Get ready, SMSF trustees! The end of the financial year is upon us, and it's time to make some smart super moves. Follow our handy checklist, and let's power through these tasks to ensure that your Self Managed Super Fund is poised for success.
SMSF Contribution Timing is Key
As the financial year winds down, timing is everything for your SMSF contributions as you need to ensure your funds land in your super account by 30 June. If you use a clearing house, they might hold your funds for up to two weeks, and you don't want to miss the deadline. To sidestep any hassles, get your SMSF contributions settled by Monday 24 June.
Making Pension Payments From Your SMSF?
Make sure they're out the door before 30 June (which is a Sunday this year). Also, ensure that your accountant or financial planner doesn't hit the reset button on any pensions that have been grandfathered under the 2015 pension deeming rules. These pensions enjoy a special status and if tweaked without expert advice, could face the new deeming rates.
Review and Maximise Your Concessional Contributions
The FY24 cap for concessional contributions is set at $27,500. Stay within this boundary to avoid unnecessary complications. As of 1 July 2020, individuals aged 65 to 67 can also make contributions, broadening the scope for many SMSF holders.
Take note: If your income, including your salary, investment earnings, super contributions from your employer, and personal concessional contributions, total over $250,000 a year, you could be on the hook for Div 293 tax .
Also important, from 1 July 2024, the cap for concessional contributions will increase to $30,000, and the super guarantee rate will rise to 11.5%. It's worth reevaluating your SMSF contributions for the 2024-25 financial year in light of these changes.
If you plan to claim a tax deduction for personal concessional contributions, ensure you've notified the ATO by submitting a NAT 71121 form .
Lastly, it's important to include all forms of contributions in this cap, such as those from your employer, any salary sacrificed amounts, and even insurance premiums paid through your super. Lastly, if you do make personal concessional contributions. Don’t miss out on a tax deduction claim!
Make Use of Unused Carry Forward Concessional Caps
The carry forward rule permits you to make extra concessional contributions by using any of your unused caps from the last five financial years. Here's the key: To use this rule, your total super balance at the start of the financial year needs to be less than $500,000 across all your super accounts.
Since this rule kicked off in the 2018-19 financial year, you could potentially contribute a significant amount – up to $132,500 in one year – if you have unused caps dating back to 1 July 2018. To see where you stand with your Unused Carried Forward Concessional Contribution space, take a peek at your records on MyGov.
Explore Non-Concessional Contributions (NCC) Strategies
As of July 1 2022, you can make non-concessional contributions until you’re 75 years old without meeting the work test. The current cap is $110,000, but from July 2024, the NCC cap will increase to $120,000 annually, or up to $360,000 with the 3-year bring-forward rule, so plan accordingly for the next financial year.
You can use NCCs to move funds into your super from personal or business accounts. It’s also possible to move funds between spouses' super accounts to maximise the benefits in the pension phase.
Downsizer Contributions for Over 55s
If you're over 55 and sold your home this past financial year, you may be able to make a downsizer contribution to your super. Each member can contribute up to $300,000 from the proceeds of selling the home into their super, without affecting non-concessional contribution caps.
Keep in mind, from July 1 2024, the caps will rise, which could allow up to $660,000 for singles and $1,320,000 for couples when combined with the bring-forward NCC cap. Be sure to speak with your advisor about this strategy if it’s of interest for your future super planning.
Boost Your Balance with Co-contributions
Check if you're eligible for the government's co-contribution to your super. (Because who doesn’t like free money!) The contribution amount you get varies depending on your income and how much you've personally contributed to your super. To work out your potential co-contribution, use the ATO’s super co-contribution calculator .
Splitting Contributions with Your Spouse
Think about dividing super contributions with your spouse. This is particularly beneficial if:
- There's one main income earner with a significantly larger super balance,
- There's an age gap allowing the younger spouse's pension phase to start earlier, or
- It could enhance eligibility for concession cards or age pension by keeping more funds in the younger spouse's super.
Check Your SMSF Loan Agreements
Got property investments in your SMSF ? It's time to revisit any loan terms your SMSF might have, particularly if you've offered special conditions like low or no interest rates. Ensure your loan agreements are up-to-date and consider whether you need to make any changes.
For any internal or third-party loans, make sure you're on track with repayments. Look into the possibility of paying interest in advance or locking in a fixed rate to make the most of the current low rates.
If your SMSF is involved in a Limited Recourse Borrowing Arrangement (LRBA) , confirm all the required payments have been made through the SMSF trustee for the year. If you've purchased property through borrowing, double-check that the Holding Trust deed has been properly stamped by your state's Office of State Revenue. Note that for related party LRBAs, the variable interest rate currently stands at 8.85%.
Managing Capital Gains Tax Within Your SMSF
Take time to assess the capital gains on your investments this year and throughout the period you've held them. If you've got investments sitting at a loss, selling them could offset other gains, balancing out your tax obligations. For those in the pension phase, it may be wise to realise gains periodically to prevent a pile-up of unrealised gains that could be affected by legislative changes in the future.
Pension Payments – Get It Right
As the financial year ends, review your pension payments. Make sure they align with the minimum required and consider tax-smart strategies like commutation for any extra cash needed.
Have you considered reversionary pensions? Ensure your spouse has breathing room to manage your SMSF benefits after you’re gone with a reversionary pension. It’s a smart move, especially with the new TBC limits coming into play.
Find Clarity with a Trusted SMSF Advisor
Navigating the world of SMSFs can be tricky. Need some guidance? Let BlueRock be your trusted financial and SMSF advisors.
Remember, this checklist isn’t a one-size-fits-all. Your SMSF is as unique as you, and we're all about tailoring our advice to match individual client needs. So don't delay; give us a call and let's make sure your SMSF is all set to shine in this financial year and beyond!
Disclaimer: The information in this article is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This information has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information before acting or seek advice before making any financial decisions.
