As we approach the end of the 2023 financial year, it is important not to forget long-term planning for retirement. In this article, we will focus on some of the things worth giving some thought to.
Importantly, recent changes to superannuation, including the removal of the work test for most contributions made by people aged 67 to 75, and the increase in the age at which people can access the three-year bring forward rule for non-concessional contributions, took effect from 1 July 2022.
- Your total superannuation balance on 30 June 2022. This is the total of all your superannuation accounts and may influence whether you can make non-concessional (after tax) contributions to super, your eligibility to access the three-year bring forward opportunity, your eligibility to access unused concessional caps from previous years, the ability to qualify for the extended work test exemption, your eligibility to receive Government co-contributions and a tax offset for any spouse contributions you may make.
- If planning to make additional superannuation contributions, remember they need to be made before 30 June. Consider making contributions well in advance of the end of the year to ensure they are received by your super fund on time. Contributions made by electronic funds transfer e.g., BPAY, are not deemed to have been made until the money appears in your super fund’s bank account. This could be some days after you initiate the transfer.
- Concessional contributions include contributions made by an employer such as the 10.5% superannuation guarantee, salary sacrifice contributions and personal tax-deductible contributions. The maximum concessional contributions that may be made this financial year is $27,500.
- If aged between 67 and 75 and wish to make tax-deductible personal superannuation contributions in the current financial year, it is still a requirement that a work test needs to be met before 30 June 2023.
- Concessional contribution carry-forward. If your total superannuation balance (i.e., the balance of all your superannuation accounts added together) on 30 June 2022 was less than $500,000 and you did not use all your concessional contribution cap in 2018-19, 2019-20, 2020-21, or 2021-22, you may be able to carry the unused portion of previous year’s cap forward and contribute it in the current financial year.
- If planning to claim a tax deduction for personal superannuation contributions, you need to provide your superannuation fund with a Notice of Intent (to claim a tax deduction) before you lodge your income tax return, and before certain other events occur. We can assist you to ensure the appropriate documentation has been lodged.
- Non-concessional contributions are contributions made from after-tax income and from other savings. The maximum amount that can be contributed this year is $110,000, or up to $330,000 using the three-year bring forward rule. However, if your total superannuation balance on 30 June 2022 was more than $1.7m, you cannot make any non-concessional contributions. If it was between $1.48m and $1.7m, the maximum that can be contributed under the three-year rule reduces.It is also worth remembering that if you made non-concessional contributions of more than $100,000 in 2020-21, or more than $110,000 in 2021-22, the amount you may be able to contribute this financial year may be limited.
- There is currently around $16bn of lost and unclaimed superannuation being held by the Australian Taxation Office on behalf of Australians. Your adviser can help you find any lost super you might have.
- The money you have in superannuation does not automatically form part of your estate when you pass away. There are several options available where you can nominate a beneficiary to receive your super on your death. However, the rules are complex. We encourage all clients to make appropriate death benefit nominations. If a nomination was made in the past, it is important to review it from time to time to ensure it remains current.
This article only covers a handful of things to consider as we approach the end of the financial year. A licenced financial adviser is equipped to ensure you take advantage of all the opportunities available to you.
By Peter Kelly on 1 June 2023
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.