Protecting your super from scams

With more than $4 trillion in superannuation, it’s no surprise scammers see it as a goldmine. ASIC has warned Australians to be on high alert after a rise in pushy sales tactics and false promises designed to lure people into risky super switches. Since your super is one of the biggest investments you’ll ever make, protecting it is crucial. Here’s what you need to know to keep your nest egg safe.

Why scammers target super

Superannuation accounts often hold large balances, which makes them a prime target. Fraudsters know that many people don’t regularly check their super fund or may feel uncertain about whether they’re getting the best deal. This makes them vulnerable to slick sales pitches that promise “better returns” or “lost super recovery.”

ASIC has noticed a rise in schemes where consumers are encouraged to switch super funds quickly, often through high-pressure phone calls, clickbait advertising, or “free” online super health checks.

The red flags to look out for

Not every call or offer about super is a scam, but there are some big warning signs to watch out for:

• High-pressure tactics – being told you must act immediately. Remember, a genuine super opportunity won’t disappear overnight.
• Cold calls or unexpected emails/messages, especially if you’ve never contacted the provider before.
• “Free super health checks” or prizes – these are often advertised through social media or websites.
• Offers to “find lost super for free” – while this sounds helpful, scammers often use it as a hook. (Tip: you can safely track down lost super yourself via the ATO.)
• Unlicensed advisers – people giving advice without proper authorisation.
• Mostly phone-based dealings – with little or no opportunity to meet a qualified financial adviser in person.
• Promises of guaranteed or high returns – if it sounds too good to be true, it probably is.

Why these tactics are dangerous

These schemes don’t always look like traditional scams. In fact, they often feel legitimate. A salesperson may sound knowledgeable, polite, and genuinely interested in helping you. Some even refer you to an adviser during the call to make the process seem credible.

The catch? The investments may be complex, high risk, or poorly explained. Even experienced investors can find it hard to spot the pitfalls. Once you’ve switched your super, it can be very difficult and sometimes impossible to reverse the decision.

How to protect yourself

Here are a few simple steps you can take to keep your retirement savings safe:

1. Don’t rush. Take your time when making decisions about super.
2. Hang up on pressure. If you feel pushed or uncomfortable, end the call.
3. Check credentials. Make sure anyone giving financial advice is licensed with ASIC.
4. Do your own research. Use trusted resources like ASIC’s Moneysmart website to learn about your options.
5. Talk to your accountant or adviser. Before making changes, get independent advice from someone who knows your situation and isn’t tied to the sales pitch.
6. Be cautious online. Avoid clicking on random ads or pop-ups offering “free” super reviews.

The bottom line

There can be legitimate benefits to switching or consolidating super, but only after careful consideration of the risks and fees involved. The key is to make sure any decision is made on your terms, not under pressure from a cold call or pushy salesperson.

Your super is too important to risk on false promises. Stay alert, ask questions, and if you’re ever unsure, speak with us before making any changes.

Family trusts are great, but beware of disadvantages

The tax advantages of using a family trust are well known – in particular, the ability to split income among family members so that a lower effective tax rate applies to the income unlike where one person derived all the income or the trust itself was liable to pay tax on it. 

A family trust, like a company, is also a good way to protect assets from potential creditors in the case of financial trouble – or from other parties as the need may arise (eg, when a family member gets married and may be gifted property or money to buy a house).

So, even though a home held by a family trust is not entitled to the capital gains tax (CGT) main residence exemption, there may be other non-tax benefits that carry greater weight. 

A family trust can also be used to help in business succession matters, for example, where farmland is held by a family trust where successive generations of a family can continue to farm it for their benefit.

Of course, to effectively use a family trust you need to have assets it can hold or acquire. It is of no use in trying to obtain tax advantages in respect of personal services income per se. You need for it to be able to hold assets – and preferably good income-producing assets.

However, for all their benefits there are a few demands associated with using a family trust.

For a start, if you wish to “stream” capital gains and/or franked dividends to certain beneficiaries – so that they retain their character as concessionally taxed amounts in the beneficiary’s hands – then there are some complex rules that must be followed. And if they are not followed properly you can end up getting a tax result far removed from what you intended. Oh, and the trust deed must allow streaming of gains (so you may need an updated deed).

Secondly, if a trust has capital losses it cannot, unlike a partnership, distribute those losses to beneficiaries. They instead remain in the trust – and furthermore can only be used to reduce future taxable income or capital gains if certain “continuity of ownership” tests are met. And this often involves the need to make an irrevocable family trust election which locks the trust into distributing all its income to certain beneficiaries only. 

Thirdly, contrary to common knowledge, distributions to children are not tax-effective in that they are usually taxed at penalty rates which equate to the top tax rate in most cases (albeit, you do get the benefit of a tax-free threshold of some $700).

Fourthly, trusts do not generally last forever (although in some state jurisdictions it is possible). At some stage the trust has to be wound up (usually after 80 years) and assets held by the trust have to be distributed to certain beneficiaries. And this can often trigger a CGT liability (and a large one at that). Just ask Gina Rhinehart and her family. 

And there is also the question currently before the High Court of whether a company will be liable for Div 7A tax in respect of “unpaid present entitlements” made to it by a trust. This too is a hot issue in relation to if and how to use a family trust effectively for tax purposes. 

So, the issue of whether to use a family trust is not always straightforward. Therefore, if you intend to use one, or think your current one needs some revisions, come and chat to us. 

What to do if you exceed your super contribution caps

Superannuation is a great way to save for retirement, but the government sets strict limits on how much you can contribute each year. These limits are called contribution caps. If you go over them, you could face extra tax. But don’t panic – here’s what you need to know and the steps to take if this happens.

Understanding the caps

There are two main caps you need to keep in mind:

1. Concessional contributions cap
   • These are contributions made before tax, such as employer super guarantee (SG) payments, salary sacrifice, and personal contributions you claim a tax deduction for.
   • For the 2025/26 financial year, the cap is $30,000 per year.
2. Non-concessional contributions cap
   • These are contributions made from your after-tax income, like personal contributions where you don’t claim a tax deduction.
   • The cap is $120,000 per year, or up to $360,000 if you use the “bring-forward” rule (this allows you to contribute three years’ worth at once if you’re under 75).

What happens if you go over?

If you exceed either cap, the ATO will issue an excess contribution determination notice outlining your options for resolving the excess.

This letter will explain what happened and tell you how much tax you’ll need to pay on the excess amount.

Your options if you exceed the concessional cap

If your concessional contributions go over the $30,000 cap, the excess amount is added to your taxable income. This means you’ll pay tax on it at your normal income tax rate, but you’ll get a 15% tax offset because your super fund has already paid tax on that money.

You have two choices:

• Withdraw up to 85% of the extra amount from your super to help cover the extra tax, or
• Leave the money in your super and pay the extra tax from your own pocket. Keep in mind, if you leave it in, the extra amount will also count towards your after-tax (non-concessional) contribution limit.

Either way, the ATO will calculate how much tax you owe, so there’s no guesswork on your part.

Your options if you exceed the non-concessional cap

If you exceed the non-concessional cap, the ATO will give you two choices:

1. Withdraw the extra contributions out

• You can withdraw the excess contributions plus any earnings they made.
• The earnings are taxed at your usual income tax rate, but you’ll get a 15% tax offset to reduce the bill.
• No extra penalty tax applies if you take the money out.

2. Leave the excess contributions in your super fund:
   • You’ll pay a 47% tax on the excess amount.
   • This option is rarely beneficial which is why most people choose to withdraw the extra amount to avoid the big tax hit.

Tips to avoid going over the caps

• Track your contributions: Check with your employer and super fund to see how much has been paid in each financial year.
• Consider timing: Contributions count in the year your super fund receives them, not when you make them.
• Watch the bring-forward rule: If you use it, you can’t make more non-concessional contributions for the next two years.
• Use ATO online services: You can link your myGov account to the ATO to see real-time contribution information.

The bottom line

Exceeding your super caps can be stressful, but the ATO has a process to help you manage it. Understanding your options and acting quickly when you receive a letter will help you reduce extra tax and keep your retirement savings on track. Remember, if you’re unsure what to do, come and talk to us – we’re here to guide you through it.

What happens if you don’t have a valid will?

When someone passes away without a valid will, this is known as intestacy. In this situation, the law in each state and territory sets out a formula for how your estate is divided. These rules often follow a standard order – spouse first, then children, then other relatives, but they may not align with what you would have wanted.

Who usually inherits the intestate estate?

If you have a spouse and no children, your spouse will ordinarily receive the whole estate. If you have a spouse and children, whether the children receive anything depends on whether they are also the children of your spouse, as well as the laws of your state.

If you do not have a spouse or children, your estate may pass to your parents, then to siblings, and then to the next of kin, but this can vary between states. If there are no surviving and eligible relatives, the state you live in will typically receive the estate.

Family provision

It is also worth noting that even when an estate is distributed under intestacy laws, certain family members or dependants may still be able to apply to the court if they feel they have been left without proper provision. These are called family provision claims. Eligible people – typically a spouse, partner, child, or someone dependent on the deceased, can ask the court to adjust the distribution to ensure fair support. This process is separate from intestacy and can apply whether or not there is a will.

Not everything is subject to intestacy laws

Your super fund may decide which of your eligible beneficiaries receives your super, or it may pay the benefit to your estate. If your super fund allows for binding death benefit nominations, you can direct your super fund to pay it to an eligible beneficiary. Life insurance payouts on policies you personally own can also be directed in accordance with your wishes and may not necessarily form part of your estate. Remember jointly-owned property typically passes to the surviving joint owner.

Estate administrator

Who handles the paperwork if there’s no will? Instead of an executor named by you, the court appoints an administrator. This is often your partner or next of kin, who will collect assets, pay the estate’s debts and expenses, and then distribute the balance under the local intestacy law. Administrators step into a formal legal role and their authority begins once the court makes the grant.

Funeral and burial arrangements

One of the most pressing questions after a death is who decides on funeral arrangements. If there is no will appointing an executor, the right to organise the funeral and burial usually follows the same order as for administering the estate. It lies with the person who has the highest claim to be the administrator, typically the surviving spouse or de facto partner, or if none, the next of kin.

Key point

Dying without a will means giving up control over who manages your estate, who inherits from it, and even who decides on your funeral arrangements. While intestacy laws provide a safety net, they may not reflect your personal wishes or the needs of your loved ones. Making a valid will ensures your estate is handled the way you want and spares your family unnecessary uncertainty and stress.

CGT and off-the-plan purchases

If you buy a property in an off-the-plan purchase, there are some important CGT issues to be aware of – especially in the context that an off-the-plan purchase may not actually settle until many months or even years after the initial contract is signed.

The first thing to note is that assuming the off-the-plan purchase does proceed to settlement, then the completed property is considered to have been acquired for CGT purposes at the time (and in the income year) in which the original contract was signed – and not in the year of settlement.

And this has some important practical consequences.

The first is that for the purposes of accessing the 50% CGT discount (in the case where the property does not become your CGT-exempt home), you are taken to have acquired the property when the off-the-plan contract was signed.

And this gives you ample time to satisfy the 12-month holding rule – including where you may even sell the property within 12 months after settlement of the contract.

Secondly, and importantly, any capital gain or loss will arise in the income year in which you enter the sale contract (eg, the 2023 income year) and not in the income year that you settle that contract (eg, the 2025 income year). And this is the case even if, as is not uncommon, this contract of sale is entered into before the original off-the-plan purchase is even settled.

In short, as long as the contract is settled, the key date for determining when property is acquired (or disposed of) is the date (ie, the income year) the contract is entered into – regardless of whether settlement takes place in the next income year or in a later income year.

This means that the income year in which any capital gain or loss is returned on the sale of the property is the income year in which you enter the off-the-plan contract – even though the settlement does not take place until another income year.

However, in this case the Commissioner has a generous policy so that the taxpayer does not have to immediately return any gain in that income year – but only once the proceeds on settlement are received. And then they can go make and amend that prior year return accordingly.

Also, in the case where the off-plan purchase is to become your home, the requirement of the “building concession” must be met in order for the property to eventually be considered your CGT-exempt home. 

Finally, it is important to understand that the CGT rules that apply in off-the-plan purchases are different from those that apply to an option agreement – which instead is treated a separate legal transaction with separate CGT consequences. It is only if the option is exercised that the transaction is merged into one transaction and the CGT rules then apply in a different way.

How the sandwich generation can cope financially

Many Australians are finding themselves part of the “sandwich generation” – adults who are juggling the demands of raising their own children while also caring for ageing parents. It’s a tough spot to be in, emotionally and financially.

Whether you’re still working and trying to build your own wealth, or you’ve recently retired and expected to finally enjoy some freedom, the reality of being pulled in both directions can stretch your time, energy and finances.

What is the sandwich generation?

The sandwich generation refers to people – often in their 40s, 50s or even 60s – who are “sandwiched” between caring for their children (sometimes adult children still living at home) and their elderly parents who may need help with transport, health care or day-to-day support.

This role often comes without warning. A parent might suddenly fall ill. A child may lose a job or return home after a breakup. Suddenly, you’re responsible for more than just your own needs.

The financial impact

Caring for others takes a toll on your finances. If you’re still working, you might reduce your hours, knock back a promotion, or even leave work altogether to support a parent – especially if they want to stay at home rather than go into aged care.

This can mean:

• Less superannuation going into your fund
• Lower overall savings
• Fewer opportunities to pay down debt or build wealth

Even if you’ve already retired, your resources may be stretched. That overseas holiday you dreamed of might be replaced with fuel costs for daily visits to mum or dad, or paying for carers and medication out of your own pocket.

Some adult children even dip into their own retirement savings to cover costs, which can leave them short down the track.

What you can do

While everyone’s situation is different, here are a few tips to help you manage:

1. Talk about money early – it might feel awkward, but open conversations with your parents (and children) about finances are essential. 

Find out:

• Do your parents have savings, super, or aged care plans?
• Do they qualify for Centrelink or aged care subsidies?
• Can your children contribute to household costs?

The sooner you understand the financial picture, the easier it is to make a plan.

2. Get help navigating aged care – the aged care system can be complex. If your parent needs more support, it’s worth getting advice to understand what services and payments are available.

You might be surprised by how much help is out there, including subsidised in-home care or respite services to give you a break.

3. Look after your own future – it’s natural to want to help your family, but don’t forget your own needs. If you’re still working, keep your super contributions going if possible. If you’re retired, review your budget and spending regularly to avoid running out of funds too soon.
4. Ask for support – don’t try to do it all alone. Speak to siblings about sharing the load, reach out to community organisations, and lean on your GP or counsellor if you’re feeling burnt out. You can’t pour from an empty cup.

Need help?

If you’re feeling the financial squeeze of being in the sandwich generation, we’re here to help. Whether it’s budgeting, retirement planning, or navigating aged care options, contact us for guidance tailored to your situation. A good plan can make a big difference.