Superannuation Tax Planning Opportunities

Before making any superannuation contributions please discuss this with our office. There are strict eligibility requirements. Most importantly, regardless of the type of contribution being made the Super Fund must receive the contributions before June 30. Transfers and deposits must clear before June 30.

  • The maximum tax deductible contribution for most eligible taxpayers is $30,000. However, the cap increased to $35,000 on 1 July 2014 for individuals aged 49 or over on 30 June 2014.
  • Taxpayers who receive ‘income’ of $300,000 or more in 2014/2015 will have their tax deductible superannuation contributions taxed at 30% rather than 15%. Please note that the definition of ‘income’ is not ‘taxable income’ but is a special definition similar to that used for the Medicare Levy Surcharge.

If you are turning 60 years of age or more at some time in 2015/2016

  • You may be eligible to commence a tax free Transition to Retirement Pension (TTR) without stopping work. In addition, investment earnings on the amount in your superannuation pension account when you start the pension will also be tax free. For this reason you may wish to have an effective pension start date of 1 July 2015. If so, you need to tell your Superfund before 30 June 2015. Amounts withdrawn after your 60th birthday could be tax free.

  • Superannuants who are aged 55 to 59 may also be eligible to commence a TTR pension but may pay tax on some of the superannuation pension received.

Non-Concessional Contributions

  • The new cap for 2015 of $180,000 gives more room to make larger non-concessional contributions. With the bring-forward rules, an individual can contribute up to 3 years in advance, which means a total of $540,000 (3 x $180,000) can be contributed this year if you are less than 65 years of age. However, this is only if the bring-forward provisions have not been triggered in either of the two previous financial years. The previous limit of $450,000 remains for any bring-forward already used.
  • Individuals aged over 65 need to meet a ‘work test’ to make any contributions and cannot use the bring-forward provisions.

Spouse Contributions

If you have a spouse who has an Adjusted Taxable Income (ATI) of less than $10,800 then you can obtain a

maximum tax offset of $540 for a spouse contribution. The tax offset decreases as your spouse’s income exceeds $10,800 and cuts off when their income is $13,800 or more. Your spouse must be under 70 years of age.

Government Co-Contribution

If your adjusted taxable income (ATI) is less than $34,488 you can make a non-concessional contribution of up to $500 and the Government will match this contribution with a co-contribution for the same amount you have contributed. This tapers out at $49,488. To be eligible, individuals must earn at least 10% of their income from carrying on a business or as an employee, be a permanent resident of Australia and be under 71 years of age at the end of the financial year.

SuperStream reporting of Superannuation Contributions

A new system of electronically reporting superannuation contributions has been introduced and employers with more than 20 employees now have until 30 June 2015 to fully implement the SuperStream system. Employers with less than 20 employees have until 30 June 2016 to comply.

It is important that you comply with the regulations as soon as possible and employers will need to obtain the necessary electronic service addresses from your employees for reporting contributions.

For Trustees of Self-Managed Superannuation Funds, it is necessary to obtain an Electronic Service Address that can receive the necessary electronic information. 

Other 2015 Year End Tax Planning Opportunities

Disclaimer: This newsletter contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.