As the end of financial year fast approaches, clients are reminded to consider their tax planning strategies to ensure prompt action is taken before the 30 June deadline.
Below are some useful reminders and references for SMSF trustees in the lead up to 30 June.
It is important to understand your contribution caps and how much you have utilised for the current year to date:
- The concessional cap (before-tax) is $25,000 whilst the non-concessional cap (after-tax) is $100,000.
- A reminder that members aged 65 to 75 are required to meet the work test before making any non-mandated contributions. That is, being gainfully employed for at least 40 hours in 30 consecutive days within the financial year the contribution is made.
- Be mindful that the $100,000 non-concessional cap can only be utilised where your total superannuation balance was less than $1.6 million at 30 June 2017.
- Members under age 65 could possibly utilise the bring forward rule which allows non-concessional contributions of up to $300,000 over 3 years, provided this hasn’t been triggered in the previous 2 years.
- Any contributions made to your Superfund must be received by 30 June in order to be claimed as a deduction in the 2017/18 financial year.
- Care needs to be taken when making personal payments of accounting or other expenses of the SMSF. These payments may be considered to be contributions to the fund, which the fund may not be able to accept dependent on the age of the members as well as other factors.
Members who are accessing an account based pension from their SMSF need to ensure that the minimum pension amount required is paid out from the SMSF by 30 June 2018. Where this minimum payment has not been paid by 30 June 2018, the pension may be treated as having ceased at 1 July 2017 and will be taxed as an accumulation account.
Transfer Balance Cap? – The $1.6m Question:
From 1 July 2017, the Government introduced a new limit on the amount of funds that can be transferred to a tax-free pension account. This limit was set at $1.6 million which is referred to as the transfer balance cap.
- SMSF’s have a new obligation to report certain events to the ATO which impact a member’s Transfer Balance Cap.
- The new Transfer Balance Account Report (TBAR) is lodged separately to the Fund Return. Commencing from 1 July 2018, the report is lodged annually or quarterly depending on whether the SMSF had any members with a Total Superannuation Balance (TSB) of $1 million or more. For the purposes of the TBAR, the TSB is measured as at 30 June 2017 for members who had an existing pension account or commenced a pension during 2017/18.
What Do You Need To Do?
We currently use Class Super software to meet the reporting obligations of our SMSF clients and this software will provide capability for TBAR lodgement with the ATO after 1 July 2018.
We will be sending out TBAR declaration reports to the trustees of Fund clients to give us permission as their tax agent to electronically lodge TBAR records on their behalf with the ATO.
Should you have any questions in relation to Self Managed Superannuation, we encourage you to contact our dedicated Super Team.