FASEA Superannuation and Retirement Planning 2 — Questions and Answers
Question 1: When advising a client on a transition to retirement income stream (TRIS), which of the following statements is correct under current legislation?
- Investment earnings in a TRIS are tax-free regardless of commencement date
- A TRIS is always in retirement phase and attracts a tax-free earnings rate
- A TRIS only enters retirement phase once the member satisfies a full condition of release (Correct answer)
- Minimum annual drawdown for a TRIS is 2% of the account balance
Correct answer: A TRIS only enters retirement phase once the member satisfies a full condition of release
A TRIS is in accumulation phase (earnings taxed at 15%) until the member satisfies a full condition of release such as reaching age 65 or permanently retiring, at which point it converts to retirement phase.
Question 2: What is the maximum non-concessional contributions cap for the 2024–25 financial year (standard annual limit)?
- $100,000
- $110,000
- $120,000 (Correct answer)
- $150,000
Correct answer: $120,000
The non-concessional contributions (NCC) cap is four times the concessional cap; with the CC cap at $30,000, the NCC cap is $120,000 for 2024–25.
Question 3: Under the bring-forward rule for non-concessional contributions, what is the maximum amount a client under age 75 (with a total super balance below $1.66 million) can contribute in a three-year period in 2024–25?
- $300,000
- $330,000
- $360,000 (Correct answer)
- $400,000
Correct answer: $360,000
With the NCC cap at $120,000, the three-year bring-forward allows up to $360,000 in non-concessional contributions across the period.
Question 4: A client aged 67 earns no employment income but wishes to make personal superannuation contributions. Which rule allows them to do so?
- The work test exemption for those aged 65 to 74 who met the work test in the prior year (Correct answer)
- The downsizer contribution rule requiring no work test
- The voluntary contribution rule applicable to all Australians regardless of age
- There is no mechanism — those aged 67 cannot make personal contributions
Correct answer: The work test exemption for those aged 65 to 74 who met the work test in the prior year
Members aged 67–74 who do not currently meet the work test can still make voluntary contributions if they met the work test (40 hours in 30 days) in the previous financial year under the work test exemption.
Question 5: Which of the following is an eligible 'condition of release' that allows unrestricted access to preserved superannuation benefits?
- Reaching age 55 while still employed
- Severe financial hardship after 39 weeks on income support
- Reaching preservation age and commencing a TRIS
- Permanent incapacity as defined under the SIS Act (Correct answer)
Correct answer: Permanent incapacity as defined under the SIS Act
Permanent incapacity is an unrestricted condition of release; the member can access their entire preserved benefit as a lump sum or income stream.
Question 6: Under the FASEA Code of Ethics, when a financial adviser recommends superannuation products, they must give priority to which of the following?
- Products offered by their licensee's approved product list
- The client's long-term best interests over any other consideration (Correct answer)
- Compliance with the letter of the Corporations Act only
- The advice that generates the highest adviser revenue
Correct answer: The client's long-term best interests over any other consideration
Standard 6 of the FASEA Code requires advisers to act in the long-term best interests of the client and prioritise those interests above all others including the licensee's commercial interests.
Question 7: What is the purpose of the 'sole purpose test' in the Superannuation Industry (Supervision) Act 1993?
- To ensure SMSFs maintain only one type of investment asset
- To require that superannuation funds are maintained solely to provide retirement benefits to members (Correct answer)
- To restrict superannuation funds to a single regulated trustee
- To ensure all super fund members have a single super account
Correct answer: To require that superannuation funds are maintained solely to provide retirement benefits to members
The sole purpose test requires that a superannuation fund be maintained for the core purpose of providing retirement benefits (or death benefits) to members, preventing funds from being used for other purposes.
FASEA Superannuation and Retirement Planning 2
When advising a client on a transition to retirement income stream (TRIS), which of the following statements is correct under current legislation?