Robert Goodman Accountants Blog

This year's Productivity Commission inquiry into superannuation highlighted concerns that many Australians' super benefits are being eroded by fees and inappropriate insurance premiums.

The government has now passed laws to force superannuation funds to take action – in some cases by cancelling insurance policies or paying benefits over to the ATO for consolidation. While the reforms will undoubtedly benefit many Australians, some members who wish to prevent unwanted action on their account may need to take action.

The new laws broadly take effect from 1 July 2019 and apply to "MySuper" and choice products (eg retail and industry fund accounts), but don't apply to SMSF trustees or small APRA funds.

Fees reform

The new laws ban superannuation funds from charging exit fees when a member wants to leave the fund, making it easier for members to close and consolidate their super accounts.

For member account balances below $6,000, funds are also prohibited from charging annual administration and investment fees totalling more than 3% of the member's account balance.

Insurance changes

Currently, many funds offer insurance on a default "opt-out" basis. While insurance is beneficial to many Australians (eg for death, permanent disablement or income protection), the government is concerned that some members are signed up for inappropriate or multiple insurance policies (eg from having accounts across multiple superannuation funds) and their super is being eroded by the premiums deducted from their accounts. Members are sometimes not fully aware of the costs and benefits involved.

Under the new laws, funds may not provide insurance for members of accounts that have been "inactive" (ie have not received any contributions or rollovers) for at least 16 months, unless specifically directed by the member. This means many existing insurance policies will be cancelled from 1 July 2019.

Funds were supposed to contact potentially affected members by 1 May 2019, but all members should check for themselves by asking:

  • Do I have an "inactive" account? This commonly includes workers with one or more old accounts from a previous job, parents taking time out of the workforce to care for children and even SMSF members who also keep an old public offer account open just for the insurance coverage.
  • What insurance am I signed up to? How much am I paying annually in premiums, and what is the insured amount? Do I hold multiple policies for the same insurance?
  • Do I want to keep the insurance cover? Your needs are unique and depend on your own financial and personal circumstances. If in doubt, seek professional advice.

If you wish to keep the insurance policy, you must make an election in writing. Contact your fund if you're unsure how to do this. You can make an election before 1 July.

Consolidating inactive low-balance accounts

Inactive accounts with balances below $6,000 will be paid over to the ATO, who will then take action to consolidate the person's super into a single account (or pay the benefits to the member directly if they are old enough to qualify or, if the member has died, to their beneficiaries or estate).

Even if your low-balance account has not received any contributions or rollovers for 16 months, the account will not be deemed "inactive" if you have taken actions such as changing investment options, changing insurance coverage or making or amending a binding nomination. You can also elect in writing to the ATO not to be treated as an inactive account member.

Get your super in order

Now is a great time for superannuation members to take stock of their accounts and insurance arrangements. Contact us if you need assistance with any of the upcoming changes.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2019. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.  

When you pass away, your superannuation benefits do not automatically form part of your estate. Instead, they're paid out by the trustee of your superannuation fund. So, what can you do to ensure your super is paid out in accordance with your wishes? For many people, a binding death benefit nomination (BDBN) is an appropriate safeguard to put in place.

How does a BDBN work?

If you don't make any nomination during your lifetime about how your super benefits should be paid on your death, the trustee has discretion to decide who will receive your benefits and in what form. Under superannuation law, your death benefits can be paid to either, or a combination, of:

  • your "legal personal representative" (LPR) – effectively, the executors of your estate (which means those superannuation benefits will then be dealt with by your will); and/or
  • one or more of your "dependants" directly, which include your spouse, children (of any age) and anyone with whom you were in an "interdependency relationship". 

Where the trustee decides to pay some benefits directly to a dependant, the trustee can also decide whether to pay your benefits as a lump sum or pension. The trustee has a lot of discretion! If you'd prefer to have certainty about how your benefits will be paid, consider making a BDBN.

This is a written direction given to the trustee specifying where your death benefits should be paid. Provided the BDBN is valid and still in effect when you die, the trustee is bound to follow it.

Making a valid BDBN

You should seek expert assistance when preparing a BDBN, especially if you're an SMSF member. Here we outline a few key principles to keep in mind.

First, the trustee can't follow a BDBN to the extent the payments would breach superannuation law. This means your BDBN can only specify the permitted recipients discussed above.

Second, for non-SMSFs, a BDBN must meet various requirements to be valid, such as being witnessed by two adult witnesses. For SMSFs, these requirements vary according to their deed.

Third, the BDBN must work in harmony with other relevant legal documentation. This includes:

  • The fund's deed (as mentioned above): the terms of SMSF deeds vary greatly. SMSF members must ensure their BDBN is permitted and valid under their fund's deed.
  • Pension documentation: if you're receiving a pension just before your death, any terms of the pension documentation that contradict your BDBN may cause legal uncertainty.
  • Your will: if your BDBN directs your benefits to your estate, your will can be tailored to ensure the benefits pass to specific beneficiaries in the most tax-effective manner.

Expiry dates

For non-SMSFs, a BDBN expires after three years. In an SMSF, a BDBN can potentially last indefinitely, but many SMSF deeds impose a three-year expiry anyway! In any event, it's good practice to review your BDBN every few years or whenever a major life change occurs.

Need to make a BDBN?

Contact your superannuation fund or financial planner or lawyer to make your binding death benefit nomination to ensure your wealth passes into the right hands, giving you maximum control and peace of mind.

 © Copyright 2019. All rights reserved. Source: Thomson Reuters.  IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants. 

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The Tax Institute has published on its Federal Budget website a summary table setting out the Coalition and Labor policies for superannuation.  

This may help you understand the competing policies being offered.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2019 The Tax Institute. Brought to you by Robert Goodman Accountants.  

Downsizer superannuation contributions

The government's new opportunity for "downsizing" Australians to contribute some of the sale proceeds from their home into superannuation may appear to be a very attractive strategy for many individuals who wish to use equity in their home to boost their retirement savings. However, anyone considering this strategy should take into account the full range of consequences, including possible adverse implications for the individual's Age Pension entitlement.

In an effort to reduce pressure on housing affordability, the government wants to encourage older Australians to sell their home in order to improve housing stock. To achieve this, the government has introduced a new opportunity for older Australians to contribute some of the proceeds from the sale of their home into superannuation.

Under the new measure, which took effect in July 2018, individuals aged 65 years and over who sell their home may contribute capital proceeds from the sale of up to $300,000 per member as a "downsizer" superannuation contribution.

This means an eligible couple can potentially contribute up to $600,000 from the sale of their home. Downsizer contributions:

  • do not count towards the member's non-concessional contributions cap;
  • are not subject to the "work test" that usually applies to voluntary contributions by members aged 65 years and over; and
  • may be made even if the member's total superannuation balance (TSB) exceeds $1.6 million.

However, downsizer contributions, once made, will increase the member's TSB. The usual limit on transferring benefits into the tax-free retirement phase also applies. This means that if you have already met your $1.6 million transfer balance cap, any downsizer contribution you make will need to stay in accumulation phase where the earnings will be subject to income tax of 15%.

To qualify for downsizer contributions, a member or their spouse must have owned their home for 10 years prior to the sale and the sale must qualify for the CGT main residence exemption, either partially or in full. Despite the name, "downsizer" contributions can be made even if the member does not purchase another replacement property.

Additionally, the member must make the downsizer contribution within 90 days of receiving the sale proceeds, and must complete a specific form and provide it to their superannuation fund when, or before, they make the contribution. Members should therefore plan their downsizer contribution carefully. The ATO says that downsizer contributions that are later identified as ineligible will be re-reported as personal contributions, which may result in the member exceeding their non-concessional contributions cap.

Could this affect my Age Pension entitlements?

Yes. Broadly, while the family home is not assessable for the purposes of determining Age Pension eligibility, superannuation savings are. This means that selling the family home and placing the proceeds into superannuation may result in either a complete loss of entitlement to the Age Pension or reduced pension entitlements.

Looking to downsize your home?

If you are thinking of selling your home and implementing a "downsizer" contribution, talk to us about whether you will qualify and whether you may require financial advice about this strategy. It is important that this contribution forms part of a long-term retirement plan that covers the relevant taxation, superannuation and Age Pension issues.

© Copyright 2019. All rights reserved. Source: Thomson Reuters.  IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants.

The ATO has begun issuing determinations to individuals who exceeded their concessional super contributions cap for the 2017-18 financial year. These determinations will also trigger amended income tax assessments and additional tax liabilities. Individuals can elect for the ATO to withdraw their excess contributions from their super fund to pay any additional personal tax liability. The key is to be aware of the time limits and avoid the pitfalls when making elections to release excess contributions.

Concessional contributions include all employer contributions, such as the 9.5% superannuation guarantee and salary sacrifice contributions, and personal contributions for which a deduction has been claimed.

A higher volume of excess concessional contributions (ECC) determinations will be issued for 2017-18, following the reduction in the concessional cap to $25,000. Taxpayers who receive an ECC determination should also expect an amended income tax assessment. This is because excess concessional contributions are automatically included in the individual's assessable income (and a 15% tax offset will apply for the contributions tax already paid by the super fund). An ECC Charge (approx 5%) is also payable to take account of the deferred payment of tax.

Individuals have 60 days from receiving an ECC determination to elect to release up to 85% of their excess concessional contributions from their super fund to pay their amended tax bill. Otherwise, individuals will need to fund the payment themselves.

If a person makes a valid election, the ATO will issue a release authority directly to the individual's nominated super fund. The fund will then pay the release amount to the ATO and the taxpayer will receive a credit equal to the amount released. This credit will be used by the ATO to first pay any tax or government debts (eg child support) before refunding any balance to the individual.

Taxpayers below the top marginal rate should have no tax debt on the released excess concessional contributions included in their assessable income. Those on the top marginal tax rate are expected to have a slightly higher tax liability for their excess concessional contributions, due to the additional ECC Charge.

Before making an election to release excess concessional contributions, consider the following:

  • As an election is irrevocable, first ensure that the determination is correct and that the contributions have been correctly reported by the super fund to the ATO for that income year.
  • Individuals with multiple super accounts should request the ATO to release any excess contributions from the account with the largest taxable component. This may help to improve the tax outcome on any benefits paid in the future.
  • Consider whether to only elect to release enough of the excess contributions to cover the additional personal tax liability (rather than the entire 85% of excess contributions). Otherwise, a taxpayer will simply end up with less money in the concessionally-taxed superannuation environment (defeating the whole purpose of the contributions in the first place).
  • Pay the tax and ECC Charge by the assessment due date, otherwise the higher general interest charge (approx 9%) will be applied until the debt is paid.
  • Finally, review any salary sacrifice arrangements to ensure the individual does not exceed their contributions limits in future years.

Need more guidance?

Talk to us today if you have received an ECC determination from the ATO, or suspect that you may exceed the $25,000 concessional cap for an income year. We can help to confirm that any extra tax payable has been correctly assessed by the ATO, before making an irrevocable election to withdraw the excess contributions, where appropriate. We can also help to organise your super arrangements for a more efficient tax outcome. Time limits apply so act now.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

ATO's use of real-time data for SG compliance

The ATO is currently undertaking a project to move towards real-time data or event-based reporting to enhance super guarantee entitlements compliance. This is an area the ATO is actively involved in having already raised around $22.8m in liabilities (including $3m in penalties) in the current financial year. It is hoped that the improvement of event-based reporting from large APRA funds which will report any changes such as employer super contributions to the ATO within 5 or 10 business days will further improve SG compliance in all sectors.

As technology improves, there's a continual move towards real-time data for enhanced and timely administration of the tax system, particularly in the superannuation sector.

The ATO is leveraging this real-time data and event-based reporting to make inroads in ensuring employees receive their full super guarantee (SG) entitlements.

In the 2017-18 year, the ATO received 31,000 employee notifications regarding SG entitlements and contacted around 24,000 employers. It completed 19,000 SG entitlements cases which were initiated by employees and a further 13,000 SG audits and reviews based on risk modelling. Total liabilities raised by the cases were approximately $850m.

On the back of that success, the ATO has continued to undertake additional SG casework through the current year financial year using funding from the SG taskforce. Thus far, it has completed around 537 cases and raised around $22.8m in liabilities including $3m in penalties. Most of the cases completed (65%) were from either NSW or Victoria. According to the ATO, it is on track to close over 2,600 cases from 1 July 2018 to 30 June 2019, raising around $130m in liabilities.

As event-based reporting from large APRA funds improves – the ATO is currently receiving data for 55% of APRA fund members which equates to 17.47m members – ensuring employer compliance with SG obligations as well as monitoring whether super contributions caps are exceeded will become progressively easier and more timely.

Currently, event-based reporting through the ATO member account attributable service (MAAS) platform, includes information such as member's name, address, TFN, and date of birth. Changes to such details are reported to the ATO within 5 business days of the event. The ATO has also started to receive information from a few funds through the ATO member account transactions service platform, which includes details on employer contributions, non-employer transactions, retirement-phase events and notice of intent. Any changes to these details will usually be reported to the ATO within 10 business days of the event.

What this means for you is that for the first-time, there will be event based reporting on things such as employer contributions, employer SG, award payments, salary sacrifice, voluntary employer contributions, as well as details of the employer and the period of payments. By extension, the ATO will also know who has not received an SG payment from their employer.

This will be an enormous help for younger people that increasingly work in more transient industries and/or roles, who often don't find out that their employer has not been contributing to their super until years later or when the company collapses. It is envisaged the complete transition to event-based reporting will be completed by mid-2019 which will better enable the ATO to protect employees and ensure super caps and other changes to superannuation are attended to in a timely manner.

Do you have an SG entitlement issue?

If you think your employer hasn't been paying the correct amount of super guarantee, or if you just want to find out whether you're doing the right thing by your employees, we can help you get everything in order. Contact us today. 

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants. 

New destination for super complaints

New destination for super complaints

Superannuation complaints are moving to a new destination from 1 November 2018. Previously, super fund complaints relating to the areas of regulated superannuation funds, annuities and deferred annuities, or retirement savings accounts was the domain of the Superannuation Complaints Tribunal. However, the Australian Financial Complaints Authority is the new government body set to take over. It has been touted by the government as a free one-stop shop for all financial complaints and will be more accountable to users.

Previously if a member of a super fund had a complaint relating to the areas of regulated superannuation funds, annuities and deferred annuities, or retirement savings accounts, they would lodge the compliant with the Superannuation Complaints Tribunal (SCT), after approaching the fund first, of course.

From 1 November 2018, these complaints will now be handled by the Australian Financial Complaints Authority (AFCA). AFCA has been established as a new external dispute resolution scheme to deal with complaints from consumers in the financial system. It will replace the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) as well as the SCT.

AFCA has been touted by the government as a free one-stop shop for all financial complaints, which will have higher monetary limits, be more accountable to users (ie having an independent assessor to deal with complaints regarding the handling of disputes), and have rules to support its dispute resolution functions and legislation in case of superannuation disputes.

The new authority might seem like a great idea, but what do you do if you have an open complaint with the SCT? Or if you've approached your super fund regarding an issue you're not happy with, and are unsatisfied with their response? Who do you turn to?

Firstly, it should be noted that the SCT is funded until the end of June 2020 to resolve all open complaints, and depending on the timing of any new complaints, the escalation point may be either SCT or AFCA. For example, the SCT will continue accepting complaints until 31 October, after which time its focus will shift to resolving existing complaints and new complaints will be directed to AFCA.

Secondly, the SCT and AFCA external dispute resolution processes are not the same, they each have their own rules and processes and uses different legislation. As AFCA has not yet started to accept complaints, it is unknown which system is better equipped to deal with a particular superannuation complaint.

According to data from SCT, in the second quarter of 2018 (ie from April to June), it increased the number of complaints resolved by 13.3% (or 551 cases) compared to the first quarter. Although, the number of complaints received also increased around 2.5% (or 580 cases), leading to the number of open complaints at the end of the second quarter totalling 1,897 cases. The number one resolved complaint by the SCT related to death benefit distribution, followed by deduction of insurance premiums, and fees and charges. These are also the top 3 most received complaints that the SCT receives.

Rounding out the top 10 types of complaints received are account balance, TTD benefit amounts in dispute, administration error, insurance cover dispute, delay in transfer of benefit, disclosure of information, and TPD benefit declined on medical evidence. If the numbers from SCT are anything to go by, AFCA should be expected to solve a similar number and types of disputes once it gets up and running.

Do you have a super complaint?

If you have a superannuation complaint relating to any of the above-mentioned categories, first contact your fund to see if something can be worked out. If you're not happy with their response, you can then make a complaint to either SCT or AFCA depending on the timing. Contact us today if you would like help with your superannuation issue or potential complaint.

© Copyright 2018. All rights reserved. Source: Thomson Reuters.  IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants.

Are you an employer that's fallen a little behind on super guarantee (SG) payments for your employees? Don't despair, the Government has announced a one-off amnesty to run until 24 May 2019, to allow employers to self-correct historical underpayments of SG amounts without incurring the penalties that would normally apply. This is subject to the SG shortfall occurring between 1 July 1992 and 30 March 2018 that have not previously been disclosed to the ATO.

Do you run a business that's maybe fallen a little behind on super guarantee (SG) payments for your employees? Perhaps you've had some cash flow issues in the past or forgot to make the payments one quarter. Well don't despair, the Government has announced a one-off amnesty to run until 24 May 2019, which will allow employers to self-correct historical underpayments of SG amounts without incurring the penalties that would normally apply.

 "The ATO estimates that in 2014-15, around $2.85bn in SG payments went unpaid…while this represents a 95% compliance rate, any level of non-compliance is unacceptable".

The amnesty applies to SG shortfalls as far back as 1 July 1992 but will not apply to shortfalls for quarters starting from 1 April 2018. Therefore, if your business inadvertently forgot to make SG payments for an employee during this period, you may be able to take advantage of the amnesty. To qualify for the amnesty, a disclosure must be made to the ATO in the approved form and must not have been previously disclosed.

Employers who take advantage of this amnesty will still need to pay all SG shortfall amounts owing to their employees, including the nominal interest and GIC (but not the administrative component). However, any SG charge payments and offsetting contributions made during the amnesty will be tax deductible for the employer.

According to the Government, those employers that do not take advantage of this amnesty will face higher penalties when they are subsequently caught. In general, a minimum 50% penalty on top of the SG charge that is already owed will be imposed. Additionally, a penalty of 200% of the SG shortfall amount may also apply for failing to lodge a SG statement on time. This is all on top of the SG charge payments and offsetting contributions not being deductible outside the amnesty period.

As a part of the carrot and stick approach the Government is taking, during the amnesty, the ATO will continue its usual enforcement activity against employers with historical SG obligations that don't own up voluntarily. In addition, it is also seeking to give ATO more tools to enforce compliance going forward including:

  • giving the ATO the ability to seek court-ordered penalties in cases where employers defy directions to pay their superannuation guarantee liabilities, including up to 12 months jail in the most egregious cases of non-payment;
  • requiring super funds to report contributions received at least monthly to the ATO which will enable the ATO to identify non-compliance and take prompt action;
  • rollout of Single Touch Payroll (STP) to all employers by 1 July 2019 which will aligning payroll functions with regular reporting of taxation and superannuation obligations; and
  • improving the effectiveness of the ATO's recovery powers, including strengthening director penalty notices and use of security bonds for high-risk employers, to ensure that unpaid superannuation is better collected by the ATO and paid to employees' super accounts.

Want to take advantage of the amnesty?

The amnesty provides a good, if not limited opportunity for employers to get their superannuation obligations in order before the ATO ramps up its compliance action and enforcement actions. If you're unsure about your SG compliance status, we can help you find out and apply for the amnesty if needed.

Call us at Robert Goodman Accountants on 07 3289 1700 or email us at reception@rgoodman.com.au.  © Copyright 2018. All rights reserved. Source: Thomson Reuters. Brought to you by Robert Goodman Accountants.

Downsize to boost your super

From 1 July 2018, people aged 65 or over will make able to make additional non-concessional contributions of up to $300,000 from downsizing their home subject to certain conditions. This is in addition to the concessional and non-concessional contribution caps. However, this measure may have unintended consequences if you plan on applying for the Age Pension, so wholistic retirement planning is needed to take advantage of the measure while minimising the downsides.

Now all the kids have all flown the coop and you're left with an empty nest, it might be a good time to consider downsizing to pursue that ultimate retirement dream; fishing beside a river, surfing every morning, or getting up to that fresh country air. Your dream could be one step closer with the measure to allow people to make additional super contributions from the proceeds to selling their home.

From 1 July 2018, people aged 65 or over will make able to make additional non-concessional contributions of up to $300,000 from downsizing their home subject to certain conditions:

  • the principle place of residence must have been held for a minimum of 10 years and located in Australia;
  • contribution must be an amount equal to all or part of the capital proceeds of sale of an interest in a qualifying dwelling in Australia;
  • any capital gain or loss from the disposal of the dwelling must have qualified (or would have qualified) for the main residence CGT exemption in whole or part;
  • contribution must be made within 90 days of disposing the dwelling (a longer time period may be allowed by the Commissioner);
  • a choice is made to treat the contribution as a downsizer contribution and the complying superannuation fund is notified in the approved form of this choice either before or at the time the contribution is made; and
  • the contributing individual has not previously made downsizer contributions or has had one made on their behalf, in relation to an earlier disposal.

The advantage with downsizer contributions is that the contribution is neither a concessional nor a non-concessional contribution, so if you have already reached your concessional or non-concessional contributions caps for the year, you are still able to make a contribution through the downsizer contribution, provided you meet all the conditions.

If you and your spouse jointly own a home, and decide to downsize, you can both benefit from this measure. For downsizing the same home, you and your spouse could potentially contribute a maximum of $600,000 into your individual super funds or SMSF. The other advantage with this measure is that the restrictions on non-concessional contributions for people with total superannuation balances above $1.6m will not apply. Therefore, the total superannuation balance of the individual will also not affect their eligibility to make a downsizer contribution. However, any downsizer contributions will still be subject to the $1.6m pension transfer balance cap.

Does this measure seem too good to be true? Well, there is also the Age Pension side you should be aware of. Currently, the family home is totally exempt from the Age Pension assets test, however, downsizer contribution may count towards the Age Pension asset test and any changes in your superannuation balance as a result of using this measure may also count towards the Age Pension Asset test.

Want the whole picture?

Need advice on how you could potentially take advantage of this measure and need to know what the downsides are?  Consult your licensed financial planner for advice or contact us and we can refer you to reputable licensed financial planners for wholistic advice for your planned retirement to help you realise your dreams. 

© Copyright 2018. All rights reserved. Source: Thomson Reuters.  IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants. 

Growing your super

Are you nearing retirement or just want to put a little extra away for the future without putting a strain on your household budget? Contributing to superannuation might be your best bet. There are two main ways to boost your super balance, salary sacrificing super (if your employer has made that option available) and personal super contributions.

The end of the financial year is nearly upon us, and there is no better time than now to get your financial plans in place for next year. If you're nearing retirement or just want to put a little extra away for the future, contributing to superannuation might be your best bet, this is especially true if you're female. Research has previously shown that women retire with an average of $120,000 less in their superannuation than men due to a combination of the gender pay gap, taking time off paid work, and working part-time.

There are two main ways to increase your super balance without putting too much strain on your weekly household budget, salary sacrificing super (if your employer has made that option available) and personal super contributions.

Salary sacrificing super

Put simply, salary sacrifice is an arrangement where you forego part of your salary in return for your employer providing the amount sacrificed into super. You should beware that your salary sacrificed contributions are considered to be contributions from your employer (eg if you decide to salary sacrifice 5% into your super your employer would only legally have to contribute 4.5% instead of the 9.5%).

Therefore, before you commence any salary sacrifice arrangement, it is advisable that you and your employer clearly state and agree on all the terms of the agreement. This may involve an explicit agreement between you and your employer that specify that they continue to pay the minimum super guarantee amount ignoring any salary sacrifice contributions you may make.

Salary sacrifice is a tax-effective way to boost your super, as the sacrificed component is not counted as your assessable income for tax purposes (provided the salary sacrifice arrangement itself is "effective") and hence is not subject to PAYG withholding tax. Although there are no limits per se to salary sacrificing superannuation, any sacrificed amounts are counted towards your annual concessional contributions cap. Therefore, tax-effective salary sacrificing arrangements are effectively limited to the concessional contributions cap.

Personal super contributions

Personal super contributions are the amounts you contribute to your super fund from your after-tax income (ie take home pay). These contributions are in addition to the compulsory super contributions your employer makes and does not include any contributions made through salary sacrifice arrangements.

Prior to 1 July 2017, only self-employed people could claim a deduction for personal super contributions, but from 1 July 2017, most people (regardless of their employment arrangement) are able to claim a full deduction for personal super contributions they make to their super until they turn 75. However, if you're between the age of 65 and 75, you will need to meet the "work test" to be eligible to claim the deduction.

If you have made a personal super contribution and want to claim a tax deduction, you will need to complete and lodge the form "Notice of intent to claim or vary a deduction for person super contributions" with your super fund and have this notice acknowledged in writing by your fund. You will need to do this before you lodge your tax return for the income year in which you are claiming a deduction for.

Interested in making a personal contribution?

Would you like to make a personal contribution and claim a deduction for tax time? Or maybe you would like to find out whether or not you qualify for the work test? Whatever it is, from setting up an effective salary sacrifice arrangement for the next financial year, to other tax strategies to make the most of your super, we can help you avoid all the pitfalls and get it right.

© Copyright 2018. All rights reserved. Source: Thomson Reuters.  IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances. Brought to you by Robert Goodman Accountants.