End Of Financial Year Checklist

[Andrew from Vista Financial]

With the end of financial year fast approaching please find below a checklist of things to consider now to set you up for a fiscally positive future.

 

 

Superannuation

 

If over 59, maximise your concessional superannuation contributions:

 

The limit applying to concessional superannuation contributions for the 2013/14 financial year is $25,000. However, if you are aged 59 or older as at 1 July 2013, a transitional limit of $35,000 applies, presenting an opportunity to maximise your concessional contributions before the end of the financial year.

 

Claiming a tax deduction for your personal superannuation contributions?

 

If you are intending to claim a tax deduction for your personal superannuation contributions, a Notice of Intention to Claim a Tax Deduction (s.290-170 Notice) must be lodged with your superannuation fund before any one of the following events occurs (whichever is the earlier):

 

• Lodgement of the income tax return for the financial year in which the tax deduction is being claimed;
  
• Commencing a pension;
  
• Withdrawing superannuation benefits;
  
• Rolling over superannuation to another superannuation fund.
  

 

Maximise your non-concessional contributions

 

Non-concessional contributions are personal contributions made from after-tax income. For the 2013/14 financial year, non-concessional contributions are limited to a maximum of $150,000. Members who were under 65 as at 1 July 2013 may be able to bring forward up to three years contributions and potentially contribute up to $450,000.

 

Defer making large non-concessional contributions until after 30 June 2014

In some cases, deferring large non-concessional contributions and triggering the three year bring forward rule until after the end of this financial year may be prudent.

 

 

Care needs to be exercised when making large non-concessional contributions.

 

Salary sacrificed contributions

 

This means foregoing part of your salary in favour of having additional concessional contributions made to super by an employer can deliver tax advantages.

 

Existing salary sacrifice arrangements should be reviewed on a regular basis, at the very least annually. Reviewing a salary sacrifice arrangement before the end of the financial year and amending for the following financial year represents good planning.

 

Turning 65 and not working?

 

Superannuation contributions can generally be made by anyone under 65 without the need to satisfy a “work test”. However, between ages 65 and 75, a superannuation fund is only able to accept contributions from a person who has been gainfully employed or self-employed for a minimum period of 40 hours worked over not more than 30 consecutive days in the financial year in which the contribution is being made.

 

 

If approaching 65 and not working, consider making superannuation contributions before your 65th birthday.

 

Review pension drawings

 

If you are drawing an income from an account based pension (also known as an allocated pension), check to ensure that the prescribed minimum level of income has been drawn in the current financial year.

 

Government co-contributions for low income earners.

 

If you are earning less than $48,516 and make a non-concessional contribution to superannuation you may be eligible to have the Government top up your contribution with up to an additional $500.

 

Spouse contributions

 

Where a spouse makes a non-concessional contribution to superannuation for their spouse, they may be entitled to receive a tax offset of up to $540 provided the spouse for whom the contribution is made has an income of less than $10,800.

 

Spouse contribution splitting

 

Superannuation laws allow you to split your concessional contributions with an eligible spouse in order to build up retirement savings for the other. Splitting superannuation contributions allows for couples to balance their superannuation savings between partners.

 

Life insurance held in super

 

With effect from 1 July 2014 restrictions will apply to the types of insurance that can be held through superannuation. Policies affected from 1 July 2014 will be limited to those that provide for the payment for an insured event that is aligned to a superannuation condition of release.

 

Self-managed superannuation funds

A new penalty regime will apply from 1 July 2014 to trustees of self-managed superannuation funds who are in breach of certain superannuation law provisions. Where breaches are identified, trustees will be personally liable for any penalty the Regulator imposes.

 

 

It is timely for SMSF trustees, in conjunction with the professional advisers, to rectify breaches prior to 30 June 2014.

 

 

Taxation

Defer or bring forward income for the current financial year

 

Consider deferring income on which tax is otherwise payable until the start of the next financial year. This may include selling assets that may generate an assessable capital gain. However, in some cases it might be advisable to bring forward income to the current financial year, particularly where income in the next financial year is likely to exceed $180,000.

 

From 1 July 2014, the Medicare Levy increases to 2% (from 1.5%) and the Temporary Budget Repair Levy of 2% will apply (subject to the relevant legislation being passed).

 

 

Pre-pay interest and tax deductible expenses

Pre-paying interest and tax deductible expense may allow the tax deduction to be claimed in the current financial year. But, for high income earners, deferring the payment of expenses until the next financial year might be appropriate in those case where the Temporary Budget Repair Levy will apply.

 

Documentation

 

Review receipts, log books and other documentation to ensure that all records required to manage tax affairs are in order.

 

 

Conclusion

 

With the end of the financial year rapidly approaching, it is time to give consideration to a range of issues that could affect your finances going forward. Some aspects of personal financial management may best be deferred until after 30 June 2014, whereas others may need to be brought forward.

[Diane]

Thanks Andrew - what's the minimum contribution you need to make to get the Govt co-contribution of $500 ... is it still $1,000?

 

Government co-contributions for low income earners.

 

If you are earning less than $48,516 and make a non-concessional contribution to superannuation you may be eligible to have the Government top up your contribution with up to an additional $500

[Blossom]

I was just about to ask the same. My super is looking pretty poor, so maybe time to top it up a little.

[Andrew from Vista Financial]

Thanks Andrew - what's the minimum contribution you need to make to get the Govt co-contribution of $500 ... is it still $1,000?

 

Government co-contributions for low income earners.

 

If you are earning less than $48,516 and make a non-concessional contribution to superannuation you may be eligible to have the Government top up your contribution with up to an additional $500

 

 

Hi Diane

 

Yes $1,000 is the minimum contribution required to get the maximum co-contribution of $500, so long as assessable income is below the lower income threshold of $33,516.

 

This may help https://www.ato.gov.au/Individuals/Super/Other-contributions/Government-super-contributions/

[Blossom]

Sorry, I'm confused. Is it under $33,516 or $48,516?

[Andrew from Vista Financial]

Hi Blossom

 

Don't worry you're not the only one, the government don't make it easy sometimes even Planners have difficulty keeping up with all the tinkering to superannuation legislation!!

 

There is the lower income threshold hold which is $33,516 and the higher income threshold of $48,516.

 

If an eligible person contributed $1,000 an earned under the lower income threshold they would receive the maximum co-contribution of a $500.

 

If an eligible person had income of say $40,000 the maximum co-contribution they could receive is $284. Therefore the minimum that person would need to contribute to get the maximum co-contribution available to them is $568.

 

Hope that helps

Edited June 16, 2014 by Blossom

[Andrew from Vista Financial]

 

If an eligible person contributed $1,000 an earned under the lower income threshold they would receive the maximum co-contribution of a $1,000.

 

 

Ooops hopefully you realised my mistake (can't edit post) should say: maximum co-contribution of $500.

[Blossom]

You should be able to edit, but I'll adjust if for you. :-)