BT signposts key issues for advisers in 2024

BT has forecast that the unexpected surge in Australian property values, fuelled by population growth and a housing shortage in major cities, is set to galvanise financial advice discussions focused on superannuation and tax strategies.

"Good old real estate and the strategies around property ownership will continue to be topical amongst financial advisers and their clients, going into 2024," said BT head of financial literacy and advocacy Bryan Ashenden.

"Clients are discussing with their advisers how downsizing from a large property they no longer need can be integrated into their financial plan, especially if they are looking to self-fund all or part of their retirement.

"As part of this, they're exploring what's the most tax-effective strategy in regard to the sale proceeds."

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The BT Technical Services Team has observed an uptick in inquiries regarding downsizer contributions, Ashendon suggested that this may be attributed to the escalated cost of living, prompting retirees to seek ways to boost their savings of increase cash flow. Another potential reason is this strategy has become accessible to more Australians, with the eligibility age reduced down to 55 years.

BT also stated that business clients transferring commercial property into SMSFs will be top of mind for advisers and their clients, with high inflation rates and reduced consumer spending in some sectors are biting into the revenues of small businesses - prompting business owners to ease cash flow for their business by using their SMSFs to buy their commercial properties, often with gearing involved.

The platform provider urged caution for clients with SMSFs regarding property improvements as any improvements made to real estate assets held within an SMSF could be classified as a contribution.

Meanwhile, Ashenden noted that while the government's updates on the Quality of Advice Review, including provisions for superannuation funds to provide advice to members, bring some clarity, the impact and effectiveness of these reforms will only be discernible once the draft legislation is reviewed in detail.

"Advisers have dealt with a great deal of complexity in recent years and are vested in how these proposed changes might be implemented. Whilst further consultation may take more time, it's important that collectively we stay invested in the process to gain the best possible outcome from implementation," he said.