Save on Tax this year with this Super Strategy!
MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS
The concessional superannuation cap for 2018 is $25,000 for people of all ages. Do not go over this limit or you will pay more tax! The non-concessional contributions cap for the 2017/18 has been reduced to $100,000. Individuals with total superannuation balance of more than $1.6 million are not eligible to make non-concessional contributions.
The full co-contribution rate applies for income up to $36,813 and the partial co-contribution applies for income up to $51,813 for the 2017/18 tax year.
Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.
Personal Superannuation Contributions Deductions for personal superannuation contributions are now allowed for all individuals under the age of 75 (including those aged 65 to 74 who meet the work test). Previously, a deduction was only available to individuals whose employment income was less than 10% of their total income.
For the contribution to be counted towards the employee’s 2018 contribution cap, it must be received by the fund by 30 June 2018.
FOR THOSE IN TRANSITION
From 1 July 2018, the earnings of a transition to retirement pension will be taxed at up to 15%, the same as they are in a super accumulation account. The earnings of ordinary retirement pensions are still tax free.
The transfer balance cap was introduced on how much super can be transferred to a tax-free account based pension. Excess transfer balance tax is payable for exceeding the cap. The transfer balance cap for the 2017/18 tax year is $1.6 million and will be indexed by CPI, rounded down to nearest $100,000.
LOW INCOME EARNERS
The spouse contributions tax offset will be available for individuals contributing to the superannuation account of a spouse whose income is up to $37,000. This will reduce up to when the spouse’s income reaches $40,000.
The low income superannuation contribution scheme has been replaced by the low income superannuation tax offset. Individuals with an adjusted taxable income up to $37,000 will receive a refund into their superannuation account of the tax paid on their concessional superannuation contributions, to a cap of $500.
The maximum super contributions base for high income earners is $211,040 per annum for the 2017/18 tax year. High income earners become liable to pay Division 293 tax when their income for surcharge purposes reaches $250,000.
This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client’s specific circumstances. © Business Edge Accountants