With the financial year coming to an end, there are several items that need your attention and strategies to consider that could be beneficial to you and your self-managed super fund.
These need to be addressed prior to 30 June.
Tax deductible contributions (concessional contributions) There is a $25,000 limit for concessional contributions in the 2019 financial year.
Contributions that exceed this limit are subject to additional tax. Where the total concessional contributions made on your behalf have not reached $25,000, there may be a tax benefit in making your own concessional contribution. Certain processes need to be followed and paperwork needs to be in place to claim a deduction for contributions so please let us know if you are looking to do this. For employees you may want to ask you employer if they are able to make a salary sacrifice contribution before the year end.
After tax contributions (non-concessional contributions)
The non-concessional contribution limit in the 2019 financial year is $100,000. If you were aged 64 or below as at 1 July 2017, you may be eligible to use the bring-forward rules that allow contributions of up to $300,000 in the current year by accessing the next two financial year limits.
This is only available if you had a total superannuation balance (your benefits held in all superannuation funds) below $1.6M as at 30 June 2017. If you made use of the above bring-forward rule in either the 2016 or 2017 financial years, then the $300,000 limit would not be relevant to you. Transitional rules will apply instead and the limit relevant to you will depend on the amounts that were contributed in those years.
Making use of these bring-forward rules is a complex area so please talk to use before making further contributions. If you are aged 65 or over you will need to have worked for at least 40 hours over any 30-consecutive day period before your fund can accept a contribution from you. This “work test” is relevant for both concessional and non-concessional contributions.
Where you make an after-tax contribution to super, you may be eligible for a Government “co-contribution” of up to $500. Income thresholds and other eligibility requirements need to be met but where applicable, it is certainly worth considering.
Timing of super contributions
Any contribution for the 2018 financial year needs to be physically received by your fund and in the funds account by no later than 30 June 2019. Contributions received into your super fund account after 30 June will not be treated as current year contributions and can cause unexpected taxation outcomes. Making super contributions by EFT late in June often causes a timing issue so we suggest processing these as early as possible.
Contributions for your spouse
Where your spouse has income below $40,000, you may be eligible for a tax-offset up to $540 where you make after tax contributions on their behalf. There are also several strategies that enable you to split certain contributions that were made by you, or on your behalf in the last financial year, into your spouse’s super account. This can prove beneficial where one spouse has a significantly higher super balance than the other. Splitting contributions can assist in future retirement planning and can significantly improve taxation outcomes.
Other contribution considerations
If you have personally paid any of your super funds expenses during the year then these amounts are treated as contributions, so keep this in mind when working out how much you can contribute to your fund this year.
Accessing pension benefits
Where you are accessing your super by way of a pension, you are required to withdraw at least a minimum amount each year. These payments need to be paid from your fund no later than 30 June. Again, making pension payments by way of EFT late in June can cause issues so plan for these to occur well before 30 June. Failing to take your minimum pension by 30 June will result in additional tax levied on your fund.
Trustee duties and regulatory reporting requirements
There are several administration obligations that you need to meet as Trustee of your self-managed fund including the need to have a valid investment strategy developed and implemented. This includes the need to review any insurance cover necessary for the fund members. Meeting these obligations is essential to ensure the ongoing compliance of your self-managed super fund.
Many self-managed superannuation funds will also be subject to additional ATO reporting requirements from 1 July 2018. Reporting may be required on pension balances and amounts that are accessed from your fund on either a quarterly or annual basis.
We are more than happy to assist you in meeting these obligations if, and when required. Book an appointment to discuss further.