Australia: Superannuation tax planning for 2014-15

Last Updated: 29 June 2014

1. Pay superannuation contributions before 30 June 2014

To obtain a tax deduction for the 2014 tax year, ensure that you pay the minimum superannuation contributions (9.25%) and any additional superannuation contribution in respect for yourself and your employees by 30 June 2014. The contribution must be received and banked by the super fund by 30 June 2014.

To avoid incurring non tax deductible SGC including interest and penalties for the quarter ended 30 June 2014, ensure you pay the minimum level of superannuation by 28 July 2014, if not already paid by 30 June 2014.

Please note the superannuation guarantee rate will increase to 9.5% from 1 July 2014.

2. Review maximum concessional contribution limits

  1. Maximum Concessional (Deductible) contributions allowed for 2014 and 2015 are:

Year Under age 50 Age 50 and over Age 60 and over
2013-14 $25,000 $25,000 $35,000
2014-15 $30,000 $35,000 $35,000

If you are 65 or over, you must pass the work test (work 40 hours in any 30 day period during the financial year) in order to make contributions.

  1. Maximum earnings base for the 2014

The maximum employee earnings base on which contributions are required to be made for Superannuation Guarantee purposes for the 2014 year:

Per quarter $48,040 Per annum $192,160

Based on the maximum earnings base, the superannuation contribution required to satisfy the 9.25% superannuation guarantee obligation is $17,775 for the 2014 year.

3. Self-employed rules and deductible personal superannuation contributions

To claim a personal tax deduction for superannuation contributions, income from "employee activities" must be less than 10% of your total assessable income, reportable fringe benefits and reportable employer super contributions for the income year in which the contributions are made.

Please review your arrangements if you are in receipt of employment income to ensure you still qualify for deductible personal superannuation contributions.

You must also send a valid "Notice of intent to claim a tax deduction" to the super fund and receive acknowledgement from the fund. If you intend to start a pension this notice must be made before the pension commences, and before your personal income tax return is lodged.

4. Consequences if you exceed the concessional contributions limit

The concessional contributions limit applies to all deductible superannuation contributions which include salary sacrifice amounts, 9.25% superannuation guarantee contributions and your own deductible contributions.

From 1 July 2013, should the concessional contributions exceed the applicable limit; the excess concessional contributions will be included in your assessable income for the corresponding year and taxed at your marginal tax rate. In addition, you will be liable for the excess concessional contributions charge.

Accordingly, you should review your salary sacrifice arrangements to ensure that contributions in aggregate made by you and your employers do not exceed your concessional cap.

5. High income earners' contributions tax

High income earners will have to pay an extra 15% tax on their "taxable superannuation contributions" if their adjusted income, plus their low tax contributions, are greater than $300,000.

6. Non-concessional contributions cap

Non-concessional contributions include personal contributions for which taxpayers do not claim an income tax deduction.

Income year Amount of cap
2013/14 $150,000
2014/15 $180,000

With the increase in the non-concessional cap to $180,000, the non-concessional cap under the bring-forward rule over 3 years has increased to $540,000 (from $450,000). Taxpayers wishing to avail themselves of the $540,000 cap must wait until 1 July 2014 and subject to not having made a bring forward contribution in the last 2 years.

Please note that the work test applies if you are 65 or over in order to make any contributions and the bring forward rule can only be used by members under 65.

7. Super co-contribution

If you are earning less than $33,516 for the year ended 30 June 2014, consider making a personal non-concessional (un-deducted) super contribution of $1,000 to a complying super fund before 30 June 2014 and the government will co-contribute $0.50 for every $1 of the personal contributions to a maximum of $500. The level of government co-contribution reduces for income above $33,516 and is phased out completely once your income level reaches $48,516. The super co-contribution is not available if you are older than 70.

8. Superannuation spouse contribution tax offset

You may be entitled to claim a tax offset of up to $540 (18% on super contributions of up to $3,000) where you make non-concessional super contributions on behalf of a non-working or low income spouse.

To be eligible for the maximum tax offset, the spouse's assessable income, reportable fringe benefits and reportable super contributions for the year are required to be less than $10,800. The tax offset is phased out completely once the income level reaches $13,800. It is available if your spouse is under 70 at time of contribution. If your spouse is 65 to 69, he or she must be gainfully employed at least part time.

9. Minimum Pension withdrawals required

If you are withdrawing a pension from a self-managed super fund, please ensure your minimum amount has been withdrawn before 30/6/14 to retain tax free status of your pension account/s in your super fund. Contact us immediately if you do not know the minimum amount to be withdrawn.

10. Capital Gains and Losses

If you have realized any capital gains during the year consider selling investments with unrealized losses, subject to investment advice considerations. This may not be relevant if all of the fund's assets are being used to provide pension benefits and the fund's income tax exempt.

A loss may not be available for deduct against capital gains if it is considered by the ATO to be a "wash sale". A wash sale is where assets are disposed to realise a loss, such as the transfer of assets to related parties or the sale (including to unrelated parties) and immediate repurchase of the assets at the lower market value.

11. Market Valuations required annually

Super funds must now review the values of their assets annually and ensure they are shown in the financial statements of the fund at each year end at market values.

12. SuperStream Rules

Employers will be required to comply with minimum data standards and use electronic transfers when transacting with superannuation funds.

The start date for employers with 20 or more employees whilst stated as 1 July 2014, has been deferred until 3 November 2014 under the existing transitional rules. Employers with less than 20 employees will not be required to comply until 1 July 2015. These rules will also affect SMSFs that receive employer contributions from unrelated employers by necessitating the establishment of electronic processes and software to manage data and electronic transfers.

This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2014 Moore Stephens Australia Pty Limited. All rights reserved.

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