Aside from your home, your superannuation will likely be the largest asset you have – so using it wisely should be a high priority. It also provides great tax benefits that should be taken advantage of where possible. However, if you have a Self Managed Superannuation Fund (SMSF), there comes certain requirements you need to fulfill.
WHAT YOU SHOULD BE DOING BEFORE 30 JUNE
If you have an SMSF, there are a few things you need to do before 30 June:
- If you are in “pension mode” (i.e. your SMSF is paying a pension to a member), then you need to ensure that the pension amounts paid to date are higher than the minimum amount required;
- If in pension mode, and if that pension is a “Transition to Retirement Income Stream” Pension (called a TRIS), then there is also a maximum of 10% of your balance that can be taken each year that you need to abide by;
- Start rounding-up all receipts and bills, as these will be needed to be reviewed by the auditor of your SMSF; and
- Obtain valuations for any assets that have either:
- Not been revalued for 3 years; or
- Have seen a material change in value since the last valuation (and material may be 20%).
PLANNING OPPORTUNITIES
Planning opportunities include:
- Splitting your superannuation contributions with your spouse to help stay under the $1.9mil “total superannuation balance” cap;
- Maximising your superannuation contributions (should this help you lower your personal tax); and
- Check your total member balances against the $500k cap (for catch-up contributions) and the $1.9mil cap to see if you will exceed those on 30 June. If you will, then you only have a few weeks before you lose the ability to perform some functions (i.e. if your balance will be over $500k on 1 July 2023, you will lose the ability to make catch-up superannuation contributions from that date).
You should also check if you are on track to reach your long-term investment goals with your superannuation. This requires you to think about how much money you want at retirement, and then work out how much money you need to contribute to super (and what rate of return you need to get on the money inside super) in order to reach that goal.
The ASIC MoneySmart website has a very nifty calculator that is designed to help with this that we suggest you look at – moneysmart.gov.au/retirement-income/retirement-planner.
TAX CHANGES RELATING TO SMSF's
CONTRIBUTION CAPS
The maximum amount an individual can contribute into super (while claiming a tax deduction) will remain steady at $27,500 per year. This cap covers employer contributions and personal contributions that you are claiming a tax deduction for.
Individuals with a superannuation balance less than $500,000 are allowed to roll-over any unused cap amounts from one year into the next year (i.e. contribute above the cap next year).
The “non-concessional” cap (which is contributions you do not claim a tax deduction for) will also remain steady at $110,000 per year.
PENSION CAP
On 1 July 2023 the “total super balance” cap will increase to $1.9mil. This cap is used to test eligibility for a few rules, such as:
- This cap is the maximum amount of superannuation you are allowed to have as a tax-effective pension. We maintain records of how much of this cap has been used – nothing needs to be done by yourself – but it can provide a tax planning opportunity;
- Individuals with a total super balance over this cap are not allowed to make “non-concessional” contributions into super;
- Individuals over (or going over) this cap cannot utilise the 3 year bring forward rule for non-concessional contributions; and
- Super funds with a member over this cap are ineligible to use the “segregation” method of calculating taxable income
MINIMUM PENSION AMOUNTS
If you have started drawing a pension from your superannuation fund, then there is a minimum amount you must draw each year in order to maintain the pension (and the tax benefits that come with it).
Age of Person
Minimum Pension %
0 – 64
4 %
65 – 74
5 %
75 – 79
6 %
80 – 84
7 %
85 – 89
9 %
90 – 94
11 %
95 +
14 %
Age: Your age as of the start of the financial year (i.e. for the 2024 year, your age on 1 July 2023)
Percentage: This is the percent of your pension account you must withdraw. The pension account balance used is the previous year’s closing balance (i.e. for the 2024 year, your balance as of 30 June 2023)
For example, you are aged 67 on 1 July 2023 and your pension account has $650,000 in it on this date. You must draw a pension of at least $32,500 for the 2024 financial year.
COMPULSORY SUPERANNUATION CONTRIBUTIONS
From 1 July 2023, employers will be required to contribute superannuation of 11% (up from 10.5%).
