1. Concessional contributions
Concessional super contributions are currently limited to a maximum of $30,000 p.a. for anyone aged under 49 as at 30 June 2017, and $35,000 for those aged 49 and older.
From 1 July 2017, the concessional contribution cap will be reduced to $25,000 for everyone.
This is the last opportunity you may have to make concessional contributions under the current higher caps.
Remember that your superannuation fund may have a close-off date for receiving contributions in the current financial year, so it is important to act quickly.
2. Non-concessional contributions
Non-concessional super contributions are personal contributions made from after-tax income.
The current annual limit for non-concessional contributions is $180,000. For those aged 64 or younger as at 1 July 2017, there is an opportunity to bring forward up to three years’ contributions and potentially contribute up to $540,000.
The non-concessional contribution cap will reduce to $100,000 from 1 July 2017.
Also from 1 July 2017, anyone with more than $1.6 million in superannuation will be unable to make further non-concessional contributions.
To qualify for the maximum co-contribution a person must derive at least 10% of their income from employment or self-employment, and have total income of less that $36,021 in the 2016-17 financial year.
If so, by making a non-concessional contribution of $1,000 they may receive a co-contribution of $500.
Once income exceeds $36,021, the Government co-contribution begins to be phased out, with the co-contribution is not payable once total income exceeds $51,021.
4. Spouse contribution tax offset
When an individual makes a non-concessional super contribution for their low income earning spouse, they may be entitled to a tax offset (rebate) of 18% of the contribution made, subject to a maximum offset of $540.
To be eligible, the spouse on whose behalf the contribution is made must have income of less than $10,800.
Once income exceeds this amount, the tax offset reduces and phases out completely when income exceeds $13,800.
The spouse tax offset is subject to a number of conditions. Please contact firstname.lastname@example.org to us to see if you are eligible.
5. Contribution splitting
A person may split up to 85% of their concessional super contributions with an eligible spouse.
Generally contribution splitting does not occur until after the end of the financial year in which the contributions were made.
For anyone wishing to split concessional contributions made in the 2015/16 financial year, action needs to be taken before 30 June 2017.
With limits now being placed on the maximum amount a person may have in a superannuation pension account, splitting contributions with a spouse represents an important opportunity.
6. Pension transfer balance cap
Superannuation reforms that come into effect from 1 July 2017 will see limits being imposed on the maximum amount that may be held in a pension account. The limit for 2017/18 will be $1.6 million.
For those who have more than $1.6 million in superannuation pension accounts, steps need to be taken now to reduce the balance to ensure the $1.6 million cap is not exceeded on 1 July 2017.
Exceeding the pension transfer balance cap may result in additional tax being paid.
7. Pre-pay expenses
If eligible to claim a tax deduction for certain expenses, look to pre-pay those expenses before 30 June 2017 in order to claim a tax deduction in the current year.
Furthermore, eligible small businesses that purchase assets may be eligible to claim an immediate tax deduction for assets valued at up to $20,000 where the asset is in use, or is installed ready for use by, 30 June 2017.
8. Deferred income
Where appropriate, deferring income until the next financial year may be appropriate particularly if an individual expects to be taxed at a lower rate in the 2017/18 financial year.
This may be particularly appropriate for people wishing to leave work. Deferring the payment of accrued leave entitlements until after the commencement of the next financial year may be worth considering in some circumstances.
9. Claiming a tax deduction for personal superannuation contributions
People who derive less than 10% of their income from being an employee may be eligible to claim a personal tax deduction for contributions they make to superannuation, subject to the concessional contribution cap.
This opportunity is available to self-employed people and to those who may derive little or no income from employment but have taxable capital gains, or receive investment income.
If aged 65 or over, a work test must be met in order to be able to make contributions to superannuation.
When claiming a tax deduction for personal contributions a notice of intention to claim a tax deduction for personal contributions must be provided to the superannuation fund within a prescribed time frame.
For advice on eligibility to claim a tax deduction for personal contributions, please contact email@example.com .
10. Retain records
Now is a good time to be collating records to ensure that those necessary to claim tax deductions are available and at hand when completing your income tax return.
Maintaining good records will ensure you are able to support the claims you make, and will speed up the lodgement of your income tax return.
These superannuation and tax tips are brief in nature. They cover the key points however a number of the issues mentioned are subject to specific and more detailed conditions.