Derek Bouman
DFK Crosbie
The end of the financial year is rapidly approaching and that means it’s time for our Self Managed Superannuation Funds to ensure they capitalise on the many opportunities available to them prior to 30 June.
These include contributions, pensions and estate planning and here are a few key points to consider:
1. Your concessional contribution limit - get it right!
The concessional contribution cap is based on your age at 1 July of the financial year. For those members aged 49 or over at 1 July 2015, your concessional contribution for this financial year is $35,000. For all other members it is $30,000.
2. Aged between 65 and 75 - don’t forget about the work test!
Review your ability to make contributions. Already aged 65? You must pass the work test of 40 hours in any 30-day period during the financial year before a contribution to super can be made.
3. Monitor your non-concessional contributions
Non-concessional contributions can help move investments into superannuation and out of your personal, trust or company name – ensuring you control your overall tax position. The non-concessional contribution limit for the 2016 financial year is $180,000 and if you’re under 65 you can trigger the 3 year “bring forward”.
4. Double deductions can still apply!
Consider the level of assessable income you’ll have this year as well as into the future. Members who may have a large taxable income this year with an expectation that it will be lower next year should consider making additional contributions in the current year (in June) whilst utilising an unallocated contributions holding account for allocation in the following financial year.
5. Ensure minimum pension obligations have been met
Current rules allow for earnings inside a superannuation fund supporting a pension to be exempt from tax. For this exemption to apply, the minimum pension is required to be taken. This withdrawal is required to be cleared, so don’t wait for the last couple of days in June to withdraw!
6. The lump sum strategy can be powerful for those who have reached preservation age but not age 60.
Subject to certain conditions, members in pension phase can elect for their pension to be treated as a lump sum for tax purposes. This means for members aged between 55 – 59, it gives you access to your low rate threshold. For members 60 and over, this provides an ability to effectively transfer assets from the fund as a pension payment.
7. Review your Estate Planning and loss of capacity strategies
It’s important that you continually review your superannuation death benefit nominations to ensure they are still valid and still structured optimally for your circumstances. This should also include a review of your plans in the case of loss of capacity – do you have an Enduring Power of Attorney in place to step into your shoes in the event of illness, mental incapacity or death?
There are numerous other strategies available and this is just a brief snap-shot of some of the strategies you should consider and implement where possible prior to year-end, now is the perfect time to start!
Derek Bouman
