Tag Archive: Concessional Contributions

  1. Happy Financial New Year 2022!

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    Welcome to our latest newsletter, End of Financial Year Edition, in which we provide you with a brief checklist of items to consider.


    A brief reminder of some of the types of contributions you may have the opportunity to make by 30 June 2022:

    • Concessional contributions up to $27,500 pa;
    • Non-concessional contributions (so long as Total Super Balance at 30 June 21 is less than $1.7m) – the cap is $110,000 pa;
    • Access the bring forward rules – up to $330,000 if eligible;
    • Access unused concessional contributions (30 June 2021 Total Super Balance must be less than $500,000)
    • Spouse contributions (rebate maybe applicable);
    • Contributions using the one-off work test exemption (30 June 2021 Total Super Balance must be less than $300,000).


    It is important for members to reconcile all pension payments received from their SMSF retirement income streams since 1 July 2021 to ensure that there is no underpayment of the minimum pension payment required to be taken by 30 June 2022. If members do not withdraw the minimum pension required, then the SMSF will lose some or all of its tax exemption, and the relevant pension account will have to be rolled back to accumulation mode.

    If you are unsure what your minimum pension requirement is, please contact us so that we can assist you in this regard. We are working through every fund to check in on this as we speak.


    It is a requirement that all SMSF assets be valued at market value for reporting purposes. Whilst this is a simple process for listed securities, it can be quite complicated and time consuming to determine the market value of unlisted investments.

    We recommend that all SMSFs that have either direct property or indirect investment in property via unlisted structures commence the process of getting updated market valuations as soon as possible so that the 2022 year end work is not held up. To note this does not have to be formal valuations but must be based on comparable sales data.

    Some important changes from 1 July 2022


    • Individuals up to the age of 75 will no longer have to meet a work test to make voluntary, non-deductible contributions;
    • The bring forward rule will be extended to individuals up to the age of 75;
    • The minimum age to make downsizer contributions will reduce to 60.

    work test

    Currently, a member aged 67 to 74 can only make voluntary contributions to super if they have worked at least 40 hours over 30 consecutive days in the financial year. This work test must be met prior to them contributing.

    From 1 July 2022, this work test will only apply to a member who wants to claim a tax deduction on voluntary contributions made to super. This means that the work test will no longer apply to any of the following contributions:

    • Non-concessional contributions
    • Spouse contributions
    • Salary sacrifice contributions

    Further, where a member does make personal deductible contributions, they will be able to satisfy the work test at any time in the financial year.


    • The Superannuation Guarantee rate will increase to 10.5% pa;
    • The $450 minimum monthly threshold to be entitled to received Superannuation Guarantee will be removed;
    • Under the First Home Super Scheme eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit (an increase from $30,000 to $50,000).

    As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

    This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 6 June 2022

  2. 2016 Superannuation Reforms passed both houses

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    Superannuation legislation proposed end of September 2016 have passed through both houses of parliament today. These make significant changes to the superannuation laws and do differ from the original changes announced in the Federal Budget in May 2016.

    The below changes will apply from 1 July 2017 so it might be sensible to for you to start thinking about how your superannuation and retirement planning will be impacted by the changes now and whether you need to change any of your super arrangements.

    Changes in the legislation which you might need to consider include:

    • The new $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase from 1 July 2017.
      • Note – this includes defined benefit funds in the assessment eg CSS/PSS pensions
    • Contributions
      • The lower contribution caps for all taxpayers applying from 1 July 2017.  The new caps will be:
        • Concessional contributions (pre-tax contributions) — $25,000 per year.
        • Non-concessional contributions (after-tax contributions) — $100,000 per year
      • Revised limit of $300,000 on the bring forward provision of 3 years’ worth of contributions to a single year. However to note:
        • If you have triggered but not utilised the whole amount of the $540,000 limit in 2015-2016 or 2016-2017, the balance left to contribute needs to be reviewed carefully as a reduced limit may apply.
        • If you have super balances exceeding $1.6 million you will no longer be able to make non-concessional contributions post 1 July 2017.
    • Reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax, from $300,000 per year to $250,000.
    • Removing the tax-free treatment of assets that support a transition to retirement income stream.

    From 1 July 2018 the following change will apply:

    • Individuals with balances of less than $500,000 will be able to ‘carry forward’ unused concessional cap space for up to five years. This will provide greater flexibility for those with broken work patterns.

    How can we help?

    The above legislative changes will most likely have an impact on your circumstances if you have a superannuation balance close to or over $1.6 million, were planning on making significant contributions to superannuation in the next few years, are a high income earner or have a transition to retirement pension in place now.

    If you would like to discuss your particular circumstances in more detail as a result of the above please do not hesitate to contact us to arrange a meeting.

  3. It’s not about retirement

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    Are you too young and busy to know whether you even WANT to retire yet, let alone when and how?  Like most 30 and 40-somethings, have you filed superannuation in the too hard basket?  Because who knows what you’ll be doing in 5 years, let alone 20 or 30?

    Well, forget retirement for a minute.  Just think of your Super as your future “passive, tax free income” to draw on fully, or partially, to fund your lifestyle when you want to take the pressure off.

    When you let yourself think that far ahead, you’ll likely ask yourself:

    1. When can I access the money?
    2. How much income will it give me?
    3. How long will it last?

    Before you even get there, you may need to figure out how much income you’re going to need.  If you’ve got no idea how much you spend now, let alone what you’ll need then, the Association of Superannuation Funds of Australia (ASFA) can give you some guidance.  For example, they say the average couple in Canberra will need around $58,000 in today’s dollars to live a “comfortable” retirement that includes occasional overseas holidays, a reasonable car, health insurance and the like.  Here’s how they break it down:

    Income requirements graph

    You can look at other states and options here, and likely figure out just how far you are from “average” from a quick skim of these figures:

    Income requirements details

    Then, head over to the “Will My Super Savings Be Enough Calculator”, to work out how long your money is going to last you (and how dependent you might be on the government providing an Age Pension by the time you get there!).  We’ve done a case study if you want to check out how to use the Calculator…

    Long and the short is, as you get closer to the magical figure of 60 (it’s earlier for some, so make sure you know your dates) the more critical it is to take control and maximise how much is in your Fund to give you the lifestyle you’re after.  Thing is, the earlier you do it, the more freedom you’ll have!   (more…)

  4. Last Minute Tax Savings Before 30 June

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    June 30 falls on a Monday this year, which given bank timings, really means that Friday 27th should be what you consider the deadline for this year…  If you’re keen on saving some tax just before the deadline, here’s some Super ways to do it!

    Pre-Tax Contributions (Personal Deductions and Salary Sacrificing)

    If cashflow permits, the most tax effective means of saving for most people in higher income brackets is to reduce total taxable income AND pay the lower 15% contributions tax on the way into the Super environment.

    Of course, given the age at which you can then access Super is somewhere between 55 and 60, the closer you are to this number, the more attractive an option it seems.

    But the government does limit how much of a good thing you can have by imposing “Contribution Caps”.  So to work out how much you can contribute this year, do these 2 things:

    – You’ll need to know what your employer has already contributed on your behalf.  If they are paying standard Superannuation Guarantee Contributions (SGC), it should be 9.25% of your total salary including bonuses, up to a maximum of $17,774.80. But it is best to check your latest Pay Slip or Superannuation Online portal if you have one. Once you know this amount, subtract it from the below “Caps” and that is how much you can still contribute up to. Note the age thresholds and caps change for next year, so for more details see our Post Budget Ready Reckoner

    Year Aged under 59 @ 1/7/13 Aged 59 and over @ 1/7/13
    2013-14 (now) $25,000 $35,000

    – You can also use this calculator provided by the Australian Securities & Investment Commission (ASIC) to work out how best to allocate any excess cashflow that you have, and what tax the additional contributions will save you.


    If you are self employed, June is the most common time to assess cashflow and make the contribution, bearing in mind that in order to claim the contribution (to be tax deductible) any income received as an employee (being “overall assessable income PLUS super contributions (ex SGC) PLUS reportable fringe benefits”) needs to be less than 10% of your total assessable income for the year.

    If you’re employed, you may find it difficult to forego a large amount of salary, or get your employer to help you out at this late stage, but you should consider monthly amounts for 2015 while you’re thinking about it!

    After-Tax Contributions (Non-Concessional Contributions)

    The government also limits how much Super you can contribute after tax, which has meant that the days of leaving savings outside of super until the last minute are all but gone.  For 2013/14, the caps are the same:

    Year Limit per year* Over 3 years (referred to as “bring forward rule”)**
    2013-14 $150,000 $450,000

    The 3 year “bring forward rule” means that you can effectively contribute 3 years’ worth of contributions today, and then not contribute any more for 3 years.  This can be done anytime, but many people leave it until the last minute before retirement and then realise just how good the tax savings are!  If you’re near 65 and/or retiring, timing becomes critical and somewhat complicated:

    1. Once you get to age 65, you need to meet a work test of 40 hours or more in a 30 day period in order to make a contribution and can only contribute the annual amount each year ie $150,000
    2. Therefore if you’re under 65 and no longer working you may want to contribute $150,000 per year and then use the 3 year rule opportunity as close to age 65 as possible
    3. Once you reach age 75 no further contributions can be accepted by a super fund unless they are the super guarantee amounts ie 9.25% of salary

    Here’s is an illustration of how to get as much into super before age 65 to maximise tax free income in retirement.  It’s all about not using the “3 year bring forward rule” too early.



    To complicate matters further, next year the Non-Concessional Caps actually increase, and so where possible, you would hold off using the “3 year bring forward rule” until the 2014-15 tax year to take advantage of the extra $90,000.

    Year Limit per year* Over 3 years (referred to as “bring forward rule”)**
    2013-14 $150,000 $450,000
    2014-15 $180,000 $540,000

     Use next year’s Caps to offset this year’s Tax Liabilities

    Although not commonly understood individuals or employers can actually contribute beyond this year’s concessional cap, claim a tax deduction this year, but have the super fund allocate the second contribution (which must be made in June as a separate deposit) to next year’s cap prior to 28 July.  It’s done by holding the portion to be allocated to the next financial year in a contribution reserve account on the basis it has not been allocated to a specific member.  If the contribution is a “member concessional contribution” they need to complete a Notice of Intent to Claim a Tax Deduction in order to claim this second contribution in the year it was actually funded.  This strategy can be used to offset significant tax liabilities that fall this year, such as the capital gains tax on a business or property investment.


    The above case assumes the client is aged over 59 this financial year, therefore accessing the $35,000 Cap for both years.  See the Post Budget Ready Reckoner for the increases next year for those aged over 49.

    Off Market Transactions

    Contributions can also be made using “in-specie contributions” or transfers of physical assets without selling down.  Although the transaction still triggers Capital Gains Tax, you may be able to avoid a tax liability if your Marginal Tax Rate is nil (because you are in pension phase), or you are able to claim a personal tax deduction on contributions (because you are self employed).

    Tips and Traps:

    – There are restrictions on which assets you can transfer in this way (for example, Listed Shares but not Unlisted Shares, Business Real Property but not Residential Property)

    – You’ll need to be able to determine a market value of the asset being transferred to ensure that it fits within the contribution caps

    – The paperwork trail needs to be implemented correctly as the auditor will likely need to check for dates of the asset transfers matching valuations

    Exempt Current Pension Income Deduction

    Income derived from SMSFs in Pension phase are exempt from paying income tax.  However to ensure the SMSF is entitled to the exemption you must:

    • Check that you’ve met the required minimum pension payments for the year
    • Re-value all assets to their appropriate market value at year end

    If cashflow is an issue in meeting minimum pension requirements, consider whether a “lump sum in-specie payment” of an asset might work.  Even though you can’t actually call the transaction a pension payment itself, new rules now allow a lump sum to be counted towards the minimum pension payments for the year.  Although it is a “workaround”, this can be helpful if you have artwork or other collectibles you want to remove from the super fund and the pension you draw is more than you need. You will need to get an independent valuation of the asset.

    If you need any help getting organised for 27th June, contact Danielle or Vanessa as soon as possible.  It’s all better in your pocket than the tax offices’!

  5. Superannuation largely untouched in “tough measures” budget

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    Nearly 2 weeks after the Budget announcements, the news is ablaze with protests and opinions on the likelihood of the measures being legislated. But from a Superannuation perspective, it’s largely business as usual.

    Here’s our take:

    1. The government saw reason and has announced measures to allow Excess Non-Concessional Contributions to be withdrawn (along with any associated earnings) where a Non-Concessional Contribution Cap (eg $150,000 or $450,000 over 3 years) has been breached inadvertently from 1 July 2013.  This administrative issue has had the potential to bite plenty of people, and though SMSF members will benefit most from this change, public offer funds are still scrambling with how they’ll practically implement the relevant calculations if they need to.
    2. The mandated Superannuation Guarantee Contribution will still move to 9.5% in July before being frozen for 4 years.  The targeted 12% is set to kick in 2022 instead of 2019, but with at least 3 elections between now and then, there’s no guarantees on that.  Our Post Budget Ready Reckoner has the current and proposed increases laid out.
    3. And the most talked about item is that some self-funded retirees may exceed the Income Test for the Commonwealth Seniors Health Card.  Superannuation Pension Payments (that are untaxed for tax purposes) will be included in the Income Test for the first time from January 2015.  Current adjusted taxable income thresholds are:
      • $50,000 (singles)
      • $80,000 (couples, combined), or
      • $100,000 (couples, combined, for couples separated by illness or respite care).

    Note that all existing account based pensions in place prior to this date will be grandfathered.  Talk to us today if you’re over or nearing 65 and don’t have one in place. 

    For existing card holders, the Government will achieve savings of $1.1b over 5 years by ceasing the Seniors Supplement for holders of the CSHC (currently $876.20 per annum for singles and $1,320.80 combined for couples).  The Clean Energy Supplement will remain in place, as will a range of concessional benefits including lower co-payments for medicines on the Pharmaceutical Benefits Scheme and access to the lower threshold for the extended Medicare Safety Net.  The last payment will be made in June 2014.

    1. Though not specifically Super related, the Age Pension age was already set to increase to 67 by 1 July 2023.  Now, from 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035.  People born before 1 July 1958 will not be affected by this change. Also, there has been no change to the preservation age for accessing preserved superannuation benefits.  See our Post Budget Ready Reckoner for Age Pension eligibility dates.
    2. And in case you thought the Budget Repair Levy may apply to tax free income derived from a Superannuation Pension, it doesn’t.  However it has captured non-arms length income derived from SMSF Investments such as discretionary trust income, private company dividends or non-arms length transactions with related parties, increasing it from 45% to 47%.

    For a full super, tax and social security budget run-down, refer to Bendzulla’s Budget Report.

    Other important Super Strategies to consider right now

    Changes to the Concessional Contribution Caps were introduced prior to Budget Night and will come into effect on 1 July 2014.

    Year Aged under 59 @ 1/7/13 Aged 59 and over @ 1/7/13
    2013-14 (now) $25,000 $35,000
    Year Aged under 49 @ 1/7/14 Aged 49 and over @ 1/7/14
    2014-15 $30,000 $35,000

    But the big ticket item here is if you’re considering a Non-Concessional Contribution to get money into Superannuation right now, make sure you hold off until 1 July this year where possible.  The increased caps will enable you to contribute up to $90,000 extra by holding off.

    Year Limit per year* Over 3 years (referred to as “bring forward rule”)**
    2013-14 $150,000 $450,000
    2014-15 $180,000 $540,000

    *Annual limits applicable where under age 65, plus 65-74 where 40 hours in 30 day work test is met
    **Bring forward rule only applicable if age under 65So for now, it’s more about using Superannuation effectively to reduce your tax and ensure a well-funded lifestyle for the future.

    Talk to us today about a range of strategies to suit you  — Call now on 1300 368 775