The art of saving your wealth by paying less tax.
Before the 30th June, consider the action you may need to take to get maximum tax advantage.
We can maximise your individual or employing entity super deductions. SMSF’s can use contributions reserves to often provide double tax deductions providing massive tax savings. TTR mechanics and strategies and commencing of pensions in SMSF to lower the tax you pay. Please contact us well before June 30 2014 for a free assessment.
- Increased tax deductable contributions cap for anyone 60+
For anyone under age 60 this financial year, the maximum amount of tax deductible contributions that can be made to superannuation without penalty is $25,000. However, for anyone age 60 and above the maximum amount is $35,000. These contributions include amounts made as salary sacrifice, Superannuation Guarantee or personal deductible contributions. - Claiming tax for personal super contributions.
Self-employed and investor clients in receipt of a pension that receive less than 10% of their income, fringe benefits and other related payments from employment may qualify for a personal tax deduction to superannuation. If they intend to claim a tax deduction, make sure the fund is notified of the amount to be claimed as a deduction before the end of the next financial year, that is, before 30 June 2015. - Making after tax contributions to super.
After tax contributions to super can come from personal savings, transferring personal investments, an inheritance or from the sale of investments. This financial year the maximum personal after tax contribution is $150,000, however, if you are under 65 you can contribute up to $450,000 over a three year period. The way it works is that for those under 65 that make total after tax contributions of more than $150,000 in a financial year, the bring forward rule is triggered. This allows non-deductible contributions of up to $450,000 in total over a fixed three year period commencing in the year in which more than $150,000 was contributed. This may sound like a real bonus, however make sure the after tax contribution caps are not exceeded because there may be penalty tax payable.TIP: From 1 July 2014 the after tax contributions cap increases to $180,000 which means if the bring forward rule is triggered then a total of $540,000 can be contributed over the fixed three year period.TRAP: If you trigger the bring forward rule before 30 June, the maximum amount will be $450,000 for the fixed three year period. - Beware of excess contributions tax.
Trustees making large superannuation contributions should exercise extreme care for any type of contributions to avoid excess contributions penalties. This can apply to any tax deductible and non-tax deductible contributions made to super. The maximum amount of tax payable can be up to the maximum tax rate of 46.5% plus additional penalties. - Government co-contribution.
Trustees can take advantage of the Government co-contribution if their adjusted income is less than $48,516. This can be done by making after tax (non-concessional) super contributions before the end of the financial year. For every dollar of contributions that are eligible, the Government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500. For 2013/14, the maximum government co-contribution is payable for individuals on incomes at or below $33,516 and reduces by 3.33 cents for each dollar above this, cutting out completely once an individual’s total income for the year exceeds $48,516. - Drawing superannuation pensions.
For those trustees in pension phase, make sure the minimum pension has been paid out for this financial year. By not receiving the required minimum pension any income earned on pension investments in the superannuation fund will be taxed at 15%, rather than being tax free if the pension rules are met by the fund. - Drawing superannuation lump sums.
Once trustees reach 60 all lump sums from superannuation are tax free. However, before age 60 any lump sums that include a taxable component can be taxable. The taxable component includes the tax deductible contributions plus any income that has accumulated on a superannuation benefit. No tax is payable on taxable amounts of up to $180,000, in total, received prior to age 60. This amount is indexed annually. Trustees may consider deferring receiving a lump sum until after reaching age 60 or until a later financial year when they may end up paying a lower rate of tax. - 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 to be deductible in the current financial year.
Contact SuperShift IQ or your SuperShift Affiliate for more information.