Preparation key for managing clients’ EOFY needs

The key to a smooth EOFY lies in the preparation, according to Tribeca Financial head of advice Robert Devlin, enabling advisers to deal with what can be a chaotic time as they push to meet their professional requirements and finalise their client obligations before 30 June.

For example, Devlin told ifa that Tribeca’s advisers spend the December quarter creating a “plan of attack” for which clients they will need to see and what they need to do for them in the June quarter, so they largely avoid the EOFY scramble.

Likewise, Lifespan chief executive Eugene Ardino said: “I think the most important thing with preparing for end of financial year stuff is not to leave it to the 15th of June.”

However, some clients may throw a spanner in the works with their own last-minute planning for the financial year, which Devlin suggested only makes the advanced preparation more important as they will have the time to handle any June enquiries.

“They might have sold assets, or they might have had a change in jobs or received a redundancy payout. There’s lots of different scenarios where it could come at you last minute but for the most part, we try and make it relatively predictable,” Devlin said.

“We know the clients that have floating tax questions, which if you’re not just PAYG, small business owners in particular, there’s things around distributions from trusts, obviously managing capital gains and things like that that we really need to be on top of coming into May and June.”

When it comes to staying on track, Devlin suggested that advisers should let technology “do some of the heavy lifting” for them, setting reminders for the future to hit the client’s needs at the right time.

One of the key things for advisers, according to Ardino, is making sure they are maximising their clients’ annual concessional contribution caps and, where eligible, looking at whether they have any unused concessional caps over the last five years that they could take advantage of.

“The 2024–25 income year is the last year to use the unused amounts from the 2019–20 income year. These carryforward rules are also known as catch-up rules and they work on a use it or lose it method,” Ardino told ifa.

“Basically, come 30 June this year, you won’t be able to catch up that 2019–20 year. It’s possibly an opportunity lost if you don’t get to do it.

“This can obviously be beneficial for individuals with the higher assessable income, and possibly in a situation where they’ve realised, you know, a large-ish capital gain, maybe from the sale of an investment property or the sale of some shares or something else.”

While both Devlin and Ardino stressed the importance of getting a jump on EOFY tasks as early as possible, the latter said there is slightly more wiggle room when it comes to dealing with self-managed super funds (SMSF) as, unlike normal super funds, you can finalise contributions to an SMSF pretty much right up to 30 June.

“Obviously, start planning for end of financial year stuff as early as you can. Be aware of super fund deadlines. You may think you can contribute to super until the 30th of June but normally super funds will have a deadline of earlier than that and it varies from super fund to super fund,” Ardino said.

“So, be aware of that just to make sure you’re able to put your contributions in before that deadline.”

Factoring in 1 July changes

Devlin also noted that advisers need to be mindful of what changes might be coming in with the new financial year and considering how these might impact when they should do particular things for clients, whether before or after the EOFY would be more beneficial.

“This year there’s some really interesting ones where, obviously, there’s an indexation to the transfer balance cap, which means quite a few things to total super balance caps, which can impact things like non-concessional contributions,” he said.

“It obviously impacts how much you can start a pension with come July versus what you can do in June. I think they’re really interesting things to be talking about in your business, and try to identify clients that may be impacted by what those changes are.”

Another incoming change, Ardino explained, is the increase to the general transfer balance cap, which will go up from $1.9 million to $2 million as of 1 July.

“Where that could be relevant is if you’re looking to set up a pension for a client, it could be a bit more beneficial to wait until the new financial year to do it if they have the capacity to use up that extra $100,000 in the cap,” he said.

Super guarantees will also go up to 12 per cent as of 1 July, Devlin explained, so advisers need to consider whether their clients’ take-home pay will be impacted.

“They might be left in a position where they’ve got actually less cash flow. Some employers will put that on top but we know there’ll be some that get absorbed,” he said.

Besides the obvious things to remember, Devlin said that EOFY is a good opportunity to sit back and think about what you could have done better.

“Making sure you’re looking back and going, ’What did I learn this year?’ Whether that be, ’I didn’t plan early enough, I didn’t take into account that this was going to index or that there was this change coming in the new financial year’,” he said.

Although navigating the complexities of Australia’s super system comes with challenges, Ardino said this also “creates an opportunity for advisers to add value for their clients and to grow their businesses”.