Perks Chartered Accountants
Wealth Management Alert
 

Superannuation Tips at Tax Time

With the end of financial year fast approaching it's time to think about...

1. Maximising deductible concessional contributions to superannuation

Concessional contributions include personal deductible contributions, superannuation guarantee payments and salary sacrificed amounts from all sources. 

This year the concessional contribution caps have been halved and care may need to be taken to ensure that contributions from all sources do not exceed the caps.

The table below shows the current concessional contribution cap limits:

 Age                                            

2009/10 

 Under 50 on 30 June 2010       

 $25,000

 50 or more on 30 June 2010

 $50,000





If you are making personal contributions to super you will need to ensure that you satisfy the 10% rule* to be eligible to claim a tax deduction and ensure that the deduction does not exceed your taxable income for the financial year.

2. Taking advantage of the Government Co-contributions Scheme

If your income** is less than $61,920 the Government Co-contributions Scheme may be for you.

In order to give Australians a helping hand towards their retirement savings, the Government contributes up to $1,000 towards the super accounts of eligible individuals who make an after-tax contribution to their super before 30 June.

The scheme works on a sliding scale – the less you earn, the more you get from the Government***.

For 2009/2010, you can get the maximum co-contribution amount of $1,000 if you earn $31,920 or less and make an after-tax contribution of $1,000. The co-contribution cuts out altogether when you earn $61,920 or more.

In order to be eligible for the Government co-contribution, you need to make a personal after-tax contribution to your super before 30 June 2010. The tax office will then calculate your co-contribution amount and deposit it into your super account.

3. Qualifying for a tax offset for spouse contributions

Taxpayers can access up to $540 as a tax offset for superannuation contributions made on behalf of a low-income or non-working spouse.

To receive the maximum offset you need to make a $3,000 non-concessional contribution on behalf of your spouse and the spouse’s total assessable income, reportable fringe benefits and reportable employer super contributions must be $10,800 or less.  The rebate reduces for every $1 above $10,800 and cuts out completely if your spouse’s income is $13,800.

4. Maximising after tax contributions

To maximize your retirement savings consider making after tax or non-concessional contributions.  The cap limit is $150,000 per annum and a two year bring forward rule applies for those 65 and under.

If you turned 65 during the financial year you can bring forward up to 2 years worth of non-concessional contributions and make contributions of up to $450,000 for the year (provided you haven’t made use of the bring forward rule in the preceding two financial years).  You will need to meet a work test though if you have turned 65 when you make the contribution.

If you are 63 or 64 and aiming to maximize your retirement savings, you might consider making non-concessional contributions of $150,000 per annum and defer using the 2 year bring forward rule until the financial year in which you turn 65 at which time you can contribute $450,000.

5. Minimum pension payments

If your superannuation account is in pension phase, you must withdraw a minimum level of pension from your super fund each year.

The 50% reduction in minimum pension drawdown requirements (initially announced in February 2009) has been extended to the 2009/2010 financial year.  The reduction applies to account based, allocated and (market-linked) term allocated pensions and annuities.

The minimum annual income payment from an account based pension is calculated as a minimum percentage of the account balance at commencement and each subsequent 1 July, as follows:

 Age
(at commencement of pension and each subsequent 1 July)

 Standard Minimum Annual Payment Percentage

 Minimum Annual Payment Percentage for 2009/10

 Under 65

 4.0%

 2.0%

 65-74

 5.0%

 2.5%

 75-79

 6.0%

 3.0%

 80-84

 7.0%

 3.5%

 85-89

 9.0%

 4.5%

 90-94

 11.0%

 5.5%

 95+

 14.0%

 7.0%

*The 10% rule requires that less than 10% of the sum of the individual’s assessable income, reportable fringe benefits and reportable employer superannuation contributions comes from employment related sources for the financial year.

** Your income includes assessable income for tax purposes i.e. wages, share dividends etc as well as reportable fringe benefits. It also includes most before tax or salary sacrifice contributions you make and can also include voluntary employer contributions where you have an option whether or not these are payable.

*** To be eligible, you must be under age 71 at 30 June 2010 and be an Australian citizen or permanent resident for that financial year, and you need to lodge your tax return for the relevant financial year. At least 10 per cent of your income must be earned as an employee (or, if you're self-employed, you must earn at least 10% of your income from carrying on a business).

Prior to acting on the above information please speak with your financial adviser and/or taxation accountant, so they can assess your situation and evaluate the relevance of this information in relation to your current circumstances.

Perks Wealth Management Pty Ltd
ABN: 88 086 643 058
Australian Financial Services Licence No: 236551

 

 

 

 

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