End-of-year superannuation planning

To get your superannuation into its best tax position, for this year-end and into 2015-16 and beyond, consult this office on which strategies suit you best. But to start with, the following tips may help point your thoughts in the right direction.

Maximise after-tax contributions

Double-check your non-concessional (after-tax) contribution figures to make sure contributions are made up to the allowable cap — now $180,000 — before the end of the 2014-15 financial year. Generally, unused cap amounts are not carried over to future financial years.

Consider salary sacrificing

Salary sacrificing is never a bad consideration to make. If you are likely to receive a bonus before year-end, you can always salary sacrifice it into superannuation rather than receiving it as cash to take advantage of the 15% concessional tax rate. However, don’t forget about excess contributions tax risks.

Remember directed termination payments into super are non-concessional

Since June 30, 2012, employment termination payments can’t be directed to superannuation as directed termination payments. All employment termination payments are now treated as personal contributions, and therefore may count toward your non-concessional cap for the year.

Using personal deductible contributions to offset a capital gain

If you satisfy super’s “10% rule”, you may be eligible to claim a deduction for your personal super contributions. A deduction could be used to possibly offset a capital gain from the sale of one or more assets. Personal deductible contributions are subject to the general concessional contributions cap. For 2014-15 this cap is $30,000, but from July 1, 2014 a higher $35,000 cap also applies for people 50 and over. Individuals over 65 will also need to meet the “gainful employment test”.

Split super contributions with your spouse

If you decide to go down this route, note the full amount of the original contribution counts toward your concessional contributions cap. Any amount over the cap will be included in your assessable income and taxed at your marginal rate, making you also liable for the excess concessional contributions charge. In this case, you will get a non-refundable tax offset equal to the 15% tax paid by your fund on this amount.

In general, it’s good practice to monitor your super contributions to make sure you don’t inadvertently exceed a cap — especially contributions made quarterly, which may result in a payment bridging two financial years and affecting the caps of the latter year.

SMSFs: Keep within in-house asset rules

If your fund’s holding exceeds 5% limit on in-house assets, reduce it by June 30 this year.

SMSFs: Make insurance more affordable

Purchase life and total and permanent disability insurance via your SMSF to benefit from the general 15% tax concessions.

SMSF in pension phase drawdowns

Make sure you have drawn down the required minimums by June 30, or the investment income derived from the assets supporting that pension may no longer be exempt from tax. If you’re almost 60 and want to cash out some of your super, consider waiting until over 60 to minimise potential lump sum tax.