Handy Tax Tips For Self Managed Super Fund Trustees

The 2013/2014 financial year is looming to a close and it is high time for you take necessary steps to reduce your tax liability on your super contributions. By doing this, you stand to put yourself in a great financial position going forward to the next financial year.  The following are some of the handy tax tips on your super contributions:-

Pass Go and Collect $500

If you will earn less than $ 46,920 this financial year and still make non concessional (after tax) contributions to your super; the government will make a co-contribution of 50 cents in the dollar (percentage varying depending on your income) up to a cap of $500. Nice little winner.

Claim A Tax Rebate On Spouse Contributions

You can claim a tax rebate of up to $540 if you make super contributions on behalf of your spouse who will earn less than $13,800 this financial year.

Avoid Exceeding Your Contributions Cap At All Cost

The cap on concessional (before tax) contributions is at $25,000. When you exceed this cap, you attract a penalty tax. Considering this tax is totally avoidable, consider looking at your position before June 30.

Review Your Salary Sacrifice

Salary sacrificing into your superannuation fund has an impact on your concessional contribution cap. The caps can change each year so it is therefore prudent of you to review your salary sacrifice amount. Otherwise you could find yourself exceeding your concessional contribution cap and paying excessive taxes.

Don?t Leave Yourself Short

It is always a good idea to make the maximum contributions possible to your super fund before June 30. Don?t leave yourself short. If your contributions are under the concessional contributions cap, consider making addition contributions especially if you are in a position to do so. For those of you whose personal tax rates are more than 15%, you could benefit from tax savings by taking advantage of the cap.

Review Your Insurance

The end of the financial year is not only a great time to review your tax commitments but also to look at your overall long term financial plan, including your insurance cover. You can review your insurance cover through super. This might call for you to make additional contributions to make up for shortfalls.

Get Your Timing Right

For your deductible contributions to be counted this financial year, they must be received by the trustee by June 30. You should not run the risk of missing out on the tax deductions on your super contributions. Remit your deductible contributions a number of days before June 30 to make sure that they are received on time.

Claim Tax Deduction On Your Super Contributions As Self Employed

For those of you who are fully or substantially self employed, you can claim a 100% tax deduction for any super contributions you make. Make a point of contacting your financial adviser to see if you are eligible considering you stand to benefit from tax savings.

2014 Tax Tips For Trustees Of Self Managed Super Funds

The following are tax tips of trustees of Self Managed Super Funds (SMSFs):-

  • Be compliant-Make sure that you complete all the necessary paperwork relating to the SMSF. The fund?s strategy should be properly documented and investments aligned with strategy. This investment strategy in turn should take into account the members? insurance needs.
  • Take out the minimum pension payments- Ensure that the minimum pension payment has been taken by June 30 or the fund will be considered to be in the accumulation phase for the whole year and pay extra tax. These minimum pension payments are based on age. A close check on the age of members is therefore worthwhile if you are to minimize tax.
  • Transfer investments into super- The regulations for in-specie(non-cash asset classes such as property and shares) transfers into an SMSF that became effective on July 1 2014 require that such transfers to be done based on prevailing market rates where possible or by independent valuers. You should therefore pay close attention to the possible tax implications before transferring investments into super such as capital gain tax and contributions tax.
  • Be careful of the reserving strategy-The reserving strategy is about delaying the payment of contributions from June into members? accounts until the following year to avoid exceeding the contributions cap and being taxed extra. The ATO is closely watching this strategy, you should take caution if considering this.

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Disclaimer: The information on this site is general in nature and not financial advice. Visitors should consider obtaining independent advice before making any financial decisions.