With the end of another financial year it is time to ensure that SMSFs (self-managed superannuation funds) have everything ready to allow a smooth completion of the SMSF's 2019/20 financials and tax return.
While most requirements are unchanged, there are some things that have been affected by COVID-19-relkated changed that SMSF trustees might need to consider.
As always, there are two concerns for SMSF trustees to take into account:
- what is the maximum contribution that can be made
- what happens if you go over your concessional or non-concessional contribution cap
For concessional contributions, there is a universal cap of $25,000 that applies if you qualify. But if your total super balance on 30 June 2019 is less than $500,000, you can bring forward any unused concessional contributions that are under the universal cap from 2018/19, and can claim personal tax deductions for any concessional contributions you make.
This is important to note that time frames apply if fund members with to claim a tax deduction for personal concessional contributions. An election must be made to the SMSF setting out the amount you will be claiming before you lodge your personal tax return for the 2019/20 financial year and no later than the end of the financial year after the contribution was made.
The notice needs to be lodged before any part of the contribution is withdrawn or used to start a pension. An SMSF also needs to acknowledge the election before an income tax return is lodged.
A major consideration in making non-concessional (non-tax deductible) contributions (NCC) is the amount of the 'Total Superannuation Balance', which determines the amount you can make to your SMSF without facing a tax penalty. If the Total Super Balance is more than $1.6 million, a penalty will apply to any NCC that is made, and you could end up having to withdraw any excess that arises.
If the Total Super balance is less than $1.6 million and you qualify to make NCC to your SMSF, you may be able to make up to $300,000 over a fixed three-year period. The standard NCC is $100,000, but for anyone under age 65 it is possible to bring forward up the next two years standard NCC is the Total Super Balance is less than $15. million.