Optimum End of Financial Year Series - Superannuation Edition

The end of the financial year is fast approaching, and it is a great opportunity for you to consider your tax position prior to 30 June2021. By reviewing your current position, you can identify whether any action is necessary before the financial year closes. This also provides a great opportunity to plan for the new year.

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As the saying goes “If you fail to plan, you are planning to fail” (Benjamin Franklin).

Let us help you review your position with some helpful tips for dealing with year-end tax planning.

Below is our Superannuation Edition.

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‍SUPERANNUATION BEFORE 30 JUNE 2021

Tax deductions for superannuation are available in the year that the contribution is made.

Superannuation for Business

For businesses you will need to ensure that employee super is paid prior to 30 June 2021 to get a tax deduction. Super is due on the 28thday following the end of a quarter.

Payment to a superannuation clearing house before 30 June may not always guarantee deductibility as the clearing house needs to pay it to the fund. If you plan to pay all June quarter superannuation before 30 June2021, we recommend this be done as early as possible to allow for any processing delays.

For more information, please refer to the ATO Website.

Superannuation for Individuals

For individuals, you may be entitled to claim a tax deduction on any personal contributions made to your superannuation fund. To claim a deduction for your personal contributions you will need to notify your super fund of your intent to claim. It is important to consider any super that has already been contributed by your employer via the super guarantee and salary sacrificed amounts as these count towards the concessional contributions cap (currently $25,000 for the year ending 30 June, 2021).

For more information please refer to the ATO Website.

Super Minimum Pension payments

For those with a Self-Managed Superannuation Fund (SMSF) and an account in pension phase you will need to review whether you have drawn at least the minimum pension payment by 30 June, 2021. The minimum pension payments are a percentage of your pension account balance on 1 July and varies according to your age. Due to Covid these rates were temporarily reduced for the 2019-20 and 2020-21 financial years.

For our existing SMSF clients, we will be in contact with you shortly regarding the minimum pension draw downs for the year ending 30June 2021.

If you require more information regarding the pension drawdown rates, please contact our office or refer to the ATO Website.

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SUPERANNUATION CHANGES FROM 1 JULY 2021

Superannuation Guarantee Increase

From 1 July 2021, the super guarantee percentage will increase from 9.50% to 10.00%. The rate is planned to increase each year until it reaches 12%. Please ensure any payments to employees from this date reflect the new rate. If you require any assistance with updating your relevant payroll software, please contact our office and we will be more than happy to assist.

Super contribution cap increase

From 1 July 2021, the superannuation contribution caps will increase as outlined below.

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Contribution Caps From 1 July 2021

Concessional  contributions cap (before-tax contributions) - $27,500

 Non-Concessional  contributions cap (after-tax contributions) - $110,000

 Concessional contributions are those contributions that are made into your super fund before tax. These are taxed at a rate of 15% in your super fund and include:

• compulsory employer contributions (superannuation guarantee)

• additional concessional contributions your employer makes

• salary sacrifice payments made to your super fund

Non-concessional contributions are made from after-tax income and are not taxed in your super fund.

Watch this space for more editions of our Optimum End of Financial Year series as we approach 30 June, 2021.

In the meantime, if you have any questions regarding the above, please send us an enquiry via our website or contact our office on 02 9821 2455.

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