Tag: self-managed superannuation SMSF

super

Important Year-End Super Considerations for 2023-24

Posted on | by Allan Hall

ACT NOW to ensure your super is in order before 30 June 2024 

In this article:

Personal Contributions

If you are looking to maximise your personal contributions in 2023/24, please carefully review the limits and information provided below. 

There will be an increase in the contribution limits taking effect from 1 July 2024 so these are also noted below for planning purposes.

Financial YearConcessional Cap (pre-tax)Non-concessional Cap (after tax)
 (Employer / Salary Sacrifice Personal Deductible)(Personal After Tax & Subject to Total Super Balance <$1.9m)
2023/24$27,500$110,000
2024/25$30,000$120,000

Concessional Contributions

Your contributions must be received in your super fund before 30 June 2024 to ensure that:

  • you are eligible to claim a deduction in 2023/24 for your contributions made;
  • the contribution is counted against your limit in the correct financial year.  

Please remember that 30 June 2024 falls on a Sunday so please do not leave your contributions until the last minute. They need to be cleared in the fund’s bank account by no later than Friday 28 June 2024. Please allow at least three days for any interbank transfer to occur. 

Be sure to check the amount of actual employer or personal contributions already received / due to be received in your super fund before making any top up contributions.

Any person aged 67-74 must meet the work test during 2023/24 in order to be able to claim a deduction for any personal contributions.  See below for further detail.  Any person aged 75 or older is unable to make personal contributions.

‘Catch Up’ Concessional Contributions

These rules commenced on 1 July 2018 so we are now into the fifth year of ‘catch up’ contributions whereby a person with a super balance of less than $500,000 as at 30 June 2023 is able to make a personal concessional contribution in 2023/24 equal to the unused amount of the concessional contribution limits applicable from 2018/19 to 2022/23. Please note that 2023/24 is the last year in which any unused contributions from 2018/19 can be claimed as they drop off after five years.  

Financial YearApplicable limit
2018/19$25,000
2019/20$25,000
2020/21$25,000
2021/22$27,500
2022/23$27,500

For example, Sam had employer contributions of $15,000 for each of 2018/19, 2019/20 and 2020/21 and $18,500 for each of 2021/22 and 2022/23. His total superannuation balance at 30 June 2023 was $380,000.  If Sam has higher than normal taxable income in 2023/24, due to say, a capital gain then, in addition to his current year 2023/24 contributions he can contribute an extra $48,000 as a personal concessional contribution before 30 June 2024 to reduce his taxable income. The extra $48,000 comprises $30,000 in unused contributions from 2018/19 to 2020/21 and $18,000 in unused contributions from 2021/22 and 2022/23. 

Please contact us if you want to check your unused catch up contribution amount.

Non Concessional Contributions

It is possible to ‘bring forward’ up to 3 years of contributions in 2023/24 if you were under age 75 on 1 July 2023 and your total superannuation balance at 30 June 2023 was within the thresholds noted below:

Total Super Balance as at 30 June 2023Age <75 on 1 July 2023
Your Total Super Balance is the combined total of all balances in super funds of which you are a member 
Less than $1,680,000$330,000
Greater than $1,680,000 but less than $1,790,000$220,000
Greater than $1,790,000 but less than $1,900,000$110,000
Greater than $1,900,000$0

Please note for planning purposes that the bring forward thresholds will change on 1 July 2024 with effect for 2024/25. These changes are noted in the following table below:   

Total Super Balance as at 30 June 2024Age <75 on 1 July 2024
Less than $1,660,000$360,000
Greater than $1,660,000 but less than $1,780,000$240,000
Greater than $1,780,000 but less than $1,900,000$120,000
Greater than $1,900,000$0
Strategy Tip
  1. If wanting to maximise super contributions, consider contributing only $110,000 in 2023/24 to enable a contribution of $360,000 in 2024/25, provided all eligibility criteria are met.   
  2. If wanting to equalise super balances between spouses, consider a withdrawal from the high balance and a contribution into the low balance. This is useful for optimising the member balances to take full advantage of the pension cap and various eligibility provisions associated with a person’s total superannuation balance. It also has the effect of lowering the ‘taxable’ portion of that member’s benefit which reduces any future tax payable on death benefits received by the beneficiaries. Please talk to us if you are keen to learn more about this.

If you are aged 67 to 74 years, you must satisfy a work test in order to be eligible to claim a tax deduction for your personal concessional contributions.

Work Test

To satisfy the work test, you must have worked at least 40 hours in a consecutive 30-day period in the 2023/24 financial year. 

If you are aged 75 or over, your super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) on your behalf.

Minimum Pension 2023/24

If you are in pension phase, please check to ensure you have withdrawn your minimum pension for this financial year before 30 June 2024.  Where these requirements have not been met your fund will be subject to 15% tax on its pension asset investment earnings, rather than being tax-free.

For our SMSF clients, the amount would have been notified to you in the completion letter in the FY23 financials package.  Please contact us if you are unsure of your minimum pension payment for 2023/24. 

CONTACT US if you would like advice on any of the above strategies that may benefit your circumstances. 

ALLAN HALL SUPERANNUATION

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smash piggy bank hammer

Illegal access to superannuation

Posted on | by Allan Hall

Accessing your super early may be illegal

There are only a few reasons that you might be allowed to access your super early.

For most people, you can only access your superannuation when:

  • you retire and turn 60
  • you turn 65 (regardless of whether you’re working).

Otherwise, it is illegal.

If you illegally access your super early, you could:

  • lose your retirement savings
  • pay extra tax, penalties and interest
  • be disqualified as a self-managed super fund (SMSF) trustee and have your name published online.
DOWNLOAD ATO FACTSHEET

Be careful if someone offers to help you access your super early

Some people may say they can help you set up an SMSF so you can access your super for reasons such as paying off your credit card, buying a house or to go on a holiday. This is not true, it is illegal.

These people (known as ‘promoters’) will often:

  • charge you a lot of money
  • tell you to transfer some or all your super from your existing super fund to the SMSF
  • tell you that you can use as much as you need for personal expenses.

Identity theft

These promoters may also ask for your personal information. If you give it to them, they can steal
your identity.

With your personal information, they can steal your super for themselves.

What should I do?

If a promoter contacts you, call us on 13 10 20 straight away to get advice.

Do not agree to anything and do not sign any documents or give them your personal details.

Don’t access your super before you retire unless you meet one of the conditions that makes it legal to access your super and receive relevant approval.

CONTACT ALLAN HALL SUPERANNUATION

Disclaimer: This article contains general advice only and has been prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. The information provided in this newsletter is objectively ascertainable and therefore does not constitute financial product advice.  If you require personal advice, please contact us to arrange an appointment with one of our licensed SMSF advisors.

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payroll

Small Business Superannuation Clearing House Changes

Posted on | by Allan Hall

Actionable Update to SMSF Bank Account Validation

ATO update introduces SMSF bank account validation aimed at improving the precision and security of superannuation contributions

Given the proximity of the next SG contribution deadline on 28 April 2024, it is important to take action ahead of this date to prevent potential compliance issues.

Key points

  • The ATO implemented a pivotal update within the Small Business Superannuation Clearing House (SBSCH) on 15 March 2024
  • This new system feature affects all small employers who use the SBSCH to pay superannuation to employee SMSFs
  • The ATO’s validation process requires small employers using the SBSCH to ensure perfect alignment between their employees’ SMSF bank account details and the corresponding fund bank account details recorded by the ATO
  • The validation focuses on the BSB and account number as registered under the SMSF’s Superannuation Role within ATO systems. For any employee where there is no exact match, the SBSCH will not process their superannuation payment.

Action Required: Review Employee Records

The ATO is contacting small employers likely to be impacted by the new SBSCH SMSF bank account validation process.

However, with SG obligations for the March 2024 quarter due no later than 28 April 2024, it is important for small businesses to act proactively.

If you are a small business using the SBSCH, it is important that you contact your employees to confirm that the SMSF bank account they pay superannuation contributions to, is the same as the SMSF bank account registered against the superannuation role with the ATO.

Where employees are unsure how to check if the bank account their employer makes super contributions to is the same as the one registered with the ATO, please contact Allan Hall for assistance on 02 9981 2300.

Should there be a need for an employee to amend SMSF bank details held by the ATO, it is crucial to communicate these changes to all fund members as the ATO will issue email or text alerts to ensure all fund members are informed.

Small employers delaying the review and update of their employees’ SMSF bank records risk facing SG shortfalls and potential penalties as there may be insufficient time to rectify a discrepancy.

CONTACT ALLAN HALL ACCOUNTANTS & BUSINESS ADVISORS

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audit & assurance

Safeguarding SMSF Members in an Aging Demographic

Posted on | by Allan Hall

Navigating Incapacity

The rising number of older individuals managing their own Self-Managed Superannuation Funds (SMSFs) highlights the importance to address potential issues related to incapacity within this demographic.

The Auditors Institute has stressed the likelihood of an increase in conversations about capacity issues, in particular about establishing processes to address scenarios proactively such as:

  • SMSF members expressing concerns about their own or their spouse’s ability to comprehend complex superannuation concepts should prompt advisers to consider incapacity safeguards
  • The importance of having mechanisms such as a well-defined trust deed, enduring powers of attorney (EPOA) and legal representatives in place to mitigate risks associated with potential incapacity among SMSF members.

The substantial size of SMSF portfolios, with an average balance of approximately $1.39 million, and the collective responsibility held by over a million SMSF members, with an average balance of $745,000, underscores the necessity for proactive discussions surrounding incapacity.

ATO data has shown that approximately 42% of all SMSF members are aged 65 or older, with almost equal representation between males and females.

The need to consider incapacity issues in SMSF management, especially with nearly half of SMSF members being over the age of 65, was emphasised by the ATO’s SMSF statistics for the 2021-22 financial year.

CONTACT ALLAN HALL SUPERANNUATION

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cash in a hessian sack

SMSF record-keeping best practices

Posted on | by Allan Hall

ATO reminds SMSFs to keep good records

How self-managed super fund (SMSF) trustees can meet their responsibility to keep accurate tax and super records.

Keeping good records

Keeping good records is more than just knowing which records to keep and for how long. It involves having a system for organising and maintaining records that makes it easier for you, and any SMSF professional you use, to:

  • complete the fund’s independent audit each year
  • lodge your fund’s annual return.

It may also help reduce audit and administration costs for your fund.

To help keep your records organised, you may want create separate files for your fund’s more permanent records, and for records that relate to a specific financial year.

For example, in your permanent file you may want to keep:

  • the fund’s trust deed
  • the fund’s investment strategy
  • details of the regular reviews of the fund’s investment strategy, including the consideration of insurance for members of the fund
  • reasons for decisions on the storage of collectables and personal use assets
  • minutes of trustee meetings
  • all signed trustee declarations
  • records of trustees consenting to their appointment as a fund trustee
  • records of all changes in fund members and trustees.

As each SMSF is unique, with its own investment strategies to achieve its objectives, you should consult with a professional licensed adviser when setting up a record-keeping system that suits your fund.

Keeping all relevant records together will simplify the process of compiling the records you need to give to your fund’s independent auditor. If your fund regularly holds trustee meetings, you could create a separate folder for them, and sort them by date.

Take minutes of all investment decisions

You should take minutes of all investment decisions, including:

  • why a particular investment was chosen
  • whether all trustees agreed with the decision.

This is because if you, as one of the fund’s trustees, invest the SMSF’s money in an investment that fails, the other trustees could take action against you for failing to be diligent in your duties.

However, if your investment decision was recorded in meeting minutes signed by the other trustees, you will have a record to show that they agreed with your actions.

Signature requirements for financial statements

Under Australia’s super laws, SMSF trustees must sign their SMSF’s financial statements before finalising their annual audit. This includes an operating statement and a statement of financial position which must be signed by the required number of trustees or directors of the corporate trustee.

Minimum record-keeping requirements

The most important reason for keeping good records is that it’s a legal requirement for you to do so. You may also need to provide accurate records to us if we ask to see them.

You need to keep any SMSF records for a minimum of 5 years.

Despite what you may have heard or read elsewhere, you cannot access your super before you retire unless you meet one of the very few exceptions to this fundamental rule of super law. Read more »

CONTACT ALLAN HALL SUPERANNUATION

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Allan Hall team

Allan Hall Secures Top 50 Position in Prestigious Accountants Survey

Posted on | by Allan Hall

Allan Hall Business Advisors has retained their Top 50 position in the Australian Financial Review’s Top 100 Accountants Survey for 2023.

In a testament to unwavering commitment to excellence, Allan Hall Business Advisors has proudly held its position as one of Australia’s leading accounting firms in the Australian Financial Review’s Top 100 Accountants survey.

Securing an impressive #45 ranking, Allan Hall continues to stand tall among the accounting sector, reaffirming its status as a trusted and reliable partner for businesses and individuals alike.

Having a Top 50 ranking is more than just a number; it represents over 60 years of dedicated service and expertise. Since inception, Allan Hall has been resolute in providing high-quality accounting and business advisory services, consistently adapting to the evolving financial landscape and delivering value to clients.

What sets Allan Hall apart is not just longevity, but also the breadth of services available and the calibre of staff. The firm’s range of services goes beyond traditional accounting, encompassing financial planning, business advisory, self-managed super funds, home loans and more. This holistic approach to client service reflects Allan Hall’s understanding that modern businesses require comprehensive solutions to thrive.

The strength of Allan Hall lies not only in its services but also in its people. The team comprises seasoned professionals who bring a wealth of knowledge and experience to the table. Their dedication to being across industry trends ensures that clients receive advice that is not only reliable but also forward-thinking.

Beyond the professional achievements, Allan Hall’s #45 ranking also reflects an extensive involvement in the Northern Beaches community, with commitment to giving back and actively participating in local initiatives that align with Allan Hall’s values.

Read the full AFR announcement here »

Allan Hall was named Business Advisory Firm of the Year at the 2023 Australian Accounting Awards and also Best Business Advisory Firm by the 2023 Beaton Client Choice Awards. These accolades reflect Allan Hall’s consistent dedication to innovation, client service and community involvement.

CONTACT ALLAN HALL BUSINESS ADVISORS

checklist

Superannuation health check

Posted on | by Allan Hall

Use this checklist to review the health of your super in 5 easy steps

Getting started

  • The best way to perform these checks is either on ATO online services through myGov or by contacting your super advisor directly
  • You need a myGov account linked to the ATO
  • Once you link your myGov account, you can also use the ATO app.

Check 1: Check your contact details

Check your contact details, tax file number (TFN) and bank account are up to date with the ATO and your super fund. This helps prevent lost super and assists us in matching any unclaimed super to you.

Log on to ATO online services through myGov. In the top menu, select My profile. From the drop-down options, select either:

  • Personal details to update your name, contact number, email and home address
  • Financial institution details to update your bank account and
    • under the Account heading, you will see Income Tax and Superannuation
    • select either Add or Update.
     

To update your contact details, bank account and TFN with your super fund, see their website or contact them directly.

Check 2: Check your super balance and employer contributions

It’s important to check your super balance each year to see how much you have and keep track of your employer contributions. You can do this anytime on ATO online services or through your super fund.

Your employer should pay your super at least every 3 months. They may choose to do it more frequently, such as your regular pay cycle. From 1 July 2022 to 30 June 2023, your employer should pay at least 10.5% of your salary into your super. From 1 July 2023 to 30 June 2024, the rate increases to 11%. If you’re under 18, you need to work more than 30 hours a week to be eligible for super.

Funds report account balances to us at certain times of the year. Balances shown in ATO online services may be different to your actual current balances.

Log on to ATO online services through myGov. From the top menu, select Super and then either:

  • Fund Details to see all your super accounts and balances (including those held in funds or with us) and the most recent date reported by your fund
  • Information then Employer contributions to see the total year-to-date employer contributions in a selected year – select Transactions to see each contribution separately.

For help calculating the amount of super your employer should be paying, use the ATO’s Estimate my super tool. If you do not receive super contributions or the amounts are incorrect:

  • contact your employer and request an update
  • report it.

Check 3: Check for lost and unclaimed super

You may have lost track of some of your super when you changed your name, address or job, for example. This is why it’s important to ensure your fund has your current details.

Lost super is when your fund has lost touch with you, or your account is inactive. This money is held by your fund. Unclaimed super is when your fund transfers lost super to the ATO.

All your super accounts including lost and ATO-held super are displayed on ATO online services.

Log on to ATO online services through myGov. From the top menu, select Super. Then select either:

  • Fund details to check for lost super – if you want to keep your super with the same fund, contact them directly to update your details
  • Manage and then Transfer super to transfer this lost super to an eligible super account – or ask your fund to complete the transfer for you
  • Manage and then Transfer super to transfer ATO-held super to an eligible super account
  • Manage then Withdraw ATO-held super to have your super paid directly to you if the amount is less than $200 or you are over 65.

Check 4: Check if you have multiple super accounts and consider consolidating

If you’ve had more than one job, you may have more than one super account. It’s important to know how many super accounts you have. Combing your super may reduce fees and make it easier to manage.

If you decide to consolidate your super, it’s important to choose the fund that’s right for you. You should check that it provides better value, and the insurance cover suits your needs, which may change throughout your life. To see which fund is the best option for you, visit MoneySmart. If you are unsure of what to do, contact your super fund or seek independent financial advice.

Log on to ATO online services through myGov. From the top menu, select Super then either:

  • Fund details to see all your super accounts and balances
  • Manage and then Transfer super to consolidate your accounts, then
    • select the fund you want to close (transfer)
    • select the fund you want your money transferred to from the accounts listed
    • confirm your selection and submit request.
     

Check 5: Check your nominated beneficiary

Take time to ensure you have a valid death beneficiary nomination in place in your super fund as this isn’t covered by your will. This means your loved ones will not be put through unnecessary difficulties to finalise your estate.

Most binding nominations expire every three years. Some super funds have an option where nominations do not expire and remain in place until they are revoked.

If you don’t nominate a beneficiary, your fund may not know who your benefit should be paid to. In these cases, they will follow the law. This usually means they pay it to one or more of your dependents or your legal personal representative.

To check or nominate your death beneficiary:

  • Refer to your super fund’s website or contact them to check if you already have a valid nomination in place
  • To update it, complete the form from your super fund, sign and date in the presence of two witnesses
  • If you are unsure, contact your super fund or seek independent financial or legal advice from a qualified advisor

Why you should review your super

Your super is one of the biggest assets you’ll accumulate in your lifetime.

However, many Australians think they don’t need to worry about their super until retirement. Some don’t think about it at all.

It’s never too early to think about your super and the earlier you get on top of it, the better. It’s a good idea to regularly review and manage your super. At the very least, make sure you:

  • are getting the super you are entitled to from your employer
  • know where it is.

Small decisions you make today can have big impacts on your final super outcomes. For instance, missing out on some employer contributions today, could have a huge impact on your super balance in retirement due to the compounding effect of earnings. The same can happen if you have lost or unclaimed super.

Benefits of a super health check

A super health check consists of 5 simple and important things you can do to get on top of your super. It will help you:

  • manage your super
  • understand your entitlements
  • make better choices for when you retire.

You can check on your super at any time. However, we suggest you get into the habit of doing a health check each year when you prepare your tax return.

CONTACT ALLAN HALL SUPERANNUATION

Disclaimer: This article contains general advice only and has been prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. The information provided in this newsletter is objectively ascertainable and therefore does not constitute financial product advice.  If you require personal advice, please contact us to arrange an appointment with one of our licensed SMSF advisors. Source: ATO

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window with a view of a tree

Further eligibility age change for downsizer contributions

Posted on | by Allan Hall

The reduced eligibility age to make a downsizer contribution from age 55 is now law

This further reduces the downsizer eligibility age, which changed from 65 to 60 from 1 July 2022.

What does this mean?

From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. There are no changes to the remaining eligibility criteria.

Key dates for downsizer contributions

  • Eligible individuals aged 55 years or older can make a downsizer contribution from 1 January 2023
  • For any downsizer contributions made between 1 July 2022 and 31 December 2022, eligible individuals must be aged 60 years or older at the time of making their contribution
  • Prior to 1 July 2022, the eligibility age was 65 years and over.

Other important information to consider for 55-59 year olds

  • Individuals have 90 days from receiving the sale proceeds of their home to make a downsizer contribution. This means if an individual receives the proceeds of sale prior to 1 January 2023, they can make their contribution from 1 January 2023, as long as they are still making it within 90 days of receiving the proceeds
  • If 1 January 2023 falls outside of their 90-day window to make a downsizer contribution, they will not be eligible. It is unlikely the ATO would grant an extension of time in these circumstances.

To find out more about downsizer contributions, including details of full eligibility criteria, the Allan Hall Superannuation team can help.

CONTACT ALLAN HALL SUPERANNUATION

Stethoscope

Increase to CSHC income test legislated

Posted on | by Allan Hall

Cheaper healthcare more accessible for eligible self-funded retirees

Key points

  • Recent legislation will increase the Commonwealth Seniors Health Card (CSHC) income test thresholds
  • Income test limit thresholds will increase to $90,000 for a single person and $144,000 for couples (combined)
  • The CSHC provides access to valuable health concessions for older Australians.

The CSHC is a concession card that provides access to cheaper healthcare and other discounts and can be valuable in reducing the cost of living for self-funded retirees. Generally, the CSHC is accessible by persons of Age Pension age but who are not eligible for the Age Pension due to either the assets test or income test. 

The CSHC is valid for 12 months and is reissued on 1 August each year provided eligibility requirements continue to be met. The eligibility test for the CSHC is different to the Age pension in that it does not have an assets test. The Services Australia webpage identifies the criteria to get a CHSC card.

Retirees who have a partner must provide details of their partner’s income in the application as they will be assessed as a couple.

The incoming increase in income test thresholds is a material increase which the Government expects will lead to more than 44,000 additional self-funded retirees being able to access the CHSC card in the first year, increasing to 50,000 by 2026-27.

What income counts?

To meet the CSHC income test currently a retiree must earn no more than $61,284 a year for a single person and $98,054 a year for couples (combined).

  • The CSHC income test is based on adjusted taxable income (ATI), usually evidenced by the tax notice of assessment plus any other income documents required to determine the person’s ATI
  • The reference tax year used is typically the tax year immediately preceding the current tax year, except if an individual has not received their notice of assessment for that year, then the tax year immediately preceding will be used
  • For couples, both individuals must use the same tax year. 

An individual’s ATI includes a range of criteria which can be reviewed here.

What are the benefits?

The main benefit of the CSHC is that it provides access to the following valuable health concessions:

  • cheaper medicine under the Pharmaceutical Benefits Scheme (PBS)
  • bulk billed doctor visits 
  • a refund for medical costs when the Medicare Safety Net is reached.

The value of these CSHC’s health concessions to retirees depends on their individual use of Medicare and PBS medicines.

State or territory governments and local councils may also offer additional discounts to CSHC holders on other expenses such as utility bills, rates and public transport. However, these are not as widespread or significant as those for the Pensioner Concession Card (PCC) which is provided to individuals receiving an Age Pension.

The CSHC can be applied for via the Services Australia website at https://www.servicesaustralia.gov.au/how-to-claim-commonwealth-seniors-health-card.

CONTACT ALLAN HALL SUPERANNUATION