Superannuation year end planning guide

With the end-of-financial year looming, here’s a quick guide to some 2018 superannuation planning considerations.

The guide reviews;

·         Contribution limits and new rules

·         SMSF Trustee Obligations

·         SMSF Minimum Pension Payments and Maximum Transition to Retirement Pension Payments

·         Employer Issues

The guide doesn’t touch on the rule changes relating to the $1.6M account balance and ‘Transfer balance cap’ and associated transitional CGT relief. For more details, visit

Contribution limits

Concessional (employer or your tax deductible contributions)

This limit is $25,000 (down from $30,000 or $35,000 in 2016/17 depending on age).

This includes all employer contributions and contributions into all various super funds you may have.

If you contribution is more than $25,000, the excess will be included in your taxable income in your personal tax return (with a 15% tax offset credited in your tax return) and may be withdrawn.

Dealing with excess contributions is painful. It’s best to make an effort not to go over the $25,000 limit.

Non-concessional (typically your own after tax, non-deductible contributions)

This limit is $100,000 if your ‘Total Superannuation Balance’ is less than $1.6M at 30 June 2017.

Excess contributions not withdrawn will be taxed at 47%.

There are more complex ‘bring forward’ rules which I won’t go into here that allow you to contribute more than $100,000 in a set time period, depending on your super fund’s balance and history of contributions. The calculation for ‘Total Superannuation Balance’ also is complex. If you would like further details, please contact me.

Earning over $250,000 means extra tax on your super

If you are earning over $250,000, tax on at least part of your super contributions will increase from 15% to 30%. As with all things relating to tax, the rules and calculations are not straightforward, but suffice to say that you will be taxed more. The amount of super that is subject to the extra tax will depend on total earnings and super contributions.

You will be able to pay the extra 15% tax from your super fund but you must comply with ATO paperwork requirements and complete and return a ‘release authority’ within a set time period.

Personal Superannuation Contributions

The rules have changed for the better for deductions for personal superannuation contributions and they are generally now deductible (subject to the contribution limits discussed above and age and work test rules)

Prior to this financial year, if you earnt more than 10% of your income through salary and wages, any personal superannuation contributions were not deductible. This significantly disadvantaged those who worked in both paid employment and ran their own business as unless they were able to make significant salary sacrifices with their employment, it was difficult to make deductible super contributions.

Fortunately, this rule has been scrapped. Personal superannuation contributions are now deductible, subject to meeting the work test. The work test affects those aged 65 years or over.

If you have reached 65 years but not 75 years, you must have worked at least 40 hours within 30 consecutive days in a financial year before your super fund can accept contributions for you. This includes non-mandated employer contributions, personal contributions, spouse contributions and government co-contributions. This is known as the work test. There is no age restriction on your super fund accepting mandated employer contributions.

End of year timing for contributions

For reporting and ATO purposes, a super contribution is considered to be made when it is received by the fund.

To claim a deduction for your super contribution this financial year, ensure the contribution is recorded in your super fund by 30 June.

There are rules concerning a fund accepting contributions into a reserve account and then allocating them to a member account within 28 days after the end of the month. However this is an unnecessary headache that requires extra time, professional expertise and thus cost and runs the risk of incorrect paperwork. It’s far simpler to ensure your contribution reaches the fund’s account by 30 June.

Completing your Super Fund’s Form to Ensure a Deduction is Claimed

To claim a deduction for personal super contributions, you must lodge with your super fund a deduction notice. You will be able to obtain this form from your super fund. For 2017/18 contributions, the form must be lodged by the earlier of the day you lodge your 2018 tax return or 30 June 2019.

SMSF Trustee Obligations

Among the many obligations for SMSF trustees, some pertinent ones for year-end planning are to;

·         Ensure the investment strategy is reviewed and updated

·         Ensure the investment strategy considers whether insurance for members should be held in the fund

·         Ensure the SMSF’s assets are valued at market value

·         Ensure any ‘in-house assets’ are within the five percent limit

Make sure you got through this process prior to 30 June and document what you have done in minutes.

SMSF’s and Pension Payments

Account-Based Pension and Transition to Retirement Minimum Pension Amount

You must pay the member the minimum annual pension amount each financial year (listed below). The minimum annual pension amount is a percentage of the balance of the fund’s pension account at 1 July, assuming the pension started in a prior year, with the percentage based on the member’s age. If you started the pension during the year, the calculation is a little more complicated.

Age is calculated by your age at either 1 July in the financial year in which the payment is made or age at the commencement day of any pension.


For those under 65, the percentage is 4 percent.

For those aged between 65 and 74 the percentage is 5 percent.

Percentages then increase further. Contact me for further details if necessary.

Transition to Retirement Maximum Pension Amount

Until the date when a member has satisfied a ‘condition of release’ and is allowed to take all cash out of the fund, you must not pay more than 10% of the pension’s account balance. The balance is typically calculated on 1 July or if the pension commences during the year, the balance as at the day the pension commenced.

For employers

Any unpaid superannuation at 30 June is not deductible.

Ensure you pay all superannuation prior to 30 June so that you can claim all superannuation expenses as tax deductions in this tax year.

Unpaid superannuation from prior years may be subject to an ATO amnesty, allowing you to make up these payments without penalty and allowing these payments to be deductible. For more details, see my article on this here.

Good luck with your superannuation planning

As you can see, there are a host of rules and issues to consider and these are just a starting point. If you have any queries, please don’t hesitate to contact me at


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