As we draw closer to 30 June 2020 it is important to consider tax planning strategies as well as other administrative duties for your money in superannuation.
Concessional contributions cap for the 2020 FY is $25,000 and the deposits must be received into the Super Fund prior to 30 June 2020.
When making a member concessional (deductible) contribution, you must give your notice of intent to claim the deduction to your Super Fund before the earlier of when you lodge your tax return or the end of the next financial year.
The non-concessional contributions cap for the 2020 FY is $100,000 if your total super balance at the close of the previous financial year is under $1,600,000.
If you are under the age of 65 you can bring-forward three years’ worth of non-concessional contributions in the one financial year as detailed below:
|Total Super Balance||Non-Concessional Cap||Bring–forward Period|
|Less than $1.4 million||$300,000||3 years|
|$1.4 million to less than $1.5 million||$200,000||2 years|
|$1.5 million to less than $1.6 million||$100,000||1 year|
A person between the ages of 65 and 74 must meet a work test to make non-concessional contributions and are limited to an annual cap of $100,000 with no opportunity to use the bring-forward rules.
If you are between the ages of 65 and 74 you will need to pass a work test to contribute into your Super Fund, this requirement means a person must work 40 hours in a 30 day period once in the financial year to be eligible to make the contribution.
It should be noted that currently there is proposed legislation to change the work test requirement to be from age 67.
Work test exempt contributions
From 1 July 2019 if you retire between the ages of 65 to 74 and have a total super balance under $300,000 you can make further contributions into a Super Fund in the next financial year without having to pass the work test.
Catch Up Contributions
From 1 July 2018 if a person’s total super balance is under $500,000 they can utilise their prior year unused contributions cap (difference between cap and contributions actually made) and make a catch up concessional contribution into their Super Fund.
If you have sold your principal place of residence or a property which at one time was your principal place of residence you can make a contribution up to $300,000 into your Super Fund. To qualify you need to be over the age of 65 and held the property continuously for a minimum 10 year period.
If you are a low or middle-income earner and make non-concessional (after-tax) super contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount of $500.
Low Income Super Tax Offset
Eligible individuals with an adjusted taxable income up to $37,000 will receive a low income super tax offset (LISTO) payment to their super fund equal to 15% of their concessional contributions from employment. Maximum offset is $500 and can be paid directly you if you’ve reached preservation age or are retired.
If your spouse’s annual income is $40,000 or less and you make a minimum contribution of $3,000 into their Super Fund you will be eligible to an 18% tax offset in your tax return.
First Home Super Saver Scheme
If you have never held property in your name you can make a voluntary contribution into your Super Fund up to an annual cap of $15,000 and a total of $30,000 to then withdraw to assist with the purchase of your first home.
Annual Minimum Requirement
If you are in receipt of a pension you will need to ensure that you have withdrawn your annual minimum prior to 30 June 2020.
For the 2019/2020 and 2020/2021 financial years there is a temporary halving of the annual requirement for account based pensions similar pension products.
The temporary minimum rates are detailed below:
|Age of Member||Percentage Factor|
|65 – 74||2.5%|
|75 – 79||3%|
|80 – 84||3.5%|
|85 – 89||4.5%|
|90 – 94||5.5%|
Transition to Retirement Pensions
If you are in receipt of this type of pension you need to ensure you have not withdrawn over the maximum limit of 10% of the account balance at the close of the previous financial year
Trustees of Self-Managed Super Funds will need to ensure they have reviewed their investment strategy to ensure their current investment allocations agree, this is even more important given the market fluctuations with COVID-19.
Trustees of SMSFs need to ensure that their investments including real property are revalued at 30 June 2020 to assist in the preparation of the financial statements.
In House Assets
Trustees of SMSFs with in-house assets must ensure that the value of these assets remains under 5% of the total assets at 30 June 2020.
Related Party Transactions
Where an SMSF has dealt with a related party the Trustee must ensure that those transactions have occurred on an arms-length basis and if there’s been a deviation that rectification occurs prior to 0 June 2020. Common examples include commercial property where the tenant is a related party or where there is a loan to the SMSF in the form of a Limited Recourse Borrowing Arrangement.