The $68,000 super stuff-up
Today I want to share a massive mistake that was made on one of our client’s super funds which we were able to pick up – saving them a huge $68,000 in tax.
This is relevant for anyone who is looking to retire soon and is thinking about putting extra money into superannuation, now or in the future.
When this client came on board with Financial Edge Group Retirement Specialists, we went through a whole list of financial and superannuation ‘checks’ to assess where he was at, and where he wanted to go.
When we contacted his super fund, we discovered our client had made a lump-sum payment into his account, from an inheritance he’d received a few years earlier. The fund had unfortunately categorised that payment as a taxable one – when it really should have been tax-free.
How our client’s super fund categorised this payment is important because it’s a large amount of money, which equates to a large amount of tax. While it’s not tax our client would have had to pay now, it’s $68,000 in tax his family would have had to pay back down the track, all because of a mistake his fund made years earlier. That’s a house deposit, a trip around the world, a new car, and no-doubt would have had a huge impact on our client’s family if it weren’t picked up.
The good news? Once we contacted the super fund and provided them with evidence of the error, they were able to admit to the mistake, apologise and correct it.
We’re very proud we picked up what was hopefully a one-off error, but it’s exactly why we go through a process with each of our clients to check on where they’re at with their retirement savings. Finding this mistake wasn’t what our client had asked us to do and most of the time there’s nothing wrong with the funds our clients hold, but it’s part of the service we provide.
Things to take away from the experience?
It’s great to put extra money into your super fund, but make sure you check when it goes in that it’s going to the right place. If you’re not sure, give us a call for a chat - we are more than happy to help ensure everything happens as it should.
Looking for more information on retirement planning? Our Facebook page and our YouTube channel have videos, blog content and lots of tips on how to make the most of your superannuation.