In an end of financial year guide, BDO said given that a contribution counts towards the caps for the year that the money is received by the super fund, it is critical to allow sufficient time for any contributions made to be processed by the bank or clearing houses, so that the payment is processed prior to 30 June 2017.
This is especially important this year with the concessional cap decreasing to $25,000 from 1 July 2017 and the non-concessional cap also being reduced to $100,000.
BDO also warned that there may be certain contributions that clients are not aware of which will count towards their cap including expense payments for their SMSF that they pay personally or that are paid for by a third party on their behalf.
“Life insurance premiums paid by an employer to another fund and in-specie transfers of assets into a fund [are other examples],” said BDO.
The mid-tier firm also reminded SMSF practitioners and clients that individuals 65 or over must meet the work test before making any contributions to their fund.
“This means that you must work at least 40 hours in a 30-consecutive-day period before you can make any contributions,” said BDO.
The guide also highlighted that if a client earnt less than $50,021 for the 2016-17 year, they may be eligible for the government co-contribution. This entitles the recipient to an additional payment of up to a maximum of $500 from the government, said BDO.
“The requirements for this payment are that you earn less than $51,021 for the 2016-17 year, are aged 71 or under at the end of the financial year, make non-concessional contributions to your fund and meet the 10 per cent work test – where at least 10 per cent of your income is employment income,” explained BDO.
“The government will match your non-concessional contributions amount at the rate of $0.50 for every $1 that is contributed. This tapers off at a rate of $0.0333 for every $1 where your income is over $36,021 until you reach $51,021 where it cuts out.”
BDO also mentioned that if one spouse earns less than $13,800, the other spouse may be able to claim a tax deduction for contributions that they make on their behalf.
“The deduction is calculated at 18 per cent of the contributions amount, up to a maximum contribution of $3,000,” said the guide.
Contribution splitting is another strategy some clients may want to consider, said BDO.
“This may be a strategy where your spouse does not have much superannuation in their account, or where they are closer to their preservation age,” said the mid-tier.