Get more from your SMSF this EOFY
Chances are you have a self managed super fund (SMSF) because you like the extra investment, tax and estate planning flexibility it can provide. But to make the most of your fund you need to keep up with the latest rule and legislation changes to take advantage of suitable opportunities.
Get shares into your fund cost and tax effectively
From 1 July 2013, the opportunity to ‘off-market’ transfer shares you own into your SMSF won’t be available. Instead, if you want to get some shares you hold personally into your fund, you’ll have to sell them, make a cash contribution and repurchase the shares in your SMSF.
So if you want to benefit from the ongoing tax concessions super can provide and save on brokerage, transferring the shares into your SMSF before 30 June 2013 could be a smart strategy.
Take out insurance in your fund
From 1 July 2013, your fund will be legally required to consider insurance as part of the investment strategy. But don’t think of this as just a compliance requirement. You will probably find that insuring in super is more cost-effective than holding the cover outside super.
Also, from 1 July 2014, some additional restrictions will apply to the types of insurance SMSFs can buy. So arranging certain types of cover now could mean you get yourself set up early and benefit from some potential cost savings in 2012-13..
Maximise your cap
It’s really important you make the most of your contribution cap* each financial year to boost your super balance (if your cashflow allows). If you don’t contribute the full amount each financial year, the remainder cannot be carried forward to the following financial year.
But it’s also essential you don’t overdo it, as excess concessional contributions are taxed at the maximum rate of 46.5%.
Review your strategy if you’re transitioning into retirement
If you are using the ‘transition to retirement’ (TTR) strategy to grow your retirement savings, you may need to make some changes. From 1 July 2013, the minimum income you’ll need to receive from your TTR pension will increase from 3% to 4% and the minimum superannuation guarantee contribution rate will increase from 9% to 9.25% in 2013-2014.
If you are currently drawing less than 4%, you will need to increase your income payments. Also, depending on your situation, you may need to reduce your super contributions to avoid penalty tax and consider what you might do with any surplus TTR income payments.
If you would like more information, please contact Scholten Collins McKissock on 03 9848 9811 or admin@scmfp.com.au.
* Concessional super contributions currently are capped at $25,000 pa, regardless of your age. The government has proposed to increase this cap to $35,000 pa from 1 July 2013 for people aged 60 and over, and 1 July 2014 for people aged 50 and over.
This document contains general information only. Godfrey Pembroke Financial Advice is not a registered tax agent. If you wish to rely on this document to determine your personal tax obligations, you should consult with a Registered Tax Agent. In preparing this information, Godfrey Pembroke Financial Advice did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, a person needs to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to their needs, objectives and circumstances. This information is based on our interpretation of relevant superannuation, social security and taxation laws as at 1 July 2013.