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The CFP®’s perspective: That feeling when you get a big win for a client

15 June 2021

Zacary Leeson

Zacary Leeson was named FPA CFP® Professional of the Year in 2020. He is a senior advisor at HPH Solutions, the 2020 FPA Professional Practice of the Yeaw

Zacary Leeson, CFP® at HPH Solutions, gives us an inside look at why financial planners work so hard for their clients and the feeling they get when they uncover big financial wins.

If you go back 11 or so years, you might remember an H&R Block ad featuring a lovely tax agent named Irene Johnson. The ad features Irene finding a better deduction for her client, doing a quiet little fist pump to herself and then getting on with her work.

The beauty of being financial planners is that we get to have these little fist pump moments all the time.

Recently, however, our team had more of a Lleyton Hewitt “C’mon” kind of fist pump moment, the kind that comes from finding a very significant saving for some new clients.

And much like Hewitt’s hallmark of success in tennis, it’s the kind of win that only comes when you dig deep.

The situation on the surface

Our new clients were a husband and wife with two children over the age of 18 (one studying at university and the other not working yet). The husband (let’s call him Frank) is a business owner, and the wife (let’s call her Sally) has not worked for the past two years.

When they came to us, even though their business was operating through a family trust, the entire business profit of $400,000 was being attributed to Frank. The tax payable on this amount was $168,267, which is no small sum!

So, the first thing we did was speak with the family accountant to determine how much of that $400,000 in profit could be distributed to his two adult children and his non-working spouse Sally as trust beneficiaries.

Their accountant confirmed it could be split between all four family members. (There wasn’t a Personal Services Income (PSI) limitation due to the business’s operational structure.)

This meant that right off the bat, we’d be able to split the $400,000 business profit between four people (Frank + Sally + two children) instead of attributing it to Frank alone.

Tax payable on $400k = $168,267
Tax payable on 4 x $100k = 4 x $24,187 = $96,748
Total tax savings = $71,519


What we discovered when we dug deeper

It would have been easy to be delighted with that initial result for the client given more than $70,000 in tax savings is pretty significant! But we wanted to see if there was more we could do. After all, one of the benefits of working with a financial advisor is that, even though we’re not accountants, we have extensive knowledge of strategies that can be leveraged to achieve the most tax-effective outcomes possible for our clients.

For example, you might already be aware that you have a tax-deductible super contribution limit of $25,000 each year and that these contributions are taxed at the concessional rate of 15% (unless you earn over $250,000.)

Back in 2017, new legislation was introduced allowing individuals to make tax-deductible ‘catch up’ contributions to their super, commencing from the 2018/2019 tax year, so long as their total super balance was under $500k.

When we dug deeper into our new clients’ situation, we discovered that both Frank and Sally:

  • Had super balances under $500,000, and
  • Had not contributed to super in any of the 2018/19, 2019/20 or 2020/21 tax years.

This created an opportunity to top up both Frank and Sally’s super with $75,000 each (3 years’ worth of $25k per year for both). This meant that the original $400,000 in business income to be distributed was now reduced to $250,000.

The family’s new tax situation looked like this:

Tax payable on $150k in super at 15% = $22,500
Tax payable on 4 x $62,500 = 4 x $10,887 = $43,548
Total tax payable = $66,048
Original tax payable amount = $168,267
New tax payable amount = $66,048
Total tax savings = $102,219


Now you’re seeing why we were channelling Lleyton Hewitt more than Irene Johnson.

The benefit of an ongoing focus on your financial and lifestyle planning

It would be fair to say that this kind of benefit to a client in their first year of advice is not typical.
But what is typical is our determination to always dig deep and not settle for good enough.

For Frank and Sally, while the initial ‘win’ has endeared us greatly to them, the greater benefit for them is that effective tax planning is just one element of the holistic service we provide.

Now that they have shared their lifestyle planning goals with us, about the kind of life they want to live now and in the future, we’re excited to see what else we can help them achieve.

Working with a CERTIFIED FINANCIAL PLANNER® professional could help you uncover new strategies to save money and set yourself up for a better financial future.  Use our Match My Planner tool to help connect you with the right financial planner for your needs.