End of Financial Year Superannuation Tax Tips

As we approach the end of another financial year, it is important to be aware of a number of superannuation considerations before 30 June 2019.

Making a Contribution

The contribution limits for year ending 30 June 2019 are as follows:

Contribution Tips:

• If you are aged between 65 and 75 you must satisfy a work test (40 hours of paid employment in a 30 day period) before making a contribution
• Check your total super balance at 30 June 2018 to determine your eligibility before making a non-concessional contribution
• Contributions made by EFT or BPAY are not deemed to have been made until the contribution appears in your super fund’s bank account. This could be some days after you initiate the transfer. Ensure contributions are physically received by your super fund prior to 30 June 2019 (remember that 30 June falls on a Sunday this year).
• Most individuals, including salary and wage earners, are now able to claim a tax deduction for personal contributions made to super. Care needs to be taken to ensure any contributions made are within your contribution limits, particularly after taking into consideration any contributions already made your employer(s).

Are you over 65 and considering selling your home?

Please note that new ‘superannuation downsizer’ legislation effective 1 July 2018 may allow individuals  aged over 65 who have sold their principal place of residence to contribute up to $300,000 to their Super Fund (without having to satisfy the work test).

Please refer to article published in the November 2018 edition of the Davidsons newsletter and contact Davidsons if you think you may be eligible.

Unused Concessional Cap Carry Forward (relevant from the 19/20 year onwards)

For the 2019-20 onwards, if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to make ‘carry-forward’ concessional contributions in addition to the annual $25,000 concessional contributions cap. Unused amounts of your concessional contributions cap accrued from the 2018/19 financial year can be carried forward for a maximum of 5 years.

For instance, an individual who has only used $10,000 of their annual $25,000 concessional contribution cap for the 2018-19 year may be able to carry forward and utilize the unused amount of $15,000 in a future financial year (provided their total super balance is less than $500,000).

Satisfying the Pension Requirements

If you are receiving a pension from your Super Fund, you must withdraw a pension that is within the applicable minimum and maximum limits prior to 30 June 2019.

If the pension drawn is outside of the minimum and maximum ranges, the pension requirements will not be met and your superannuation pension balance will revert back to “accumulation phase” where all income and capital gains are taxed at 15%.

Members also need to be careful to not exceed their maximum pension as penalties apply for illegal early access to superannuation benefits.

Do you have a Self Managed Superannuation Fund?

If you operate a Self Managed Superannuation Fund (SMSF), prior to 30 June 2019 it is important to ensure:

• any prior year management points raised by your auditor have been addressed
• you have obtained market valuations for any unlisted investments owned by the SMSF
• the SMSF’s investment strategy has been reviewed and adjusted where required
• your SMSF has been considered as part of your overall estate planning strategy and Binding Death Benefit Nominations & Enduring Power of Attorney are in place where appropriate
• any property trust profit distributions owing to the SMSF from the 2018 financial year have been paid
• your SMSF has been complying with new ATO Event Based Reporting requirements which are applicable in instances such as commencing / stopping a pension and withdrawal of certain lump sums

Should you require any assistance with your superannuation year end requirements, please contact Simon Abbott on 03 5244 6867.

The information that provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.

Davidsons is not licensed to provide any financial product advice nor make any recommendations in respect of any financial product. If you require such advice, you will need to consult a financial adviser who is licensed to provide financial product advice before you make a decision on a financial product.