EOFY: What to remember this year

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The end of the financial year is fast approaching and with super changes from Government, the implementation of FoFA and the Budget in May, it’s a busy time for planners. Amidst so much uncertainty, DFK business journalist Gunilla Haglundh says planners should focus on what they do know when it comes to preparing for 30 June.

Planners need to remind clients of the super changes and how they will affect the next financial year. This includes reviewing the concessional contribution cap and increase in maximum contributions for over 60 year olds.

“Planners should discuss this increase with their clients so they can take it into account for next financial year’s salary packaging arrangements,” says Brent McCartney, director at DFK Australia New Zealand.

For a self-managed superannuation fund to comply and take advantage of the tax concessions available, they must ensure that each member, if in pension mode has paid their minimum pension payment by year end.

When it comes to the end of the financial year, planners need to review:

  • The capital gains tax position of every investment made during the year to determine whether tax minimisation strategies can be implemented inside or outside super by offsetting gains with losses or utilising carry forward losses or even starting a pension in a super fund
  • Any payments made on behalf of the fund are in accordance with TR 2010
  • Capital gains tax position of every investment made during the year
  • Investment strategies, including insurance of members - In 2012, the Cooper review found that less than 13% of SMSFs held life insurance cover for their members, and the ATO has levelled some criticism.

“It’s part of the review to suggest an insurance component, whether it be life insurance or income protection,” says BKM Financial Services planner Christian Beltrame.

Clients with a large taxable income this year, but expecting a lower taxable income next year, should consider a contribution allocation strategy to maximise deductions for the current financial year.

For those who are between 55 and 60, they should consider transition to retirement strategies from super particularly as the tax free threshold has increased from $6,000 to $18,000 in 2012/13.

Clients with an older spouse or a lower super balance may consider splitting Concessional contributions to that partner for earlier access or to even out balances, particularly as the government appears on a crusade to increase their tax revenue in some way on the superannuation system – perhaps by targeting higher balances. Contribution splitting consistently can ensure family balances increase whilst not disadvantaging individual members.

There are also a few things that advisers can do for their business at the end of the financial year:

  • Delay large asset purchases until next year, to get the higher $6500 immediate write off instead of $1500 this year
  • If you want to claim for bad debts, remember that they must be bad and written off before the end of the financial year
  • If you think you are going to pay bonuses, then write them down now and claim the deduction even if paid after 30 June
  • Observe that 30 June is on a Sunday this year, so any transactions you make, effectively has to be made on the 27 to go through