“But if something then happens to them, their children could cop a massive tax bill because their tax planning in their super was done the wrong way. It’s difficult to tell them that they need advice,” Johnson said.

Instead, Johnson urged advisers to ask clients if their parents have superannuation and implement strategies to minimise tax obligations on them as future beneficiaries while complying with regulatory requirements.

Clients could then ask their parents to seek advice from an accountant or financial planner on how to minimise the tax impact on them as the future beneficiary, he added.

“This is crucial because if a parent dies with $1 million in super and it goes to the child, they would have to pay 17 per cent or $170,000 in tax on that,” Johnson said.

“On top of that, their taxable income for the year has just gone up by $1 million. All of those other benefits that they were receiving – such as childcare supplement, health insurance rebate, or not paying division 293 tax on their super contributions – will be lost as well.”

Johnson also proposed that advisers could direct their clients to do an immediate in-specie distribution of all the assets to their parents instead of selling their assets and investments and paying out the money, which could take two to three weeks.

“I often see advisers making the mistake of advising their clients to sell their mum and dad’s investments and pay the money to them,” Johnson said.

“This then leads to the assets being sold and the balance distributed after death and the super being subject to death benefits taxes unnecessarily”.

Alongside this, parents must provide their children with the enduring power of attorney so that the children can take control of the SMSF or superannuation if something happens to them without needing to go to the Supreme Court to be granted guardianship of their parents, Johnson noted.

At this year’s SMSF Adviser Technical Strategy Day, Johnson will unpack SMSF strategies for older clients, including how the proposed $3 million threshold could impact them and how to minimise tax obligations for future beneficiaries who inherit their super.

If Division 296 is legislated, Johnson warned that older SMSF clients would have to pay up to 30 per cent tax within the super environment if they are not in the pension phase.

Subsequently, if they die, their children would have to pay an additional 17 per cent in tax, which Johnson said is “not a smart strategy”.

Instead, he suggested investing those funds in an investment company, which, while still taxed at 30 per cent, the client could leave the shares in the company to a testamentary trust, and all the franking credits could go to the beneficiaries of that trust.

“Whereas if you have it in superannuation and you leave that to your estate, even if it’s the tax-free component, there are no franking credits to go with for your kids,” he said.

Johnson said that he would show modelling in his session on how older clients who exceed the $3 million super cap could benefit from receiving franking credits by investing in a company.

To learn more from Peter Johnson about how to navigate tax planning, pensions, and contributions for your older SMSF clients, come along to the SMSF Adviser Technical Strategy Day 2024.

It will be held in the following locations:

Tuesday, 15 October, at Blackbird, Brisbane.

Tuesday, 22 October, at Rydges, Melbourne.

Thursday, 24 October, at Shangri-La, Sydney.

Click here to book your tickets and make sure you don’t miss out!

For more information, including agenda and speakers, click here.

This conference is produced by Captivate Events. If you need help planning your next event, email director Jim Hall at This email address is being protected from spambots. You need JavaScript enabled to view it..