’ available, as it is determined by the highest ever amount assessed.”

Mr Ashenden said that one bit of good news will be that the ATO will automatically calculate the revised cap amounts from 1 July 2021 and it will be visible to clients through their myGov account.

“For clients that have not, or do not commence a superannuation income stream before 1 July 2021, they will receive the full increase with a future transfer balance cap of $1.7 million,” he said.

“For clients who have the potential to maximise their transfer balance cap into the future, but are considering now the option to commence an income stream, the benefits of waiting until 1 July 2021 to commence it should be considered, albeit balanced by the potential need to commence accessing funds today. The option of some lump sum withdrawals in the interim may be an alternative consideration.”

Looking ahead, Accurium outlined common scenarios which will be seen in the differences between proportionate entitlement and no entitlement in personal transfer cap indexations.

In regard to no entitlement indexation, Accurium gave an example of Fran who started an account-based pension (ABP) in her SMSF on 1 December 2017 with $1.6 million. On 1 July 2018, she partially commuted her ABP for an amount of $400,000.

“The balance of her transfer balance account just before indexation on 1 July 2021 is $1.2 million, being the credit of $1.6 million from the commencement of her ABP on 1 December 2017, less the debit of $400,000 from the partial commutation on 1 July 2018,” Accurium stated.

“While Fran’s transfer balance account is less than $1.6 million just prior to indexation of the transfer balance cap, as her highest transfer balance account balance prior to indexation was $1.6 million, she is not entitled to any indexation and her personal transfer balance cap remains $1.6 million.

“However, Fran will have cap space available to start a new retirement phase income stream to the value of $400,000.”

In regard to proportional entitlement, Accurium gave a scenario of Terry who first commenced a retirement phase income stream, an ABP, on 1 September 2020 with an amount of $1.4 million. 

“There are no other events in Terry’s transfer balance account prior to 1 July 2021. Terry’s unused cap percentage is 12.5 per cent, being the unused cap amount of $200,000 as a percentage of his transfer balance cap of $1.6 million at 30 June 2021,” Accurium said.

“Terry’s personal transfer balance cap would then be indexed by 12.5 per cent of $100,000; that is, $12,500.

“Terry’s personal transfer balance cap after indexation of the general transfer balance cap on 1 July 2021 will be $1,612,500.”



Tony Zhang
05 February 2021



The right words of advice – whether it be from friends or family, business mentor, sports coach – can have lasting impact on the way we lead our lives, manage our businesses. The same holds true for financial advice.



Good advice is valuable.

The right words of advice – whether it be from friends or family, business mentor, sports coach – can have lasting impact on the way we lead our lives, manage our businesses.

The same holds true for financial advice. The right advice can deliver more than just a better investment outcome. Think peace of mind heading into retirement, lower stress in a relationship and possibly even higher levels of happiness.

The need for advice ought to be beyond dispute. Yet it is not.

The value of advice ought to be well understood. Yet it is not.

With an ageing population and growing pool of superannuation assets the financial advice industry ought to be thriving. Yet it is not.

The Financial Services Council recently released a research report titled the Future of Advice prepared by the independent research and actuarial firm Rice Warner. While the report is aimed at advancing the public policy debate on the financial advice industry it contains some strong learnings for individual investors.

The report rightly identifies the challenges consumers face in managing their financial position and points to the need for advice in order to maximise income and avoid financial difficulties. A task made harder by the interplay of tax, super and social security regimes.

The research has modelled a range of cameos to assess the value of advice and estimates that those who obtain advice accumulate more than three times more assets after 15 years than those who make their own decisions (including doing nothing)”.

That is a significant financial payoff and is in line with proprietary research by Vanguard titled Adviser's Alpha that independently researched the impact of advice and estimated the value about 3% in improved net return.

The value of the advice is not always for the wealthy or in the complexity. The Rice Warner paper says the greatest cumulative increase in funds at retirement when advice is taken at younger ages comes from asset allocation advice. Regardless of wealth level for an individual aged 40 about half the value of the advice is derived from simple advice in respect of savings.

Indeed individuals who are in the low socio-economic wealth bands are expected to gain more from advice than those who are wealthy. That reflects the tendency of those individuals to save less of their disposable income and allocate assets to safe but low-yielding asset classes such as cash and term deposits.

The Rice Warner research makes a strong case for the tangible, financial benefit of getting advice – with one important caveat. Costs matter.

The modelling of the impact of advice was done on a before-fees basis because fees vary widely across the industry. Importantly, the research showed that advice fees of 1% of a portfolio value would likely be a “net detractor” in purely financial terms.

There is considerable public policy discussion around the so-called “advice gap” which refers to the gap between those who could benefit from advice and those who actually receive it. During the Royal Commission into Financial Services poor and unethical practices within the industry were publicly exposed and as a result there has been considerable restructuring of the advice industry with major banks withdrawing as major players in the market along of with the number of individual financial planners falling as some choose to simply exit the industry.

Not surprisingly after the revelations from the royal commission the regulatory focus was heightened around investor protection. The financial planning industry today looks quite different today to five years ago – conflicted remuneration has been banned, a best interest's duty introduced and educational and professional standards are in the process of being lifted.

But the very measures meant to protect consumers are impacting the cost and complexity of providing advice and the Rice Warner report calls out the fundamental problem that the law regards most financial advice as complex and risky for consumers. So “simple advice has the same complex and lengthy processes as high-risk advice,” according to Rice Warner.

Consider the components that are required to provide a financial plan:

Fact find
Fee disclosure statement
Statement of Advice
Record of advice
Opt-in requirement (where this an ongoing fee arrangement)

The result is that the complexity of delivering advice has driven up costs and as a result it is the middle ground where the “advice gap” has widened and that in part is because the cost of delivering the advice is much higher than consumers are prepared to pay.

The FSC/Rice Warner study has recommended a new model with the aim of simplifying the advice delivery structure and making it more affordable.

The proposal is separating Personal Advice into two categories – simple personal advice and complex personal advice.

Simple advice would deal with well understood financial needs and products. Complex personal advice would cover things that are known to be complex and/or risky but also include areas where specialised advice skill are required such as derivatives or self-managed super funds.

Whether the FSC/Rice Warner proposal is the best solution is up for debate with regulators, policy makers and the industry. ASIC has kick started this discussion in asking for feedback on the roadblocks towards the delivery of good-quality affordable personal advice. What is clear though is that it is a debate worth having in order to ensure mainstream Australian investors can get both the right level of advice at an affordable price and the long-term benefits that good advice can provide.

An iteration of this article was first published in The Age / Sydney Morning Herald on 19 Jan 2021.


By Robin Bowerman
Head of Corporate Affairs, Vanguard Australia
25 Jan, 2021



With the new year almost here, a technical expert has highlighted some of the key superannuation strategies advisers should be considering for clients in different life stages.



In an online article, SuperConcepts executive manager, SMSF technical and private wealth, Graeme Colley said in terms of the year ahead, there’s plenty of strategies to think about for helping clients build their retirement savings.

For clients nearing or in retirement

For this age group, Mr Colley said one of the significant changes that happened during 2020 was the increase in the age at which personal contributions can be made.

“Since 1 July 2020, the age at which personal contributions can be made has been raised from 65 years of age to 67 before the work test of 40 hours in 30 consecutive days in the financial year cuts in,” he said.

“Personal contributions include concessional and non-concessional contributions. The age increase provides a little bit more flexibility for anyone retiring prior to the age of 67 to make last-minute tax-deductible and non-deductible super contributions.”

Recontribution strategies can also come in handy for those aged between 65 and 67, as they have access to their superannuation when they choose, he noted.

“It is possible to recontribute any amounts withdrawn from super back to the fund as non-concessional contributions, provid[ed] the person has a total super balance of less than $1.6 million,” he said.

“This can reduce the amount of tax an adult child is required to be pay on the death of a parent if they receive a super payment. To see whether there is any benefit in using the recontribution strategy, advice is always recommended.”

If either client is at least 65 and has just sold their home, then the downsizer contribution may be available, he added.

“The downsizer contribution is available as a once-off opportunity for members of a couple who are at least 65 years of age to contribute up to $300,000 each to super from the sale of their residence. The contribution must be made within 90 days of the sale of the residence,” he explained.

“There is no upper age limit to make the downsizer contribution.”

Once clients have reached their preservation age, Mr Colley said, they can access transition to retirement income streams, and if they haven’t retired or reached 65 years of age, they can commence account-based income stream.

“The rules require that a minimum amount is obliged to be withdrawn each year and it is possible to withdraw lump sums depending on the rules that apply. A maximum amount applies to transition to retirement income streams,” he said.

“For some people, it may provide flexibility for anyone with a transition to retirement income stream or an account-based income stream to pause it and have it recommenced at a later time as it is required.”

For parents

Mr Colley said, for mum and dad, making personal concessional and non-concessional contributions to super can be beneficial where they qualify.

“This could include getting access to the bring-forward rule for concessional contributions if their total super balance [is] no more than $500,000,” he said.

Mr Colley noted that whenever clients make non-concessional contributions to super, it’s important to ensure their contribution caps are not exceeded and that their total super balance is taken into consideration in working out whether they can make non-concessional contributions to super.

It may be possible for clients in this age group to also make spouse contributions, which are counted as non-concessional contributions of the spouse and can have the effect of evening up the couple’s super balances.

“To be eligible, if the spouse is under 67 years of age, there is no need to meet a work test, but if they are between 67 and 75 years old, the work test must be met prior to making the contributions. Spouse contributions are unable to be made after the spouse has reached 75 years of age,” he noted.

“If the spouse is a low-income earner and has an adjusted taxable income of less than $40,000, it is possible for the contributor to receive a tax offset of up to $540 for the first $3,000 of the spouse contribution.”

Some clients, he said, may also qualify for co-contributions, which are paid by the government to their super fund.

“If [they] have an adjusted taxable income of less than $54,837 for the 2020–21 financial year and make a non-concessional contribution of up to $1,000, the government’s co-contribution can be up to a maximum of $500,” he noted.

The low-income superannuation tax offset, he explained, is available for anyone with an adjusted taxable income of less than $37,000.

“It applies to concessional contributions because the tax payable on the contribution received by the fund is usually greater than the personal tax they would pay if the contribution was paid to them as salary and wages,” he said.

“The offset is calculated by the ATO and paid directly by the government to the superannuation fund.”

Another contribution strategy advisers may want to consider is contribution splitting which allows a person to split concessional contributions to their spouse.

“To qualify, the split to the person’s spouse can take place if they are under preservation age, currently 58 years of age, or between preservation age and 65 years old if they have not retired,” he said.

“Concessional contributions include employer super guarantee contributions, salary sacrifice contributions and personal deductible contributions. It is possible to split up to 85 per cent of the person’s concessional contributions or up to their concessional contributions cap.”

Our younger clients

Younger clients who are older than 18 years of age are entitled to the same superannuation concessions as their parents, but will depend on whether they qualify for a tax deduction, government payment or tax offset for the contributions they make to super, Mr Colley noted.

“However, for children under the age of 18, it is possible to have contributions made for them. This could be made by their parents or guardians as non-concessional contributions. The amount of the non-concessional contribution is limited to the caps that apply to everyone,” he said.

“Some children under 18 years of age can make personal contributions to super. However, if they wish to claim a tax deduction for the contributions, they must be working.”



Miranda Brownlee
28 December 2020


SMSF services firm Heffron has outlined some of the legislative bills and pieces of guidance the SMSF industry is still waiting on and some of the recent proposals floated by the government.


2020-21 federal budget proposals for superannuation

As part of the 2020-21 federal budget, the government announced a raft of new measures for super funds aimed at addressing underperformance and multiple accounts.

The measures include plans to staple existing superannuation accounts to a member to avoid the creation of new account when a person changes employment, performance benchmarking and the introduction of the best financial interests duty.

Heffron head of SMSF technical and education services Lyn Formica said the government released exposure draft legislation for the measures in November, with submissions now closed.

“Given many of the measures have a 1 July 2021 start date, we expect Bills will be introduced to Parliament soon,” said Ms Formica.

Bring-forward measure for those aged 65 and 66

The bill containing the measure to extend the use of the bring-forward rules for non-concessional contributions from age 65 to age 67 failed to pass in the last two weeks of parliamentary sittings for 2020.

With Parliament not returning to early February, this leaves some clients in this age group in a difficult position.

Australian Executor Trustees senior technical services manager Julie Steed previously noted that some practitioners have been advocating a strategy when the client puts $1 more so that the bring-forward rule is triggered but the excess is only $1.

However, she warned that for many licensees, advisers need to base their advice on current laws.

Heffron managing director Meg Heffron said while contributing the full $300,000 now would not be a compliance issue if the new rules failed to be passed, it would create an excess non-concessional contribution, which would come with serious tax consequences.

Six-member SMSFs bill

The bill to increase the maximum number of members of an SMSF from four to six, Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill, is also still before the Senate, said Ms Formica.

The earliest possible start date for this measure is now 1 April 2021, she noted.

In early November, the Senate economics legislation committee recommended that the six-member SMSF bill be passed after it was previously referred to the committee for inquiry and report.

Legacy pension proposal

As part of its Mid-Year Economic and Fiscal Outlook (MYEFO) released in December, the government also outlined a proposed change to enable the partial commutation of certain legacy pensions.

The MYEFO stated that the measure will help ensure that retirees who have commuted and restarted certain market-linked pensions, life expectancy pensions and similar products are treated appropriately under the transfer balance cap.

However, Ms Formica explained that unless the measure is far wider than the wording suggests, she expects it is unlikely to bring much joy to many of the members still running these pensions.

“We have long argued that the government should allow legacy pensions to be converted to simple account-based pensions,” she said.

“This would provide a simple solution to the many problems that these pensions present given that the law has changed profoundly in the 13 plus years since these pensions were actively used in SMSFs.”

Ms Formica said it appears the government instead plans on further tinkering, which will only provide relief to some members.

Non-arm’s length expenditure guidance

One of the other key items that SMSF professionals are still waiting for said Ms Formica is the ATO’s finalised ruling on non-arm’s length expenditure.

“The ATO is still to finalise their view on the situations in which SMSFs will be considered to have non-arm’s length income (NALI) because the expenses of the fund are lower than they would have been in an arm’s length situation,” she explained.

“We expect the ATO will be seeking to release their final view before the transitional rules of PCG 2020/5 – covering expenses of a general nature – expire on 30 June 2021.”


05 January 2021

Showing 10 of 150 posts
1 2 3 4 30