EOFY SUPER PLANNING: it’s time to undertake a final review of your super to ensure that you have maximised your tax and retirement benefits for the year.

1. FY2021 Super
Planning

2. With the end of the financial year fast approaching, it’s
time to undertake a final review of your super to
ensure that you have maximised your tax and
retirement benefits for the 2020-21 year.
What should you be considering in terms of
superannuation prior to 30 June 2021?

3. 1. Maximise super contributions
Ensure that you have maximised your annual
concessional (tax deductible) and non-concessional
(un-deducted or after-tax) super contributions. The
following tables summarise the contribution caps for
the current financial year and those for the following
financial year, which will increase for the first time in 5
years.
This cap is inclusive of any 9.5% compulsory employer
contributions made on your behalf (note this is set to
increase to 10% from 1 July 2021).

4. Those earning more than $250,000 will pay an
additional 15% contributions tax on their concessional
contributions.
If you are aged 67 and over, you need to satisfy a work
test of gainful (paid) employment of at least 40 hours in
a consecutive 30-day period during the financial year in
order to be eligible to contribute to superannuation.
Note, it is proposed from 1 July 2020, that concessional
contributions work test required for those aged 67 to
74 will be abolished for those salary sacrificing. For
those making personal concessional contributions, the
work test will still apply.

5. If you are over age 75, only mandated or compulsory
super guarantee contributions are permitted.
Non-concessional contributions
For those under age 65, the non-concessional
contribution caps listed are based on the annual non-
concessional cap (i.e. $100,000 for 2020/21 brought
forward over 3 years and would only be applicable for
those people that have not exceeded their annual non-
concessional contribution cap in the prior 2 financial
years.

6. If you are aged 67 and over, you need to satisfy a work
test of gainful (paid) employment of at least 40 hours in
a consecutive 30 day period during the financial year in
order to be eligible to contribute to superannuation.
Note, it is proposed from 1 July 2022, that concessional
contributions work test required for those aged 67 to
74 will be abolished.
If you are over age 75, non-concessional contributions
are not permitted

7. Individuals with total superannuation balances of
$1.6m or more on 1 July 2020 are not eligible to make
non-concessional contributions to superannuation this
financial year.
From 1 July 2019, individuals aged 67 to 74 years with
total superannuation balances below $300,000 can
make voluntary contributions to superannuation for up
12 months from the end of the financial year in which
they last met the work test.

8. Note your super contribution will not be counted for
this financial year unless the payment is received by
your super fund prior to 30 June 2021. So, prepare to
make final contributions by 26 June 2021 at the latest.

9. 2. Review your salary sacrifice agreement
Review your salary sacrifice agreement to ensure that
you have maximised your salary sacrifice
superannuation contributions for the 2020-21 financial
year. If you do not have an agreement in place, then
consider establishing an agreement with your employer
for the 2021-22 financial year. From 1 July 2021, your
salary sacrifice agreement will need to take account
that the super guarantee rate will increase from 9.5%
to 10%.

10. 3. Personal concessional contributions for employees
and self-employed
Those self-employed, or only receiving investment
income should consider making a personal
concessional super contribution to reduce their taxable
income. Employees are also eligible to make personal
concessional contributions in addition to contributions
made on their behalf by their employer, provided their
total concessional contributions from all sources
(including super guarantee) does not exceed $25,000.

11. If you are eligible to make a concessional contribution
in which you are able to claim a tax deduction, then
you need to ensure that you have notified your super
fund in writing of your intention to claim a tax
deduction and you should also ensure that you receive
an acknowledgment of your intention from your super
fund. Without the notice and acknowledgment, your
claim for a tax deduction for your personal
contributions will be invalid.

12. 4. Carry-forward your concessional contributions cap
From 1 July 2018, you can roll forward any unused
concessional contributions cap for five years (after
which they expire). So, if you don’t use the full amount
of your $25,000 concessional contributions cap in any
year, you can always carry-forward the unused amount
and take advantage of it up to five years later. This is
provided your total super balance is less than $500,000
on 30 June of the previous financial year.

13. The 2019-20 year was the first financial year where you
can access unused concessional contributions, carried
forward from the 2018/2019 financial year.
For those with higher than usual income this year, this
can be a useful strategy to offset this income provided
they have unused cap available and are eligible to make
the contribution.

14. 5. Split your concessional contributions with your
spouse
You can split up to 85% of your concessional
contributions from a prior year with your spouse as
long as they’re under their preservation age, or under
65. This may be a strategy where your spouse has a low
super balance (must be less than $500,000 before the
start of the financial year) or is closer to retirement.
Contribution splitting can only be done after the end of
a financial year.

15. 6. Make a “downsizer” contribution
If you are over age 65 and have sold your home, you
may be eligible to make a once-off contribution of up to
$300,000 (or $600,000 per couple).
For those eligible, there is no need to meet a
contributions work test and the contribution is not
subject to the prohibition on making additional non-
concessional contributions where your total super
balance is more than $1.6 million.
Note, it is proposed from 1 July 2022, that the age limit
of eligibility will reduce from age 65 to age 60.

16. 7. Make a spouse super contribution
You may be entitled to an income tax offset of up to
$540 for superannuation contributions for the benefit
of a lower income (under $40,000) or non-working
spouse who is under age 75.

17. 8. Access the Government co-contribution of up to
$500
If you are under age 71, engaged in employment and
your total income is less than $54,837, the government
will co-contribute 50 cents for every $1 of any non-
concessional (undeducted) super contributions that
you make, up to a maximum of $500. This may be a
useful strategy for low income working spouses or
adult children working part-time.

18. 9. Make a super contribution to save for your first
home
Under the First Home Super Saver Scheme, voluntary
contributions to your super fund may be withdrawn to
help buy or build your first home. Under the scheme,
you can withdraw up to $15,000 of eligible
contributions made over a financial year or up to
$30,000 in total for all years, plus an amount that
represents deemed earnings. Non-concessional
contributions can be withdrawn tax free. Concessional
contributions and total earnings will be taxed at
marginal tax rates with a tax offset of 30%.

19. Note, it is proposed from 1 July 2022, that the
maximum releasable amount for the scheme will be
increased from $30,000 to $50,000.

20. 10. Consider starting a pension from superannuation
If you are over age 55, consider commencing a pension
from your super fund. Under the current super rules,
anyone who has reached “preservation age” (55 for
those born before 1 July 1960), can start a “transition
to retirement income stream” (TRIS) and draw up to a
maximum of 10% of their account balance each year.
This is irrespective of whether they continue to work or
not. Many use this strategy to reduce their tax but
more importantly, increase their contributions to
superannuation whilst supplementing their reduced
take-home pay with their pension withdrawal.

21. Alternatively, if you are over age 65, or if you are under
age 65, but have retired since commencing the TRIS, or
if you are between age 60 and 65 and changed jobs
after age 60, then you may convert your TRIS to a
“retirement phase pension”. The earnings on super
funds paying retirement phase pensions are tax free up
to the pension transfer balance cap (set at $1.6 million
as at 1 July 2017 but will increase to $1.7 million from 1
July 2021).

22. 11. Draw your minimum pension before year end
If you are already drawing a superannuation pension,
please ensure that your fund has paid you the
minimum pension before 30 June 2021. The minimum
pension for the year is based on a percentage of your
fund member balance as at 1 July 2020, or, if you
started your pension during the year, the fund member
balance at commencement pro-rata for part year. Due
to economic effects of Covid-19, the Government
reduced the minimum pension percentage factor by
50% for the 2019-20 and 2020-21 years as follows:

23. The minimum pension percentage factor will resume to
100% from 1 July 2021
There is no maximum annual limit to your account-
based pension, unless you are under age 65, still
working and drawing a TRIS pension from your super
fund, in which case the maximum annual limit is 10%.

24. 12. Thinking about setting up an SMSF before year
end?
If you are planning to set up an SMSF before year end,
it may be better to defer the set up until after 30 June
2021, so as to avoid the fixed annual SMSF compliance
costs that will apply regardless of how long the SMSF
has been in operation.
Are you now ready to make a start on your end of
financial year super planning checklist?
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