Save on Tax this year with this Super Strategy!
MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS
The concessional superannuation cap for 2019 is $25,000 for people of all ages up to the age of 65. 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 for people up to the age of 65. Individuals with total superannuation balance of more than $1.6 million are not eligible to make non-concessional contributions. If you’re not sure, you should seek or call a specialist with a discussion with your accountant or Super Fund support team.
The full co-contribution rate applies for income up to $37,697 and the partial co-contribution applies for income up to $52,697 for the 2018/19 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. Still not sure, that is ok as we understand it can get confusing and recommend you seek a professional for guidance, feel free to book in online now.
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 2019. This means even if you’re not in business, you can access this saving and get a bigger refund for your effort.
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 2018/19 tax year is $1.6 million.
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.
DOWNSIZE YOUR HOME
From 1 July 2018, people aged 65 or over can make contributions into their super account of up to $300,000 ($600,000 for a couple) using the proceeds from the sale of their main residence. Although these ‘downsizer’ contributions are considered non-concessional (after-tax) contributions, they are in addition to any voluntary contributions made under the current non-concessional contributions cap ($100,000 in 2018/2019).
Downsizer contributions can be made regardless of your annual non-concessional contributions cap position and whether you meet the requirements of the work test. If you are aged 75 and over, you can still make a downsizer contribution even if you have never worked.
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