Have a super EOFY
As we approach the end of the 2022 financial year, it is important not to forget long term planning for retirement. We would like to highlight some superannuation related issues worth considering.
Important to remember, recently legislated changes to superannuation, including the removal of the work test for contributions made by people aged 67 to 75, and the increase in the age at which people can access the three-year bring forward rule for non-concessional contributions, do not take effect until 1 July 2022. An opportunity still exists to capitalise on opportunities before 30 June 2022.
We are here to assist you and if you have questions, or you would like to explore opportunities in your own year-end superannuation planning, please don’t hesitate to contact us.
Things to consider:
Your total superannuation balance as at 30 June 2021. This is the total of all your superannuation accounts and may influence whether you can make non-concessional (after tax) contributions to super, your eligibility to access the ‘three-year bring forward’ opportunity, your eligibility to access unused concessional caps from previous years, the ability to qualify for the extended work test exemption, your eligibility to receive Government co-contributions and a tax offset for any spouse contributions you may make.
If planning to make additional superannuation contributions, remember they need to be made before 30 June. Consider making contributions well in advance of the end of the year to ensure they are received by your super fund on time. Contributions made by electronic funds transfer e.g., BPAY, are not deemed to have been made until the money appears in your super funds bank account. This could be some days after you initiate the transfer.
Concessional contributions include contributions made by an employer such as the 10% superannuation guarantee, salary sacrifice contributions and also personal tax-deductible contributions. The maximum concessional contributions that may be made this financial year is $27,500.
Concessional contribution carry-forward. If your total superannuation balance (i.e., the balance of all your superannuation accounts added together) on 30 June 2021 was less than $500,000 and you did not use all your concessional contribution cap in 2018-19, 2019-20, or 2020-21, you may be able to carry the unused portion of previous year’s cap forward and contribute it in the current financial year.
If planning to claim a tax deduction for personal superannuation contributions, you need to provide your superannuation fund with a Notice of Intent (to claim a tax deduction) before you lodge your income tax return, and before certain other events occur. We can assist you to ensure the appropriate documentation has been lodged.
Non-concessional contributions are contributions made from after-tax income and from other savings. The maximum amount that can be contributed this year is $110,000, or up to $330,000 using the three-year bring forward rule. However, if your total superannuation balance on 30 June 2021 was more than $1.7m, you cannot make any non-concessional contributions. If it was between $1.48m and $1.7m, the maximum that can be contributed under the three-year rule reduces.
It is also worth remembering that if you made non-concessional contributions of more than $100,000 in either 2019-20 or 2020-21, the amount you may be able to contribute this financial year may be limited.
Planning to buy your first home? Voluntary contributions made to super since 1 July 2017 may be withdrawn for the purpose of buying your first home under the First Home Super Saver Scheme.
Are you aged 65 or older and have recently sold your long-term family home? If so, you may be eligible to contribute up to $300,000 of the sale proceeds to superannuation. However, conditions apply, and contributions need to be made within 90 days of receiving the sale proceeds.
If your total income is less than $56,113 and you receive at least 10% of your income from employment or self-employment, and you make a personal non-concessional contribution to super, you may be eligible to receive a Government co-contribution of up to a maximum of $500.
People who contribute to super for their spouse may be eligible to receive a spouse contribution tax offset of up to 18% of the amount they contribute, subject to a maximum offset of $540. A spouse contribution tax offset is available where an eligible spouse for whom a contribution is made has income of less than $40,000.
With the introduction of limits people may now have in a superannuation pension account, the ability to split contributions between spouses, and therefore move towards equalising super, is more important than ever.
There is still time to split concessional contributions. Up to 85% of concessional contributions made in 2020-21 may be transferred to a spouse’s account before 30 June 2022. Certain conditions apply.
Are you running a small business and have sold the business or any business assets during 2021-22? If so, you may be eligible to take advantage of the small business capital gains tax concessions. Not only do these concessions save you tax, but you may qualify to make additional contributions to superannuation without being constrained by the contribution caps.
On 30 June 2020, the Australian Taxation Office was holding $13.8bn of lost and unclaimed superannuation on behalf of Australians. We can assist you in searching for any lost superannuation you may be entitled to.
The topics covered in this email are a snapshot of some of the things to consider as we head towards the end of the 2022 financial year.
If you have any questions about the issues raised, or if you would like us to review your circumstances or simply check that everything is on track, please don’t hesitate to contact us.