With June 30 drawing close, trustees of SMSFs must look forward towards optimising tax benefits emanating from SMSF. At the same time, they must also ensure that their fund is compliant with superannuation regulations.
No way should you defer making the contributions beyond 30 June. Those making electronic fund transfer must keep in mind that the contribution, in the given case, may only reflect on the following business day. It is wise to budget time accordingly.
If you have non-concessional contribution in mind, gather all relevant documents about the last two years’ postings. It will help you understand whether the ‘bring forward’ provision in the NCC is triggered. Quite important as it can dictate the kind of contributions you can make for the present financial year!
If you are aged 59 or below, you concessional contribution (CC) stands at $25,000. The upper ceiling is $35,000 if you are above 59. The ‘non-concessional’ stands at $150,000. If you are under 65 years of age during the year you make the first contribution then you can bring forward couple of years of NCC’s and make all the three years of super contributions together (or you can split it over 3 years).
In case you have already arranged with your employer that your pre-tax wages be sacrificed into superannuation, they will be understood as CC as part of your Salary Sacrifice Arrangement. It is important to prefigure what your concessional contribution cap is in order to evade going overboard.
By the 28th of the month that follows a quarter, employers have to dutifully contribute towards Superannuation Guarantee (SG). For example, 28th April is the day by which an employer should make contributions related to the employee’s earnings for the first quarter (Jan-March). This SG contribution becomes a part of the CC ceiling for the given financial year.
Let us assume you meet the following criteria: You are below 75 years of age, are self-employed, or at any rate, receive minimum ‘super’ favour from your employer. In the given case, you are eligible to claim a tax deduction on your personal superannuation effort.
You will have to start with a ‘Notice of intention to claim a tax deduction’. This is lodged with your SMSF trustee prior to filing in your income tax return for the given year. The job is done once the trustee officially acknowledges your intention. It is worth noting that your NCC converts into a CC in this scenario.
If NCC for spouse is in your mind, go the distance before 30 June sets in. Unless your SMSF receives the contribution before this date, you won’t be eligible for a tax rebate on your contribution. Maximum tax offset is only possible if the income of your spouse is in deficit of $10,800.
If it is so, 18% of up to $3,000 (NCC) becomes claimable. For spouses earning between $10,800 and $13,800, some kind of tax offset can be claimed, the degree of which keeps diminishing as you keep getting north of $10,800. Post $13,800, the offset completely vanishes.
Another thing worth noting is your spouse’s age. Ideally, he/she should be below 65 years of age. If she is between 65 and 69, it is crucial to attest that he/she is productively employed for a minimum of 40 hours over a period of 30 days (back-to-back).
If at least 10% of your income is generated via business or employment or both, the government will match your non-concessional contribution with a co-contribution not exceeding $500 a year. Of course, it goes without saying that you have to match a few other criteria, too. For example, you need to be a permanent resident of the country and be below 71 years of age when the financial year draws to a close.
Up to an upper cap of $1,000 contributed towards your SMSF by 30th June, the government puts in $50 cents for each dollar of yours. Maximum co-contribution, again, is only possible if your yearly income is less than $33,516. While you still receive aid if you are earning between $33,516 and $48,516, there is no help if your income is north of $48,516.