Superannuation Tips – End of Financial Year
As the end of another financial year fast approaches, there are a number of important superannuation items that we will be helping our clients with over the next few weeks. Given the extensive changes that will apply to the superannuation system from the 1st of July, your year-end superannuation planning takes on increased importance this financial year.
Some of the items that superannuation investors need to be aware of include:
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Salary Sacrifice and Concessional contributions. Many clients have been budgeting to make the maximum concessional contributions to superannuation this financial year, which is currently set at $30,000 per annum for those aged under 49 as at the 1st of July 2016, and $35,000 per annum from those aged 49 and over as at the 1st of July 2016. With just a few weeks left until the end of the financial year, it may be worth checking with your superannuation fund, employer, or financial adviser, as to whether you are on track to meeting that target. Remember, the contribution is counted at the time it is received by your superannuation fund, and not the time at which your employer makes the payment.
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Non-Concessional contributions. As widely communicated over the past 12 months, the current financial year is the last opportunity in which people can contribute up to $180,000 each into superannuation in the form of non-concessional contributions, or $540,000 each using the bring forward provision. It is also the last year in which those with a superannuation balance of $1.6million and above can make any non-concessional contributions. Most clients who are planning to make these contributions will already have done so, or will be in the process of making them. It is still not too late however.
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Pension Payments. We are currently communicating with all of our self managed superannuation fund pension clients, to ensure that they have withdrawn the minimum amount of pension payments for the current financial year, as required by legislation. The minimum amount of pension payment a person is required to withdraw is generally a percentage of their pension account balance as at the 1st of July 2016. The percentage amount is based on a person’s age, as per the following table.
|
Age |
Percentage of account balance at 1 July |
|
Under 65 |
4% |
|
65 – 74 |
5% |
|
75 – 79 |
6% |
|
80 – 84 |
7% |
|
85 – 89 |
9% |
|
90 – 94 |
11% |
|
95+ |
14% |
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Superannuation Co-Contribution. For those earning under $51,021 in income in the current financial year, you may be eligible for the government co-contribution to superannuation of up to $500. To receive this, you simply need to contribute $1,000 into your superannuation fund prior to June 30, in the form of a non-concessional contribution. The government will then credit your superannuation fund with the co-contribution after you have lodged your tax return.
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2017/2018 Salary Sacrifice and Concessional Contributions. Remember, the limit on concessional contributions reduces to $25,000 per annum from the 1st of July 2017, regardless of one’s age. For those who are salary sacrificing into superannuation, you may need to organise with your employer to reduce your salary sacrifice payments in order to accommodate the lower limit on concessional contributions in the coming financial year.
Whilst we have had a number of conversations with clients who are concerned that the government is forever making changes to the superannuation system, and is also limiting the tax concessions available in the system, overall the superannuation system in Australia remains a great vehicle through which to accumulate wealth and save for one’s retirement.
If you have any questions please contact your Addison Partners contact or call us on 4995 7300