Leave a Comment:
(0) comments
Add Your Reply
Self-managed super funds have become increasingly more popular since they can provide more flexibility around investments, tax and estate planning. But to make the most of your fund, you need to keep up with the latest rules and legislative changes to make sure you’re taking advantage of relevant opportunities this financial year.
Take out insurance in your fund
From 1 July 2014, some insurances will no longer be available through your superannuation fund. So arranging certain types of cover now could mean you get yourself set up to benefit from some potential cost savings in this financial year. Whilst insurance through super may be more cost effective for you than holding the cover outside super, you should speak to your adviser and review your insurance needs.
Maximise your cap
It’s really important you make the most of your contribution cap each financial year to boost your super savings (if your cashflow allows)*. If you don’t contribute the maximum amount each financial year, the remainder cannot be carried forward into the next financial year.
But it’s also essential you don’t overdo it. Concessional contributions that exceed your cap are now included in your assessable income and will be taxed at your marginal tax rate. Also, the “excess concessional contributions tax charge” (which is like interest charged) will also apply. Your excess concessional contributions may also be counted towards your non concessional contributions cap (if you do not choose to have them refunded to you).
Review your strategy if you’re transitioning into retirement
If you are using a transition to retirement (TTR) strategy to grow your retirement savings, you may need to alter your strategy from 1 July this year in light of some pending changes.
On 1 July 2014, the cap on concessionally taxed super contributions will increase from $25,000 to $35,000 if you are aged 49 or over on 30 June 2014. If you are eligible for the higher cap, you may want to increase your concessional contributions and draw more from your TTR pension to replace the extra money you contribute.
Also, the Government has proposed deferring the increase in the Super Guarantee (SG) contribution rate from 9.25% to 9.5% until 1 July 2016*. So make sure you keep an eye on whether the SG rate increases, as these contributions count towards your cap.
* Concessional super contributions currently are capped at $25,000 pa, for people aged 58 or under on 30/6/13 and $35,000 for people aged 59 or over on 30/6/13. From 1 July 2014, the general concessional cap will be increased to $30,000. For people aged 49 and over on 30/6/14, their concessional cap will be $35,000.
**if not made law by 1 July 2014, the rate will go up to 9.5% from 1 July 2014.
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs. Mohamed Said and Avante Financial Services Pty Ltd are not registered tax agents. If you wish to rely on this to determine your personal tax obligations you should consult a registered tax agent.
