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End-of-year superannuation planning
End-of-year planning should be an important part of your overall tax strategy. Our tax professionals specialise in personal and business tax planning and can assist you with any of your superannuation questions. While we are conveniently located in the Melbourne suburb of Caulfield, feel free to phone us or just drop by.
We’ve put together the following tips to help better position yourself this financial year and point you in the right direction for the 2015-2016 year.
Maximise after-tax contributions
Double –check all your after tax contributions. The allowable cap is now $180,000, before the end of the 2014-2015 year.
Consider a salary sacrifice
Making a sacrifice of your salary is not a bad consideration to make. If you are going to receive a bonus before the year end, consider sacrificing it into your superannuation instead of taking the cash. You can take advantage of the 15% concession tax rate, but don’t forget about the excess contribution risks.
Remember directed termination payments into super are non-concessional
Any employment terminations payments cannot be directed into superannuation, since the tax law changed in 2012. All payments are now treated as personal contributions and may be included in your non-concessional cap for the financial year.
Using personal deductible contributions to offset capital gains
You may qualify to claim deductions for your personal super contributions if you satisfy the “10% rule.” This deduction can be used to potentially offset a capital gain from the sale of one or more of your assets. These personal contributions are subject to the general concessional contribution cap of $30,000 for the 2014-15 year. From July 1 2014 a $35,000 cap applies if you are 50 or over. Anyone over 65 will need to pass the “gainful employment test” as well.
Split super contributions with your spouse
If you decide on this option, the full amount of the original contribution counts toward your cap. Any amount over that will be included in your assessable income and taxed accordingly. Make sure to monitor your contributions carefully, especially when they are made quarterly. If you accidently go over the cap due to overlapping financial years, you may affect the caps of the following year as well.
SMSF’s: Keep within in-house asset rules
Make sure to reduce your fund’s in-house assets if they exceed the 5% limit. You can do this before 30th of June and still fail within this financial year.
SMSF’s: Make insurance more affordable
By purchasing life insurance, total or permanent disability insurance through your SMSF you will be able to benefit from the general 15% tax concession.
SMSF in pension phase drawdowns
Make sure you draw down your minimum pension payments by the 30th of June. If you fail to do so, the income derived from the asset may not be exempt from tax. Also, if you are almost 60 and want to cash out a portion of your super, consider waiting until you are over 60. By doing so, you will minimise your lump sum tax, potentially saving you money.
Hillyer Riches are tax agents in Caulfield, and are here to assist you with any of these tax planning ideas and can answer your questions about the end of the financial year. Remember the 30th of June is fast approaching!
Hillyer Riches Management Pty Ltd is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently