17 April 2024
Elston Quarterly Portfolio Update Q2 2024
In this video, Portfolio Manager David Seager provides his perspective on the key questions discussed in the recent quarterly asset allocation meeting. Read more
11th June 2015 - Asset Management, Private Wealth
With the end of the financial year upon us, it is a good time to review your situation prior to 30 June. Listed below are some common items for you to consider:
There is a limit (the concessional contributions cap) on the amount you can contribute to superannuation each year from your pre-tax income. Contributions your employer makes on your behalf, such as Superannuation Guarantee and salary sacrifice contributions, count towards this limit.
If you have arranged with your employer to contribute part of your salary to superannuation via a salary sacrifice arrangement, it is important to review your contributions to ensure they are still within the limit. The limit will be either $30,000 or $35,000, depending upon your age.
If you are self employed, or have little or no employment income and are eligible to contribute to super, then you may be able to make personal contributions and claim a tax deduction. For this deduction to be claimed, the money must be received by your superannuation fund by 30 June and you need to ensure you do not exceed the limits for Concessional Contributions.
If you are employed, and have taxable income less than $49,489 then you may be eligible for the co-contribution. Under this arrangement, eligible people can put an extra $1,000 of after tax money into super and the government will match it with $500, for those earning less than $34,489. The co-contribution amount will gradually reduce for those earning more, cutting off once income reaches $49,489.
If your spouse has a low income, you may be eligible to claim a tax offset of up to $540 by making a $3,000 after tax contribution to their superannuation fund. Where eligible, the maximum offset is available if your spouse earns less than $10,800. The offset gradually phases out and is unavailable once your spouse’s income reaches $13,800.
If you have sold a capital asset, such as an investment property, a business asset or some shares, then you may have realised a capital gain. This may mean a large increase in your taxable income for the year and have significant tax consequences for you. In most cases, nothing can be done about the gain once the year has ended. Therefore you need to consider now if anything can be done to reduce the impact of this tax.
If you are taking either an Account Based or Transition to Retirement Income Stream from superannuation then you need to ensure you draw the minimum payment. These pensions have a minimum annual payment that must be drawn annually. This is based on the opening balance and your age at the start of the financial year. Failure to take the full minimum will mean the pension does not meet the required standards, and your super fund may not qualify for a tax exemption for the year. You should therefore review what the minimum is and ensure this has been paid out.
In some circumstances, it could be a beneficial strategy to draw extra out of superannuation so that the money can go back in as after tax (known as non concessional) contributions. While this may sound like a strange thing to do, it may be beneficial to those who;
A re-contribution strategy is complex and not for everyone. Issues such as income tax, access to super lump sums, eligibility to contribute and contribution caps need to be considered. Therefore it is essential that you seek advice.
If your SMSF is receiving contributions from an unrelated employer, it must be able to receive contribution information through the new SuperStream data standards. If you have recently changed employers or intend to change employers, it’s important to make sure your fund can receive contributions using the data standards so you are not in breach of your duties. If your contributions are made by a ‘related’ employer (for example, if you are employed by a company you own) this typically won’t apply to you.
Have any of these happened to you this year?
If so, you may need to review your insurance cover.
When doing a review of your finances, it is also essential that you consider your strategy for managing your investments over the year ahead. It has been proven that those investors with a disciplined strategy for investment fare better than those who simply follow the herd. You should therefore ensure you have a plan as to the mix of assets you should hold. This plan should consider things like: investment risk, target return, liquidity, income requirements and tax effectiveness.
If you are an SMSF Trustee, then you are actually required to have a written plan in place that addresses these issues.
The old saying goes; if you fail to plan, you are planning to fail. This is particularly true with your finances. Therefore, if you have any goals that may require money to achieve, then you need to have a plan. This plan should be regularly reviewed and measured and you should be asking yourself if you are on track to reaching those goals. If you have no plan, or don’t know if you are on track to achieve your goals, then there is no better time than the start of a new financial year.
While not an exhaustive list, the items above are some of the main issues that you need to consider this time of year. If you need assistance in ensuring these items are addressed, you should contact your adviser urgently – as time is running out.
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