The contribution caps this year are again $25,000 for concessional contributions, and $100,000 for non-concessional contributions.  Contributions must be received by the Fund’s bank account by 30 June.  With 30 June falling on a Sunday this year, it would be advisable to make any contributions at least one week in advance, to allow for processing time.  If using a clearing house facility, then you will need to check their cut-off times (eg Xero has notified clients that June 20 is the cut-off date this year).

Contribution Caps

Concessional (deductible) Contributions:

• Employer contributions
• Salary sacrifice contributions
• Personal contributions – where a tax deduction has been claimed

Non-Concessional (deductible) Contributions:

NB: When making non-concessional contributions, including utilising the bring-forward rules, you will need to consider your total superannuation balance – see below:

If you have more than $1.4m and wish to utilise the NCC bring forward rule please call us to check your eligibility.

Anyone making large superannuation contributions should exercise extreme care to avoid excess contributions.  Making sure you do not exceed the contribution caps will save you both money and time of dealing with excess contributions.

Personal superannuation contributions

Most people regardless of their employment arrangement, can claim a deduction for personal super contributions they make to their fund until they turn 75.

Individuals who are aged between 65 and 75 will need to meet the work test to be eligible to claim the deduction.

If you wish to claim a tax deduction for personal contributions made to your super fund, you must complete and lodge a notice of intent with your fund within the required time frame, and have this notice acknowledged (in writing) by your fund.  Any contribution also needs to be received by your fund before June 30.

Timing

To secure a tax deduction for any concessional contribution for the year ending 30 June 2019, remember that all contributions must be received into the super fund’s bank account by 28 June 2019 (30 June falls on a Sunday).

This applies to employers making contributions on behalf of employees and for individuals who make a concessional contribution with the intention of claiming it as a deduction in their personal tax return.

Work test

If you are 65 years old or older, you must meet the work test before making any contributions to your fund.

This means you must work at least 40 hours in a 30-consecutive-day period before you can make contributions.

If you are 75 years or over, only mandated contributions (ie Super Guarantee) can be made.

Downsizing

Members over the age of 65 years can now contribute up to $300,000 each from the proceeds of selling their home to superannuation.  This contribution is excluded from:

• Existing age test
• Work test, and
• $1.6m balance threshold

In order to be eligible to make a downsizer contribution, the following criteria must be met:

• Must be your principal place of residence
• Must have owned it for at least ten years
• Must have been executed after 1 July 2018.

NB: Sale proceeds contributed to superannuation under this measure will count towards the Age Pension assets test.

Rebalancing accounts between spouses

The end of financial year is also the perfect opportunity to rebalance pension accounts between spouses, to ensure that super balances are as even as possible and the $1.6 million transfer balance cap is maximised for each member.

Strategies to assist with this include ‘withdraw and re-contribution’ and ‘contribution splitting’.

If you would like more details on these strategies, including eligibility, please contact us.

Spouse superannuation tax offset

An individual may claim the maximum tax offset of $540 for superannuation contributions they make to an eligible superannuation fund of their spouse if the sum of the spouse’s assessable income, total reportable fringe benefits amount and reportable employer superannuation contributions is $37,000 or less.

The amount of the offset progressively reduces when that income exceeds $37,000 and completely phases out when the income reaches $40,000.

Please note that you will not be entitled to a tax offset if your spouse has exceeded their non-concessional contribution cap for the year, or has a total superannuation balance from all of their superannuation accounts equalling or exceeding their total super balance cap of $1.6 million immediately before 1 July 2019.

Catch up Contributions

Not making your full superannuation contribution? Now you can catch up!

This year is the first year of new measures that enable people who have been out of the work force, like new Mums, to top up their superannuation.

If you have:

• A total superannuation balance below $500,000 as at 30 June; and
• Not utilised your entire concessional contributions cap ($25,000) for the year,

then you can ‘carry forward’ the unused amount on a rolling 5-year basis.

For example, if your total concessional contributions in the 2018-19 financial year were $10,000 and you meet the eligibility criteria, then you can carry forward the unused $15,000 over the next 5 years. You may then be able to make a higher deductible personal contribution in a later financial year. If you are selling an asset and likely to make a taxable capital gain, a higher deductible personal contribution may assist in reducing your tax liability in the year of sale.

Remember:

• Your total superannuation balance must be below $500,000 as at 30 June of the prior year before you utilise any carried forward amount (within the 5-year term); and
• In some cases, an additional 15% tax can apply (30% total) to concessional contributions made to super where income and concessional contributions exceeds certain thresholds ($250,000 in 2018-19). Your income could be higher than usual in the year when you sell an asset for a capital gain.