The end of the financial year is fast approaching again, and with it brings a great time to have a look at your superannuation and make sure you have taken advantage of any opportunities this year and reviewed your contribution caps.
If you have a self-managed superannuation fund (SMSF), it is also a time to ensure you have met all your obligations. There have been lots of changes in the last 12 months in the superannuation field and the following action items will help you keep abreast of the new rules.
Personal super contributions
A new and exciting opportunity has emerged this year allowing most people (regardless of their employment arrangement) to be able to make contributions to their super fund and claim a tax deduction for these personal super contributions.
To take advantage of this you need to:
- Ensure your contribution has been deposited to & cleared in the super fund’s bank account before the 30th June.
- Complete and lodge a notice of intent with your fund before June 30 2019 (or the lodgement of your tax return if it is earlier) and have this notice acknowledged (in writing) by your fund. Note that some funds require this form to be lodged with the contribution.
- If you are aged between 65 – 75, you also need to ensure you have met the work test before the contribution was made (40 hours paid employment in a 30-day consecutive period in the 2018 financial year).
- Finally, make sure your contribution does not create a tax loss in your individual tax return.
It is important to make sure you have not exceeded the contributions caps this year as exceeding your caps will result in penalties. The contribution caps for this financial year are:
- Concessional – $25,000
- Non-concessional (after tax) contributions – $100,000
Members under 65 years of age have the option of contributing up to $300,000 over a three-period depending on their total super balance. Transitional arrangements also apply to individuals who brought forward their non-concessional contribution caps in the 2015-16 or 2016-17 financial years so be sure to check your contributions from previous years and talk to your accountant.
Is your total super balance more than $1.4 million?
If so you have additional considerations. Your bring forward non-concessional contributions cap reduces, and furthermore, if your total superannuation balance is more than $1.6m you cannot make any non-concessional contributions during the year. Make sure you talk to your accountant before making any non-concessional contributions if your balance is greater than $1.4 million.
Drawing superannuation pensions
If you are in pension phase, you need to ensure the minimum pension has been paid in cash to you for this financial year. These pension payments must be cleared from your SMSF bank account by 30 June — which falls on a Saturday this year. Give yourself enough time for the payments to clear from your SMSF bank account as failure to pay your minimum pension may result in your fund losing its tax-free income status on your pension balance.
If you have withdrawn more than your minimum pension this year, make sure you talk to your adviser and document how you wish the excess to be treated.
Don’t forget that there is now a cap of $1.6m on the amount that you can have in tax free pension phase. Make sure you review your “Transfer Balance Cap” and ensure you do not exceed this cap.
If you meet the relevant work tests and earn less than $51,813, it is also worth considering if you can take advantage of the Government super co-contribution.
SMSF fund expenses
Review your bank account for the year and make sure that all your SMSF related expenses have been paid by the SMSF. Also double check that there have not been any personal payments made by the SMSF, and correct these if need be.
- Make sure you review your investment strategy and check that it is still current
- Check all your SMSF investments are held in the name of the trustee
- Organise a new valuation for your property if you have not had one prepared recently, or the value of your property has changed materially.
- Review your estate planning and binding death nominations and make sure they are still applicable.
If you need assistance with any aspect of your end of year planning, please don’t hesitate to call our Bentleys superannuation team. A little bit of work now may mean a little more in your retirement pocket later!