New rules have recently created potential opportunities to consider for the 2018/19 financial year.
1. Buying your first home?
From 1 July this year, eligible first home buyers can withdraw voluntary contributions made after 1 July 2017 to their superannuation fund to purchase a first home under the First Home Super Saver Scheme (FHSSS). The FHSSS allows eligible first home buyers to save their deposit in the concessionally taxed super environment.
2. Selling your home?
Eligible super members can make super contributions of up to $300,000 per person from the sale of their home after 1 July this year, if they are aged 65 or over and meet other conditions. These contributions don’t count towards the concessional and non-concessional contribution caps and can be made even if the member doesn’t meet the usual age, work and other contribution tests.
3. Eligible for a tax cut?
The tax cuts announced in this year’s Federal Budget have been legislated. The first tranche took effect on 1 July this year, providing savings of up to $530 – see table below. There are a number of things that could be done with the extra cash, such as paying off debt and making extra super contributions (see opportunity 4).
1. Source: Budget 2018-19 fact sheet, ‘Lower, fairer and simpler taxes’ The tax liability and reduction in tax is calculated taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (at 2 per cent with the change to the Medicare levy low income thresholds).
4. Want a super deduction?
From 1 July 2017, most people (including employees for the first time) are eligible to claim personal super contributions as a tax deduction. This could reduce taxable income and give super savings a much needed boost.
5. Not likely to max out your super cap?
If super members make concessional (pre-tax) super contributions of less than the cap of $25,000 in 2018/19, they may be able to carry forward unused cap amounts, for use in a future financial year. This is worth keeping in mind – particularly for members who take time off work or work part-time. It means members may be able to make ‘catch-up’ concessional contributions from 1 July 2019, if their cashflow allows. Concessional contributions include all employer contributions (super guarantee and salary sacrifice), personal contributions claimed as a tax deduction and certain other amounts.
6. Have an SMSF?
From 1 July this year, if a pension is started or is running in an SMSF, certain events may need to be reported to the ATO using the ‘Transfer Balance Account Reporting’. Also, while not yet in effect, if a new limited recourse borrowing arrangement (LRBA) is started in an SMSF, there is a potential law change that would make the outstanding balance of a relevant LRBA count towards the members’ ‘total super balance’.
We can help assess whether any of these potential opportunities suit your needs and situation and make suitable adjustments to your financial plans.
Important information and disclaimer
This document has been published by Les Wigginton, Kristy Mitchell and Lindsay Richardson, RFPCQ Pty Ltd ABN 67 122 988 916, RFPNQ Pty Ltd 69 101 628 755, RFPLW Pty Ltd 61 123 530 245 trading as Regional Financial Planning and Mining Insurance Services Pty Ltd ABN 76 151 091 879 Authorised Representative(s) of Apogee Financial Planning Limited (ABN 28 056 426 932) (“Licensee”), an Australian Financial Services Licensee, registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia Bank Limited group of companies (“NAB Group”) .
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.
While it is believed the information in this publication is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors gives any warranty of accuracy, or accepts any responsibility for errors or omissions in this document.
Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.