2018 Top SMSF Tax Tips
Our top list of SMSF changes to consider before & after 30 June 2018.
1. concessional contribution Cap 25,000
This is the maximum deductible amount for 2018 and 2019 and needs to be paid and received by the funds bank account on or before 30/6/18.
2. unused cap amount
A sweetener for the above is that any unused amount in one year can be utilised within the next 5 years, but this does not commence until after 2019, and is providing a members super fund balance remains under 500,000.
3. super tax threshold lowers to 250,000
This means that where the adjusted taxable income (ATI) of a member including deducted super contributions exceeds 250,000, the fund tax rate that applies to the excess will be 30% instead of 15%.
4. non-concessional contribution cap 100,000
This refers to non-deducted contributions, and a new lifetime cap of 500,000 also applies (and dated back to 2007).
5. new transfer balance cap of $1.6m
This means a limit from 1/7/17 on the funds transferable to Retirement Phase, on which subsequent earnings qualify for tax-free status. The remainder must be held in an Accumulation Phase which is taxed at 15%. Transfers to remedy any excess should be made in the 2017 return. For those affected, we have attempted to explain the changes in the attached summary.
6. temporary cgt relief
This refers only to those who need to make changes in respect of the above $1.6m cap above. It basically means those who need to transfer assets to meet the cap can receive cgt relief on gains made while they were tax-exempt assets. Note an election is needed by the 2/7/18 to obtain the relief. It has become a highly complex, messy area but most funds will remain unaffected.
7. work test abolished for 65-74
Previously you had to satisfy a work test of at least 40 hours per month in order to make contributions. In 2018 you may be able to contribute savings or proceeds from property into lower taxed or tax-free super, and gain a deduction for doing so.
8. TTR accounts now taxable
In 2018 a fund's earnings from investments held on TTR (or TRIS) Account will no longer be tax-free, and will attract 15% same as funds held on Accumulation Account.
9. removal of TTR lump sum tax break
The Government has also removed TTR pensions being treated as tax-free lump sums for tax purposes.
10. low income super co-contribution & tax offset
For 2018 this provides a 50% co-contribution up to $500 which phases out between $37-51k. The spouse income threshold increased from 10800 to 40000 Adjusted Taxable Income in 2017/18.
11. personal super contribution deductions
The test of having less than 10% of employment income in order to deduct personal contributions has been removed. This means any employee can make tax deductible personal contributions up to their cap of $25000 (including contributions from elsewhere). Note that an intent form needs lodging with the ATO or your fund, and prior to lodging your tax return with the deduction.
12. extended 2017 lodgement date 2nd July 2018
The ATO have provided an extension because of all the changes and complexity for many 2017 returns.
The above is a quick guide only. We do not provide investment or financial advice, and our services are limited to purely SMSF accounting, taxation & audit. Please always be wary of financial advice where a tax benefit is being promoted.
Last updated: 30/06/2018