The end of the financial year is closing in fast.
Have you have taken full advantage of the contribution caps?
In 2020-21 non-concessional contributions are limited to $100,000 and concessional $25,000. Before topping up your superannuation balance it is important to review your contributions to date to ensure you do not exceed the relevant caps.
For those with balances of under $500,000, you may also be able to utilise your non-used concessional caps from 2019 and 2020 to top up your concessional contributions before 30 June and gain the associated tax deductions.
From 1 July 2020 going forward, everyone is eligible to contribute without working as long as they are under 67 years at the time.
Whilst the benefits have been somewhat reduced by the $1.6 million transfer balance cap, those nearing retirement should consider whether a re-contribution strategy may be appropriate. This strategy is used to reduce the taxable component of your SMSF which has the benefit of reducing the tax payable when your balance is passed to your adult children.
Downsizing & Super Contributions. For those over 65 this financial year, they may be able to contribute an additional $300,000 each under the ’limit.
The Federal Government recently confirmed that minimum pension discounts would continue for another financial year. However, the reduction will likely see many people exceeding their minimums, in which case it may be beneficial to consider whether any excess payments can be drawn as sums’from your pension or accumulation component, rather than applied against your tax-free pension cap.
Now is an important time to closely review your SMSFs investment strategy, with your annual audit and accounts just around the corner. Investment strategy documents should not be set and forget, so all trustees should be reviewing and confirming that their current portfolio suits their strategy and vice versa.
It is also important to check your binding death benefit nominations, which determine how your SMSF benefits will be paid. This can be lapsing, non-lapsing, and even reversionary.
The minimum % you need to withdrawal from your pension balances are illustrated below. Should you wish to discuss, please contact our office.
Minimum percentage factor (indicative only) for each age group
Age Reduced rates by 50% for the 2019–and 2020–income years (%)
| AGE | PERCENTAGE |
|---|---|
| Under 65 | 2% |
| 65 | 2.5% |
| 75 | 3% |
| 80 | 3.5% |
| 85 | 4.5% |
| 90 | 5.5% |
| 95 or more | 7% |
We have also provided a few links to the ATO for reference:
Please do not hesitate to contact our office for further information or clarification.
