EOFY Superannuation Checklist | June 2017

As the end of the financial year rapidly approaches, these are the key superannuation considerations you need to make prior to 30 June.

Pensions

  • Ensure minimum pension paid otherwise pension will cease and fund will lose its tax exemption on earnings
  • For those of you with a TRIS, check maximum pension not exceeded

Concessional (Tax Deductible) Contributions

  • Pay balance of year’s contribution. Internet transactions on 30 June may not appear in bank accounts until 1 July
  • Remember – maximum contribution is $30,000 if you are under age 50. Those of you aged 50-74 have a maximum of $35,000.
  • If the fund member is in the 65-74 age group, ensure work test has been met prior to making contributions
  • Lodge splitting notices with super fund trustee
  • From 1 July 2017, this concessional cap will fall to $25,000 for everyone, so everyone will need to ensure their reserving and salary sacrifice strategies are appropriate. Also, ensure that all contributions are deposited with enough time so they are received by Friday 30 June 2017
  • From 1 July 2017, everyone who is eligible to make a contribution will be able to claim a tax deduction for personal superannuation contributions without needing to satisfy the 10% rule – you should seek advice on whether this could benefit you

Non-Concessional (Non-tax deductible) contributions

  • Make payments to super fund by 30 June
  • This fiscal year the maximum personal non-tax deductible contribution is $180,000, however, if you are under 65 years of age (if eligible) you could contribute up to $540,000 prior to 30 June 2017
  • From 1 July 2017, this cap will fall to $100,000 p.a. with a $300,000 fixed year bring forward. Those who triggered the bring-forward rule before 30 June 2017 but didn’t utilise the full $540,000 will be limited to a transitional bring forward cap. Advice should be sought if any further non-tax deductible contributions can be made over the 2018 and 2019 fiscal years
  • Those with a total superannuation balance of $1.6 million as at 30 June 2017 or more will not be able to make after-tax contributions past 1 July 2017. This could be the last opportunity to get additional funds into your super

Collectibles

  • Either have these removed from the fund or ensure new rules are complied with
  • Collectibles can be sold to members but sale must be at market value
  • If the collectibles are to remain in the fund, arrange insurance in the name of the SMSF trustee and have them removed from display at the member’s home or work premises

Property valuations

  • We have been inundated with enquiries about whether sworn valuations are required for property held by SMSFs at 30 June 2017 under the new reforms – these are not required. Please be aware trustees are required to value assets at 30 June every year and the ATO valuation guidelines have not changed. You can view the guidelines here

Related Party LRBA Loan

  • Ensure related party loans are based on commercial options or loans are amended to comply with safe harbour benchmarks in PCG 2016/5

Leases of property or equipment to associated parties

  • Ensure expired leases have been replaced
  • Make payment of any outstanding lease amounts

Loans to associated entities

  • Make certain loan is documented
  • Pay interest as required by loan
  • Reduce loan balance if needed to ensure compliance with in-house asset rules

SMSF fund expenses

  • For SMSF members in the accumulation phase, tax deductions for expenses are usually not significant, but it’s important to ensure expenses are actually incurred or paid before 30 June 2017 to be deductible in the current financial year

Preparing for the $1.6 million transfer balance cap and capital gains tax (CGT) relief

  • You will need to comply with the transfer balance cap and ensure all relevant documentation is formulated by 30 June 2017. Minutes should be created detailing your intent to transfer assets out of retirement phase to avoid breaching the new transfer balance cap. Minutes documenting how CGT relief is intended to be undertaken should also be produced
  • You should make sure that as of 1 July 2017 you only have $1.6 million in pension phase. This may require rolling some assets currently supporting a pension back to accumulation phase where their earnings are taxed at 15 percent. You may be eligible for CGT relief on assets affected by the new rules

Transition to retirement income streams losing their tax-exempt earnings status

  • From 1 July 2017, superannuation fund members will lose the tax-exempt treatment of earnings on assets that support a transition to retirement pension (TTR). You will still be able to start new or maintain existing TTRs, but they should be reviewed before 30 June in accordance with their SMSF’s objective

How can we help?

If you have any questions, require assistance or would like further clarification on any aspect of your end of year superannuation tax planning, please contact your Partners Wealth Group advisor on 1800 333 143 to discuss your specific requirements.

This newsletter contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider you financial situation and needs before making any decisions based on this information.