Self Managed Super Funds - Aston Accountants

SMSF Trustee Reminders – May 2019

In this article we go through some general reminders that SMSF trustees and members need to be aware of, and perhaps take action on before 30 June 2019.

We look at your contributions for the year, what a total superannuation balance (TSB) means, whether you can contribute to your superannuation account, what a work test is and how it affects you… and things to consider if you are turning 75.

Check your contributions

With only 6 weeks left of the 2019 financial year, it’s a good idea to review where your concessional contributions are up to.

The concessional cap for individuals for the 2019 financial year is $25,000. This cap applies per person so if you have more than one superannuation fund you should check all of them.

Concessional contributions are contributions that are considered ‘taxable’. Most commonly known as employer contributions, salary sacrificed contributions and contributions where you intend to claim a personal tax deduction.

If you have a salary sacrifice arrangement in place with your employer you should add up your total concessional contributions already paid to your superannuation fund from 1 July 2018 to present, to ensure you will not exceed your cap.

Amounts contributed over your annual cap are considered excess contributions and eventually will be taxed at your marginal tax rate plus interest.

Your Total Superannuation Balance (TSB)

Total Super Balance refers to the total amount an individual has in superannuation as at 30 June of the prior financial year ie currently for 30 June 2018.

The TSB is used to determine how often you need to report certain events to the ATO such as pension commencements and lump sums and most importantly whether you can make non concessional contributions (non-taxable contributions).

If you have a TSB of over $1.4m as at 30 June 2018 the amount you contribute to superannuation as non concessional contributions may be restricted. You will have noticed we have been requesting the 30 June balances of any other superannuation funds you have outside of your SMSF. This is due to the TSB applying not only to your SMSF balances, but all your superannuation balances. It is important you consider any other super funds you have before making non concessional contributions.

Am I allowed to contribute to superannuation ?

Apart from having to consider your TSB before contributing to superannuation you also need to consider your age. For individuals aged 65 and over at the time of contributing, you must meet a work test prior to making voluntary concessional or non concessional contributions.

So, what is this work test ?

Basically if you are aged 65-74 you must be working for a minimum of 40 hours in any 30 consecutive day period. By working, the ATO mean you must be gainfully employed where you receive remuneration for your efforts. ie not volunteering. Where you are employed and are paid per hours worked, the work test is usually quite easy to prove. For those that are self employed with varying hours of work, this can become more difficult to show you have done the necessary hours. We suggest keeping a timesheet or work diary to show the work test has been met.

If you are unsure whether you can meet the work test, check with us first! As a trustee you should not be accepting contributions from members 65 and over (even yourself!) if the work test has not been met.

Are you approaching 75 years of age?

If you are approaching 75 years of age you might be planning how to celebrate this occasion. And as much as we love a party, we’d hate for you to miss out on making your last contributions to superannuation.

For individuals turning 75 years old (that can meet the work test), contributions must be received no later than 28 days after the end of the month that individual turns 75 years old.

This may be the last opportunity to contribute to your superannuation fund. If you would like further information please contact us.

Superannuation Guarantee Amnesty

On 24 May 2018, the government announced the start of a Superannuation Guarantee Amnesty. The Amnesty will be available retrospectively from 24 May 2018 to 23 May 2019, subject to legislation passing.

The Amnesty gives employers a one-off opportunity to self-correct past super guarantee (SG) non-compliance without penalty. Catch-up payments made in the 12 month period will be tax-deductible.

To be eligible for the Amnesty and avoid harsher penalties the government requires employees to:

disclose their SG shortfall amount including nominal interest to us within the 12 month Amnesty period, and
not be subject to an audit of their SG for the relevant periods.

This won’t be final until the legislation is passed through Parliament however you can read more information about the government’s plan here.

Once the legislation is passed, we will be talking with clients that we believe may find this amnesty useful, or you are welcome to approach us for assistance.

in News / Running A Business / Self Managed Super Funds by Emily Yip

Increase your Superannuation before 30 June 2018

From 1 July 2017, all eligible Australians under the age of 75, including employees, are able to claim a personal tax deduction for extra superannuation contributions deposited to their superannuation fund before 30 June 2018 – providing you don’t exceed the superannuation cap of $25,000 and satisfy the work test if you are aged between 65 to 75.

So if your employer has contributed less than $25,000 into superannuation for you, or you are self-employed and have made no contributions so far this year, now is the time to consider topping up your superannuation fund.

Superannuation contributions that you claim as a personal tax deduction pay 15% tax which is collected and paid by your superannuation fund. This can be lower than your personal rate of tax.

Your Superannuation fund will be able to give you details of how to make the extra contribution but remember it MUST be received by the super fund by 30 June 2018 so it’s a good idea to do it a few days early just to make sure it gets there on time. Also you will need to complete some paperwork and submit it to your Superannuation fund in order for them to be tax deductible.

in News / Personal Tax Returns / Self Managed Super Funds / Tax Advice and Planning by Emily Yip

First Home Super Saver Scheme

Help to buy your first home

The First Home Super Saver Scheme (FHSS) was introduced to reduce the pressure on affordable housing. Access to this scheme applies from 1 July 2018.

From 1 July 2017 concessional and non-concessional contributions you make to your super fund can be applied to be released to help you purchase your first home. Release requests can only be made after 1 July 2018.

Concessional/before tax contributions include salary sacrifice amounts, contributions by your employer and any other contribution you have claimed a tax deduction for. Non concessional/after tax contributions are contributions you voluntarily make from your after tax dollars.

To be eligible:

applicants must be over 18 years of age
you must not have owned any property in Australia previously
you must not have used the FHSS already
intend to live in the property you wish to purchase as soon as practical after purchase
intend to live in the property for at least 6 months in the first year of owning the property

And no, don’t think about using the release funds to purchase a house boat, a motor home, vacant land or any other type of premises not capable of being occupied as a residence.

How much can you release from your super?

Eligible individuals can apply to release 100% of non concessional contributions and up to 85% of concessional contributions but are limited to a maximum of up to $15,000 in one financial year. The maximum that can be released is $30,000 in total across more than one financial year.

Will there be tax?

Of course there will be tax! The ATO will work out the tax to withhold from your released funds at your estimated marginal tax rate less a 30% tax offset or at 17% tax.

And yes, the released funds are also included in your taxable income in the year you request the release. But the amount won’t affect any family tax benefit calculations for that same year.

If your request to release the funds is granted, there is a 12 month time limit to sign a purchase or construction contract. Although it is possible to request an extension, if not granted, you can be requested to recontribute the release amount back to your super fund or pay further tax on the release amounts.

Please note the above is factual information only. If you would like advice concerning the FHSS and your personal situation please contact us. One of our authorised representatives would love to help you out.

in News / Self Managed Super Funds by Melissa de Largie

SMSF Events Based Reporting

You may have heard of Events Based Reporting but not quite sure what this means for you as a member of a SMSF.

The ATO’s initial proposal of Events Based Reporting had software providers, administrators and professional bodies scratching their heads at the thought of the additional administration and costs required to adhere to the ATO’s new requirements.

There have been many disgruntled conversations over the last few months regarding the impracticality of these new reporting rules from these parties.

The superannuation changes from 1 July 2017 certainly had us on our toes and as if these changes weren’t enough, the ATO started to talk about ‘events based reporting’ as a means to keep track of individual’s superannuation balances.

We have now heard good news that the ATO has taken on board the many suggestions and criticisms its proposals received and eased up on the reporting requirements they wished to implement.

When will Events Based Reporting commence?

The ATO announced that its implementation of SMSF event based reporting will commence from 1 July 2018.

SMSFs with member balances over $1 million:

Events Based Reporting will be limited to those SMSFs with members with total superannuation account balances of $1 million or more. These SMSFs will be required to report Transfer Balance Cap events 28 days after the end of the quarter in which the event occurred.

SMSFs with member balances under $1 million:

SMSFs whose members’ total superannuation balances are less than $1 million can report Transfer Balance Cap events at the same time the SMSF lodges it’s tax return.

The ATO originally expected all SMSFs regardless of account balances to report Transfer Balance Cap events monthly!

The final proposal will save SMSF’s excessive administrative costs.

SMSFs solely in accumulation phase are not affected by Events Based Reporting as it only relates to transfer balance cap events.

If you are one of our valued clients likely to be affected by the above reporting changes, you will hear from us closer to 1 July 2018 to help you transition to the new reporting rules.

If you would like to know more information please Contact Us