With the end of the financial year rapidly approaching, it’s time to undertake a final review of your super to ensure that you have maximised your tax and retirement benefits for the 2017-18 year.

So what should you be considering in terms of super prior to 30 June 2018?

1. Maximise super contributions

Ensure that you have maximised your annual concessional (tax deductible) and non-concessional (undeducted or after-tax) super contributions. The following tables summarise the contribution caps for the current financial year .

Concessional contributions

Age                              2017-18
Under 75                      $25,000

• This cap is inclusive of any 9.5% compulsory employer contributions made on your behalf.
• Those earning more than $250,000 will pay an additional 15% contributions tax on their concessional contributions.
• If you are age 65 and over, you need to satisfy a work test of gainful (paid) employment of at least 40 hours in a consecutive 30 day period during the financial year in order to be eligible to contribute to superannuation.
• If you are over age 75, only mandated or compulsory super guarantee contributions are permitted.

Non-concessional contributions

Age                               2017-18
Under 65                      $300,000
65 to 74                        $100,000

For those under age 65, the non-concessional contribution caps listed are based on the annual non-concessional cap (i.e. $100,000 for 2017/18) brought forward over 3 years and would only be applicable for those people that have not exceeded their annual non-concessional contribution cap in the prior 2 financial years.
• If you are age 65 and over, you need to satisfy a work test of gainful (paid) employment of at least 40 hours in a consecutive 30 day period during the financial year in order to be eligible to contribute to superannuation.
• If you are over age 75, non-concessional contributions are not permitted.
• Individuals with total superannuation balances of $1.6m at the start of the financial year are not eligible to make non-concessional contributions to superannuation.

Also note your super contribution will not be counted for this financial year unless the payment is received by your super fund prior to 30 June 2018, which this year falls on a Saturday. So please allow for expected time delays depending on your method of payment.

2. Review your salary sacrifice agreement

Review your salary sacrifice agreement to ensure that you have maximised your salary sacrifice superannuation contributions for the 2017-18 financial year. If you do not have an agreement in place, then consider establishing an agreement with your employer for the 2018-19 financial year.

3. Personal concessional contributions and notice requirements

If you are eligible to make a concessional contribution in which you are able to claim a tax deduction, then you need to ensure that you have notified your super fund in writing of your intention to claim a tax deduction and you should also ensure that you receive an acknowledgment of your intention from your super fund. Without the notice and acknowledgment, your claim for a tax deduction for your personal contributions will be invalid.

Also in the 2017-18 year, employees are now eligible to make personal concessional contributions in addition to contributions made on their behalf by their employer, provided their total concessional contributions from all sources (including super guarantee) does not exceed $25,000.

4. Make a spouse super contribution

You may be entitled to an income tax offset of up to $540 for superannuation contributions for the benefit of a low-income (under $13,800) or non-working spouse who is under age 70.

5. Access the Government co-contribution of up to $500

If you’re under age 71, engaged in employment and your total income is less than $51,813, the government will co-contribute 50 cents for every $1 of any non-concessional (undeducted) super contributions that you make, up to a maximum of $500. This may be a useful strategy for low income working spouses or adult children working part-time.

6. Consider starting a pension from superannuation

If you are over age 55, consider commencing a pension from your super fund. Under the current super rules, anyone who has reached “preservation age” (55 for those born before 1 July 1960), can start a “transition to retirement income stream” (TRIS) and draw up to a maximum of 10% of their account balance each year. This is irrespective of whether they continue to work or not. Many use this strategy to reduce their tax but more importantly, increase their contributions to superannuation whilst supplementing their reduced take-home pay with their pension withdrawal.

Alternatively, if you are over age 65, or if you are under age 65, but have retired since commencing the TRIS, or if you are between age 60 and 65 and changed jobs after age 60, then you may convert your TRIS to a “retirement phase pension”. The earnings on super funds paying retirement phase pensions continue to be tax free, but only on fund earnings based on a maximum of $1.6 million of pension fund assets (see below).

7. Draw your minimum pension before year end

If you are already drawing a superannuation pension, please ensure that your fund has paid you the minimum pension before 30 June 2018. The minimum pension for the year is based on a percentage of your fund member balance as at 1 July 2017, or, if you started your pension during the year, the fund member balance at commencement pro-rata for part year. The minimum pension percentage factor for the 2017-18 year is as follows:

Age

 

Account Balance

%

 

* Minimum pension based on $1.6m balance on 1 July 2017

$

55-64

4.00

64,000

65-74

5.00

80,000

75-79

6.00

96,000

80-84

7.00

112,000

85-89

9.00

144,000

90-94

11.00

176,000

95+

14.00

224,000

If you had more than $1.6m in pension benefits as at 30 June 2017, then under the superannuation changes commencing 1 July 2017, you would have been required to wind back your pension benefits back down to $1.6m.

There is no maximum annual limit to your account-based pension, unless you are under age 65, still working and drawing a pension from your super fund, in which case the maximum annual limit is 10%.

8. Election for capital gains tax relief

Under the 2017 super reforms, self- managed super funds (SMSFs) are able to elect for capital gains tax relief, where, if certain conditions are met, to reset the cost base of fund assets to market value where a member was required to reduce their retirement phase pension balance to $1.6 million by July 1, 2017 or they had a TRIS (of any value).

This election is lodged with the 2017 year SMSF annual return which is due on 30 June 2018.

9. Event based reporting for SMSFs

If your SMSF was paying a retirement phase pension to a member on 30 June 2017 that continues to be paid on or after 1 July 2017, then the SMSF needs to lodge a transfer balance account report to the ATO by 1 July 2018.

10. Thinking about setting up an SMSF before year end?

If you are planning to set up an SMSF before year end, it may be better to defer the set up until after 30 June 2018, so as to avoid the fixed annual SMSF compliance costs that will apply regardless of how long the SMSF has been in operation.