The new financial year always brings change, and 2019/20 is one of the more dynamic in recent times. An array of rates and thresholds have moved, but the first week of this July brings more than just incremental changes. A number of rules affecting the clients of financial planners are markedly different in the new financial year. This month there are a dozen of these changes that planners need to know about;
6. Insurance in inactive, low-balance super accounts to be cancelled
From July 1, 2019, insurance held in a super account with a balance under $6000, that has been inactive for 16 months, will be automatically cancelled. An account can be saved from being considered inactive if an employer sponsor informs the fund that they intend to pay SG contributions of greater than the insurance premium. Insurance cancellation can also be avoided if:
the member changes their investment options under the fund;
the member makes changes in relation to their insurance coverage under the fund;
the member makes or amends a binding beneficiary nomination;
the member, by written notice given to the ATO Commissioner, declares the account is not inactive; or
the superannuation provider is owed an amount in respect of the member.
Advisers and clients will need to be diligent to prevent unintended cancellation of insurance in super under this new rule.
The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.
The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.