The Coalition wins a third term – your superannuation policy update in preparation for the end of the financial year

With the end of financial year now fast approaching and certainty with the Government and its super policies it is the time to ensure everything is in place for your SMSF before 30 June. I have compiled some strategies that you may need to consider and ensure the plans you have in place are the best for you and your SMSF.

Before 30 June you should:

• Review if you have any income available to contribute to your fund; and
• Review your total contributions to ensure they are below the caps.

Non-concessional (after tax) contributions are limited to $100,000 for the 2019 financial year and concessional (before tax) contributions are limited to $25,000.

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 2016-17 financial year.

Anyone making large superannuation contributions should exercise extreme care to avoid excess contributions.  Making sure you do not exceed the contribution caps will save you both money and time of dealing with excess contributions.

Contributions are included in a financial year if they are received in your fund’s bank account by 30 June. With 30 June falling on a Sunday this year, it would be prudent to make your contributions by Wednesday 26 June to ensure they are received by your fund prior to the end of the financial year.

If you are in pension phase, you need to ensure the minimum pension has been paid to you for this financial year. Where these requirements have not been met your fund will be subject to 15% tax on your pension investments, rather than being tax free.

Most people regardless of their employment arrangement, can claim a deduction for personal super contributions they make to their fund until they turn 75.

Individuals who are aged between 65 and 75 will need to meet the work test to be eligible to claim the deduction.

If you wish to claim a tax deduction for personal contributions, you must complete and lodge a notice of intent with your fund before June 30 and have this notice acknowledged (in writing) by your fund.  Any contribution also needs to be received by your fund before June 30.

If you meet the relevant work tests and earn less than $52,697, it is also worth considering if you can take advantage of the Government super co-contribution.

For members in the accumulation phase, it is important that any expenses are actually incurred or paid before 30 June to be deductible in the current financial year.

The end of financial year is also the perfect opportunity to rebalance pension accounts between spouses, to ensure that super balances are as even as possible and the $1.6 million transfer balance cap is maximised for each member.

Funds that were paying a pension during 2018-19 will need to complete and lodge a Transfer Balance Account report with the ATO. The date of when you have to report depends on the size of your superannuation balance.

If you have any questions or would like further in ensuring you and your fund are well prepared for the end of the financial year please call Cayle Petritsch or Martin van der Saag on 02 9984 7774.