With three months until the budget, the taxation of superannuation has become a key focus as a potential area where the government can raise additional revenue.
National accounting firm RSM Bird Cameron said there were some key points that your clients should be considering before budget night.
RSM Bird Cameron principal Brad Eppingstall said that by taking action now, SMSF members might be able to minimise the impact of any changes that would be announced.
“When considering what should be done before the budget is handed down on 14 May, SMSF trustees can work within the current laws,” said Eppingstall. “It is unlikely that any changes announced on budget night will be retrospective and have an impact on transactions that have already taken place since the start of the financial year.”
Here are some points that you should consider talking about with your clients:
Planned contributions for a fund can be made prior to budget night. The contributions can be tax deductible or undeducted. They should be carefully planned to ensure the $25,000 deductible and the $150,000 undeducted contributions limit cap is not exceeded.
In addition, consider contributing up to $450,000 by utilising the next two years of undeducted contributions limit where the member is under 65.
Anyone over the age of 55 can start drawing part of their superannuation benefits as a transition to retirement pension. The aim of these was to allow partial access to superannuation benefits while reducing working hours. Key is that it is not necessary to retire to have partial access to the superannuation benefits and the maximum withdrawals are limited.
Where appropriate SMSF members and trustees should ensure that all necessary documentation is ready and signed for the start of a transition to retirement pension as soon as possible to ensure a pension exists by budget night.
A major part of the Simpler Super changes in 2007 was the tax free withdrawal of superannuation benefits for members over age 60. There have been rumours that the government will reintroduce tax on superannuation withdrawals or limit the amount of superannuation benefits that are able to be withdrawn tax free.
Superannuation benefits include taxable and tax free components. Tax free components are not taxable on withdrawal where the taxable components may be depending on the member’s age. SMSF members should consider their options with superannuation benefits to maximise the amount of tax free benefits in the fund.
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