EOFY Super Checklist!

Yes, we blogged smart super strategies last week, but it’s the end of the financial year so we have prepared this EOFY Super checklist to make sure you do not forget to act!

These strategies assist you to:

1. Maximise your super,
2. Maximise your tax refund (or minimise your tax payable),
3. Take advantage of the super rules.

Sensible if you have the cashflow:

Make Concessional (tax-deductible) Contributions up to the $27,500 cap

With personal tax deductions (PDC) now available for super contributions, clients can top up their concessional contributions from personal savings if the amount from SGC, salary sacrifice are falling short of $27,500. If you make a PDC you must inform the super fund about your intention to claim a tax deduction for the contribution prior to lodging the 2022 income tax return (not required from 1st July 2022). Tip: Contributions are not considered until they are received by the super fund, so it is best to  top up your super fund by 20th June 2022 i.e. at least 10 days before the close of year.

Carry forward contributions if you have less than $500,000 as on 30th June 2021, you may be eligible for a higher cap of concessional contributions where you can utilize any unused or carry forward concessional contributions dating back to 1st July 2018. The trustee of the fund must acknowledge the receipt from a member of their notice of intent to claim a deduction to ensure the tax deduction for the contribution. A reminder that work test is required for those 67 and older till 30th June 2022 to be eligible to contribute.

Spouse Contributions

Spouse contributions are treated as non-concessional contributions and are not tax deductible, hence, they are counted towards the spouse’s con-concessional contributions cap.

If the spouse qualifies as a low income earning spouse (Below $37,000/year), the contribution made by the spouse may qualify for a tax offset for your super fund e.g. If the spouse contribution is $3,000 then you can qualify for a tax offset of up to $540.

Co-contributions and low-income superannuation tax offset (LISTO)

If an individual has made a non-concessional contribution of at least $1,000 to the superannuation fund, they may qualify for a co-contribution from the government of up to $500. An individual under the age of 71 and less than $57,016 income in the year 2021/22 who is self employed or employed by someone, qualifies for this. The payment from the ATO will be paid directly to the qualified individuals super fund once they have lodged the tax return for the financial year.

For individuals who have earned less than $37,000 in the financial year, ATO will automatically pay up to $500 under the Low-income superannuation tax offset (LISTO). However, this will depend on the amount of tax-deductible contribution made to the superannuation.

Non-concessional contributions – $110,000 cap

For anyone under the age of 67, the bring forward rule can be accessed if your total superannuation balance (TSB) is no more than $1.59 million e.g. If your TSB is between $1.48 million & $1.59 million – then you can bring forward one year of the non-concessional cap of $110,000. And if your TSB is no more than $1.48 million, then you may qualify to bring forward two years of the cap. All these contributions must be in the fund’s bank account before 30th June 2022.

Did you know?

After retirement contributions age 67-75

For those who are aged between 67 & 75, there is a special concession for contributions. If your TSB is no more than $300,000 on 30th June in the previous financial year, you may be entitled to make concessional and non-concessional contributions to super without having to meet the ‘Work Test Requirement‘.

From 1st July 2022, if you are 67 to 75 year old and wish to make voluntary deductible contributions to your superannuation, you must meet the work test requirement. For all other non-deductible contributions, the requirement for a work test has been scrapped in the latest Treasury bill passed earlier this year (Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest Bill 2021). Once you reach the age of 75, you will be ineligible to make any voluntary contributions, unless it is within 28 days of you turning 75.

Downsizer contributions

Downsizer contributions to your super from sale of your home is beneficial as you may end up in a lower tax rate if the monies are invested via your super fund instead by individuals due to nil tax rates for pensioners or 15% tax rate for accumulators. You can contribute a maximum amount of $300,000 or lesser if the sale price of your home is below $300,000. You may make more than one contribution, but the total must not exceed the maximum specified limit and all contributions must be made within 90 days of settlement of your own home.

Your spouse and you can both make a downsizer contribution ($600,000), even if your spouse was not on the title of your home. But the combined value of your spouse’s contribution and your own cannot exceed your home’s sale price Downsizer contributions are exempt from contribution rules but they still count toward the $1.7 million transfer balance cap. The government passed a measure in Feb 2022 to reduce the eligibility age for making downsizer contributions from 65 to 60 years, which will come into effect from 1 July 2022 this year. Age is important at the time of making a contribution. For example if a person is 59 years today and sells his house today – settlement could be 42 days later – after his 60th Birthday and after 1st July 2022, he will be able to make the contribution as it will meet all the criteria’s.

Don’t Forget:

To make your Minimum Pension Payments

Super members must ensure that the minimum withdrawal amounts relating to their account based pension or transition into retirement income stream have been withdrawn before 30th June 2022.

To be safe and protect yourself if you are a SMSF Trustee make sure the pension payments leave the account by close of business day on 30th June 2022, unless they are paid by cheque in which case it should be done a few days before 30th June 2022 to avoid delay.

The 50% reduction in the minimum draw down rates has been extended to 30th June 2023.

Please call if you would like to discuss, this is general advice and should not be implemented without you checking and confirming its appropriateness for you with your tax or wealth adviser.