Contribution strategies outlined in lead-up to EOFY
With the end of the financial year now approaching, advisers should be flagging contribution strategies for clients including deductions for personal super contributions, says a technical expert.
With 30 June not far away, AMP technical strategy manager John Perri said clients should be determining their capacity to make additional contributions and checking how much of their concessional cap is left for the year.
“If you have the capacity to make additional concessional contributions, then under the current rules, you may be able to claim a tax deduction for them,” Mr Perri said.
“You will need to supply your fund with some paperwork to claim the deduction. If you are in an SMSF, then you can download from the ATO website a standard ‘notice of intent’ form to claim a tax deduction for personal super contributions.”
Labor has stated that it intends to reinstate the 10 per cent rule, which would effectively restrict anyone earning more than 10 per cent of their income from employment from claiming a tax deduction for personal super contributions.
In the 2016 budget, the Coalition government introduced a measure to remove it, and the rule has been scrapped since 1 July 2017.
With Labor planning to reintroduce the 10 per cent rule, this may be the last financial year that those predominately earning their income from employment would be able to use this strategy.
One of the other strategies to consider before 30 June, he said, is making non-concessional contributions to qualify for the government co-contributions.
Mr Perri reminded advisers that the government will provide a co-contribution amount of $500 to individuals earning less than $37,697 where they make a $1,000 non-concessional contribution.
Couples may also want to consider making use of the spouse contribution tax offset, which is currently $540, for non-concessional contributions made by one spouse on behalf of the other spouse who earns less than $37,000 per annum.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.