Gold Superannuation Strategies before June 30
If you are looking for some last minute gold nuggets before June 30, then make sure you take advantage of these three valuable superannuation and retirement strategies before the new superannuation laws are put into action. You need to stay ahead of the government changes to superannuation if you want to give your retirement strategy a decent boost.
Get the most out of salary sacrificing arrangements
Given Treasurer Wayne Swans announcement to end the $50,000 concessional contributions cap for over-50s and since there are still no new measures announced to assist those super members with superannuation balances below $500,000, focusing on maximising your salary sacrifice contributions before June 30 can be an ideal strategy.
Linda Chen of Maxmillian Financial Planning says that the recent budget announcement was detrimental to planners and their clients and unfortunately the $25,000 concessional contributions cap for all superannuation members looks like it will stay in place until July 2014 for now. Remember the big advantage is that contributions tax of only 15% applies to concessional contributions versus your marginal rate of tax which could be up to as high as 47%.
As a member of a superannuation fund, clients should work with their advisers in looking to use the transitional concessional contributions cap of $50,000 if they are over the age of 50 until the 30th June 2012. This is their last chance to give a significant tax effective boost to their retirement balance.
Are you self employed? – score a double tax deduction
Another tip for preparing for June 30 is if you are self-employed, and you have an SMSF and are eligible to claim a tax deduction for personal super contributions, you have the potential to get a double deduction in the current year. According to a recent ATO determination ID 2012/16, it allows SMSF investors to make a concessional contribution during the current financial year and receive the tax deductions associated with this contribution but not have this contribution allocated to their account until the following financial year.
A good example is if you have an existing super concessional contribution limit of $25,000 and you contribute this to your SMSF before June 30, then put in a further $25,000 and hold it in a reserve or 'suspense' account before it is allocated to your member account. Then in July the reserved amount is allocated to the relevant account. Legislation requires that any contributions held in this account must be allocated to the appropriate member within 28 days following the end of the month. So you could get a $50,000 tax deduction and the good news is that this would not form an excess contribution since the second amount is not allocated to your member account until July.
Editor note: Be warned the ability to contribute funds in a ‘reserve’ or ‘suspense’ account is limited to the terms of the Trust Deed of your SMSF.
Look at transferring in-specie assets for self managed super funds
For those who run a self managed super fund take note that time is running out for you to take advantage of in-specie asset transfers. The final date for standard in-specie transfers is 30 June 2012.
If you are an individual who holds shares in your own name you could be earning dividends and hence more taxable income. If you are able to make further concessional or non concessional contributions it could be more strategic to transfer in-specie the shares into your SMSF as a boost to your retirement plans.
Warning: As an SMSF trustee if you leave it until after 1 July to move assets, you will most likely need to sell the shares, move them into cash, then put the money into your SMSF and setup a buy order to re-purchase the same shares you want to hold. The main issue here is that there could be a delay in timing as to when you sell and then buy, so it could play for or against you given the current market conditions.
Of course in any of the above cases you should seek the advice of a qualified professional to see if it is appropriate for your circumstances.
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