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Recent developments

Welcome to the July Adviser query of the month and technical briefing, an update of recent technical developments for financial advisers for the period from 24 May 2025 to 25 June 2025.

In this edition, the Adviser query of the month looks at small business CGT contributions and the last point they can be received. We also cover the Government’s decision to delay the commencement of the aged care reforms and ASIC’s no-action position for deficient advice fee written consents.

 

Adviser query of the month

    Small business CGT super contributions

    Question

    My client who is a sole trader is about to turn 75 and is looking to sell their business. Their tax agent has advised that they will satisfy the small business 15-year exemption. By satisfying this concession, all realised capital gains will be exempt from tax.

    Are there any time frame considerations for making a super contribution that counts towards the small business capital gains tax (CGT) contribution cap?

    Answer

    Making super contributions using the small business CGT contribution cap can be a good way to make additional contributions to super.

    There are four small business CGT concessions however only two allow for contributions to count to the small business CGT contribution cap. These are the:

    1.    Small business 15-year exemption

    2.    Small business retirement exemption

    The amount that can be contributed is not affected by the individual’s total superannuation balance. However, there is a small business CGT contribution cap. This is a lifetime cap and is $1.865 million for the 2025-26 income year. Contributions from both of the CGT concessions listed above count to this cap however the maximum that can count towards this cap from the small business retirement exemption is $500,000.

    Small business CGT contributions are considered member contributions and must be received by the 28th day after the month the individual turns 75.

    For example, if the client were to turn 75 at any time during July 2025, it must be received by the 28th day of August 2025.

    The same time frame applies for contributions made by satisfying the small business retirement exemption.

    Importantly, this age/time limit applies to the acceptance of super contributions. There’s no age limit for accessing the small business CGT concessions.  

    Note: It is beyond the scope of this adviser query though for companies and trusts that wish to qualify for these small business CGT concessions, there are separate timing requirements for making payments to the company or trust’s CGT concession stakeholders and subsequent time limits for making contributions to super.

    Government announcements

      Aged care reforms to be delayed to 1 November 2025

      In September 2024 legislation was passed to make significant changes to the aged care industry, including both residential aged care and home care.

      These reforms were due to commence from 1 July 2025 however the Government has announced it will recommend to the Governor-General that she defer the commencement of the reforms to 1 November 2025.

      This extension will provide aged care providers with more time to prepare their clients, support their workers, and update their systems. It will also allow for the finalisation of key operational and digital processes and for Parliament to consider supporting legislation for the changes.

      Further information can be found here: Government announcement

       

      Update on the Higher Education Loan Program (HELP) changes

      The Government announced plans in November 2024 to reduce HELP (Higher Education Loan Program) student loan debt by 20 per cent and to make HELP and student loan repayments fairer, effective from 1 June 2025.

      This is yet to be legislated however the Government has reaffirmed its commitment to this measure, stating it will be the first piece of legislation introduced in the next Parliament session starting on 22 July 2025.

      Once the legislation is enacted, the Australian Taxation Office (ATO) will apply the one-off 20 per cent reduction to student loan accounts based on the HELP debt as of 1 June 2025, prior to the application of indexation. Indexation will then be applied only to the remaining loan balance after the 20 per cent reduction.

      Further information can be found here: 20% reduction of student loan debt and FAQ

      Regulator developments

      ATO

      Indexation of the personal transfer balance cap

      The general transfer balance cap (TBC) increased from $1.9 million to $2 million on 1 July 2025.

      Individuals who have commenced a ‘retirement phase’ income stream prior to 1 July 2025, though haven’t previously used their full TBC are eligible for partial indexation to their TBC. Those that have never had a transfer balance account prior to this date will have a TBC of $2 million. Individuals who have fully utilised their TBC at any point in the past will not receive indexation.

      The ATO has indicated that updated personal TBCs will be available online from 11 July 2025.

      Keep in mind that there can be a lag in the reporting of transfer balance transactions by super funds to the ATO and this should be considered when sourcing TBC information from ATO online services. Large super funds must report within 10 business days after the transaction, while SMSFs must report within 28 days after the quarter in which the transaction occurred.

      Further information can be found here: ATO – Upcoming personal transfer balance cap changes

       

      Practical Compliance Guideline – Personal financial advice fees

      The ATO has released Practical Compliance Guideline (PCG 2025/1 - Fees for personal financial advice paid from member accounts by superannuation funds - apportioning the deduction and pay as you go withholding obligations) regarding the deduction of advice fees by super funds for consultation.

      The maximum preservation age is remaining at 60 for everyone born on or after 1 July 1964 and is not changing for those born before this date.

      This Guideline covers:

      • A methodology a trustee of a super fund (other than a self-managed superannuation fund) can use to determine the extent to which payments of financial advice fees are tax deductible to the fund.

        The Guideline notes that the ATO will accept an ‘account-based method’. That is, fees paid from an accumulation phase account (including transition to retirement pensions that are not in the retirement phase) will be considered to be incurred in relation to gaining or producing assessable income and will therefore be deductible. Fees paid from a retirement phase account won’t be deductible under this method.
      • The ATO’s compliance approach in relation to a fund's pay as you go (PAYG) withholding obligations for financial advice fees paid in the income years prior to 1 July 2019.

      Further information can be found here: PCG 2025/1

       

      Relaxed commutation rules for complying pensions

      On 18 June 2025 the ATO released a summary of the 7 December 2024 changes that allow for the full commutation of certain complying pensions and amend the rules regarding the allocation of reserves within a super fund.

      Further information can be found here: ATO summary, Macquarie – Summary of changes, Macquarie – Market linked pension commutation adviser query and Macquarie - Centrelink/DVA debt waiver

       

      ASIC

      Ongoing fee arrangements – no-action

      ASIC has announced a limited no-action position regarding issues with account numbers in a client's written consent for deducting ongoing advice fees under an ongoing fee arrangement (OFA).

      ASIC will not take action for breaches of s962S of the Corporations Act 2001 and s99FA of the Superannuation Industry (Supervision) Act 1993 if:

      • Written consent was provided under s962S for fee deduction from 10 January 2025 to 5 September 2025.
      • The consent did not include an account number.
      • Trustees deducted fees from the member's account as per the consent.

      In order to rely on this no-action position, the Australian financial services licensee or representative (i.e. fee recipient) must enter into a new OFA with the client and seek a new written consent for the fee recipient to deduct or arrange to deduct ongoing fees, including to cover the period where any fees were deducted under a non-compliant written consent.  

      The revised OFA must comply with all the requirements in section 962T of the Corporations Act. If this is not in place by 5 September 2025, the fee recipient must take steps to stop receiving fees. 

      Further information can be found here: ASIC announcement

      Other topics of interest

      Bendel decision update – Unpaid present entitlements to corporate beneficiaries

      A discretionary trust and the ATO have been in disagreement over the classification of distributions from a discretionary trust to a corporate beneficiary.

      This case challenged the ATO’s long held view that a distribution to a corporate beneficiary for tax purposes, without transferring money/assets to the corporate beneficiary, is a ‘loan’ for the purposes of Division 7A of the Income Tax Assessment Act 1936. The Full Federal Court found in favour of the taxpayer, which potentially has significant implications for the treatment of such arrangements going forward.

      In last months’ Technical briefing we noted the ATO’s position on the Full Federal Court’s position and that the ATO had applied to the High Court to appeal the decision in Commissioner of Taxation v Bendel [2025] FCAFC 15.

      On 12 June 2025 the High Court granted the Commissioner of Taxation special leave to appeal this decision.

      It is expected that it will take some time before the case is heard by the High Court and a decision is made. In the meantime, the ATO’s Interim Decision Impact Statement indicates that it will continue to administer the law in accordance with its published views.

      Important information

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      The information provided is not personal advice. It does not take into account the investment objectives, financial situation or needs of any particular investor and should not be relied upon as advice Therefore, before acting on any information provided, the appropriateness of that information should be considered having regard to any objectives, financial situation or needs. Any examples are illustrations only and any similarities to any readers’ circumstances are purely coincidental.

      While the information provided here is given in good faith and is believed to be accurate and reliable as at the date of preparation, 25 June 2025, it is provided by MIML for information only. Neither MIML, nor any member of the Macquarie Group gives any warranty as to the reliability or accuracy of the information, nor accepts any responsibility for any errors or omissions. MIML does not accept any responsibility for information provided by third parties that is included in this document. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. This information does not constitute legal advice and should not be relied upon as such. MIML will not be liable for any direct, indirect, consequential or other loss arising from reliance on this information.

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