With the clock ticking on the current financial year, now’s the time to make sure your superannuation affairs are in order for 30 June 2018.
Don’t leave contributions to the last minute
It’s vitally important to ensure that any contributions for 2017/18 are received by the fund no later than 30 June 2018, which is a Saturday. If contributions are made by internet banking, be aware of the service conditions that apply, the date the transaction will be processed and importantly, when the deposit will show in the fund’s bank account. Where an electronic contribution is made on 30 June 2018, generally, the deposit will not appear in the fund’s bank account until the following day, which is the next financial year (and some banks may not process until the next business day).
Where an electronic deposit appears in the fund’s bank account post 30 June 2018, it cannot be recorded as a contribution in the 2017/18 financial year. The ATO’s tax ruling, TR 2010/1, is clear when it comes to electronic contributions: “A contribution is made when the funds are credited to the superannuation provider’s bank account.” Paperwork indicating that the contribution was instigated on or before 30 June 2018 won’t be sufficient to show that it belongs to the 2017/18 financial year, if on the fund’s bank statement the date of receipt is 1 July 2018 or later.
It is, however, interesting to note that if a contribution is made by way of personal cheque, the ATO considers the contribution is made when the personal cheque is received by the fund, provided the cheque is promptly banked and honoured. This would allow for a contribution to be made on 30 June 2018 by personal cheque, received by the fund on the same day, but not banked until 2 July 2018 and still recorded as a contribution in the 2017/18 income year.
However, the best course of action is to ensure all intended contributions for 2017/18 are made in plenty of time before 30 June 2018.
We suggest you lodge any Contributions by Tuesday 26th June 2018.
Use the correct contribution caps:
The concessional contribution cap for everyone, no matter their age, is $25,000 for 2017/18. Those with salary sacrifice arrangements in place need to ensure they don’t breach this lower concessional cap and should review/revise their arrangement accordingly.
Also, those employees who cannot salary sacrifice to super are able to make personal contributions and claim as a tax deduction. The restriction, known as the ‘10% test’, was removed from 1 July 2017. There are specific notice requirements in place and again, you need to ensure that the total of personal deductible and employer contributions does not exceed the $25,000 limit for 2017/18.
The non-concessional cap for 2017/18 is $100,000. However, for anyone who has a ‘total super balance’ of at least $1.6m as at 30 June 2017, their non-concessional cap is reduced to zero. For those under age 65 during 2017/18, the bring forward rule can be used, where eligible, for non-concessional contributions. However, this also depends on the member’s total super balance at 30 June 2017.
It’s also important to note that where the bring forward rule is not fully utilised in year 1, that any non-concessional contributions made in any remaining year of the bring forward period are subject to the $1.6m total super balance test. For anyone who triggered the bring forward rule in either the 2015/16 or 2016/17 financial years, there will be a transitional bring forward contribution cap that applies, which should be confirmed.