Latest News

Hot Issues
spacer
State and Federal COVID-19 support --- January - 2022
spacer
Beware section 99B
spacer
ATO provides further clarity on DIN process
spacer
Unpaid client invoices placing greater pressure on SMEs
spacer
10 top global corporations since 1998
spacer
Increase in the number of SMSF members
spacer
Single Touch Payroll (STP) – Phase 2
spacer
ATO reiterates tax system incentives
spacer
Our 2021 Advent Calendar.
spacer
ATO flags focus areas for combating $33.5bn ‘tax gap’
spacer
Business Resources - Grants, Assistance, Resources and more.
spacer
Employee Christmas Parties and Gifts – Any FBT?
spacer
FBT – Christmas Parties and Taxi Fares
spacer
How the best firms are supporting the mental health of their employees
spacer
Asian Economies (1960 - 2020)
spacer
Making the festive season less taxing
spacer
Why more Millennials are turning to SMSFs
spacer
Company directors must register - all you need to know
spacer
Hardship priority processing of tax refunds
spacer
Business valuations: Tips, tricks and traps
spacer
Government moves to scrap SG $450 threshold
spacer
World's most productive countries
spacer
Superannuation changes - Superannuation guarantee (SG)
spacer
Unused Super Contributions
spacer
Main residence exemption myths and misconceptions
Article archive
spacer
Quarter 4 October - December 2021
spacer
Quarter 3 July - September 2021
spacer
Quarter 2 April - June 2021
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 3 of, 2020 archive
spacer
September update of latest COVID-19 initiatives.
spacer
ATO JobKeeper 2.0 guidance surfaces
spacer
Expats Return to Australia – Travel Expenses
spacer
Profession to be relied on for post-JobKeeper turnover certificates
spacer
Update of Superannuation contribution rules from July 1, 2020
spacer
Expats & COVID-19 Impacts on tax residency
spacer
Economic recovery could be slower than anticipated: RBA
spacer
High Court rules in favour of employers on personal leave accruals
spacer
JobKeeper Phase 2 - Latest Update
spacer
Payroll Tax 2020 concessions and JobKeeper
spacer
High alert issued over myGov tax time scam
spacer
Extended director penalty regime to catch out ‘zombie companies’
spacer
SG amnesty deadline - 7 September
spacer
‘Hundreds’ to be contacted in ATO early super compliance blitz
spacer
90,000 SMEs to benefit from new JobTrainer program
spacer
Work Related expenses – 2020
spacer
‘Everyone is now on notice’: ATO acquires COVID-19 data on 3m Aussies
spacer
Extra Tools & Resources for our clients.
spacer
Year End Tax Deductions – “equipment”
spacer
Home Office Claims 2020
spacer
Early release of super sees ‘high take-up’
spacer
Tax time 2020: ATO homes in on rental deduction claims
spacer
ATO announces Div 7A COVID-19 assistance
Update of Superannuation contribution rules from July 1, 2020

 

The rules around Superannuation contribution change almost every year, so it is important that taxpayers know what these changes mean to them.

 

       

The following outlines what has changed.

An increase in the age required for the work test.

From July 1, 2020, the age required rose from 65 to 67. The main benefit of this change is that it provides, where possible, an additional opportunity to implement voluntary super contribution strategies.

What taxable contributions can be made for the year ending June 30, 2021?

There is a cap of $25,000 per person for those able to make extra contributions to their super during the 2020/21 financial year. Any excess over this concessional contribution (CC) cap is taxed at the individual's marginal tax rate.

CCs are contributions where a tax deduction is claimed and include:

  • Superannuation guarantee contributions (SGCs)
  • Employer voluntary / extra contributions like salary sacrificing
  • Member taxable contributions claimed as a deduction in personal ITR.

The CC cap will, in most cases, exceed employer contributions in 2020/21. If this is the case, then consideration could be given to adding personal taxable contributions to get you up to the $25,000 limit.

The higher your income, the greater the tax savings and keep in mind that there is no upper age limit for being eligible to receive SGCs.

Carry forward provisions

An indivdual can carry forward CCs if their total superannuation balance (TSB) is less than $500,000.

Unused contributions can be carried forward for five years. This option came into effect in 2019/20.

An important consideration prior to June 30, 2021 is to see if you can utilise this carry forward option to bolster your CCs before the date noted.

Work test

If an individual is under 67, there is no work test required to be able to make a contribution.

The work test is where, once you turn 67, you must be able to show that you have been gainfully employed for 40 hours or more in any 30-day period in a financial year.

If an individual is between the ages of 67 to 74, they must meet the work test in order to make a contribution.

Splitting of contributions

An individual can split their CCs that are made on their behalf to a spouse but they need to meet certain requirements.

The main reasons to split contributions are to:

  • Assist with the limit of only being allowed to have $1.6 million to start an account-based pension with
  • Assist with ability to make non-concessional contributions (NCC) given the cap limit also of $1.6 million
  • Assist with the ability to use the carry forward provisions given the member balance cap of $500,000
  • Address age differences between spouses and the ability to access benefits at an earlier date
  • Access Centrelink advantages by minimising a member’s account
  • Allow a member to have sufficient superannuation to be able to pay life insurance.

Spouse rebate for super contributions

A spouse rebate, up to a maximum of $540, can be claimed for superannuation contributions for the year ending June 30, 2021.

If your spouse earns less than $37,000 per year and you contribute $3,000 into superannuation for them, you can claim a tax rebate of $540.

Spouse contributions can be made if you are aged under 75 from July 1, 2020.

What tax-free contributions can be made for 2020/21?

Non-concessional contributions (NCC) are those contributions made into a super fund from after tax income. In this case, an individual is not claiming a tax deduction. There is a cap for NCCs of $100,000 for the 2020/21 year.

Members under 65 have an option to contribute up to $300,000 over a three-year period, depending on their total superannuation balance (TSB). The rule works as follows:

TSB NCC and bring forward amount

< $1.4M $300,000 over 3 years

> $1.4 & < $1.5M $200,000 over 2 years

> $1.5 & < $1.6M $100,000 over 1 years

> $1.6M $0 (nil)

To be able to make an NCC, a member must meet the work test, as described above.

The increase from age 65 to 67 also impacts on the ceasing work contribution rule as of July 1, 2020 by given more time to make a NCC.

NCCs can be made on a once-off basis in the financial year after you have ceased employment if your TSB is less than $300,000 as of June 30 in the previous financial year. You also need to be under 75.

Downsizing contributions and how this applies to those over 65 years of age.

From July 1, 2018, anyone 65 years or older can make a downsizer contribution of up to $300,000 from the proceeds of selling their residential home.

The contribution is not an NCC and does not count towards the contribution caps, so it goes into superannuation as a tax-free contribution.

If a member has more than $1.6 million in superannuation, they are still allowed to make a downsizer contribution.

If the downsizer contribution is made and is placed into retirement phase, it will count towards a member’s transfer balance cap, which is $1.6 million.

If you are thinking of downsizing then speaking to a financial planner will help clarify eligibility requirements.

Get more from your super

If you have any questions on the above then simply ask us.

 

 

PlannerWeb

 

 

 

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922