Monday, 19 May 2014

BAN TACS Accountants Pty Ltd Newsflash Thinking Of Putting A Lump Sum Into Superannuation?

BAN TACS Accountants Pty Ltd Newsflash Thinking Of Putting A Lump Sum Into Superannuation?
The ultimate tax minimisation strategy for retirement is having your money in a super fund that is in pension stage so it pays no tax on its earnings and you pay no tax when you draw the money out. There are restrictions on how much you can put into superannuation so you need to start planning. You are allowed to put $150,000 in the 2013/14 year if you are under 65 years of age. 

You will not get a tax deduction for this amount and it will not be taxed going into the superannuation fund. If you want to contribute more than this and you did not put more than $150,000 in each of the last two years then you are entitled to pull back the next two year’s allowance.

This means that if you are under 65 years of age at any time during the 2013/2014 financial year you can put up to $450,000 in this year. Or if you need to put more than this in and you won’t be over 65 by 30th June, 2014 then you could just put $150,000 in this year and on 1st July use up the 2014/2015 threshold and draw back the next two years after that. In the 2014/2015 financial year the threshold will go from $150,000 to $180,000. 
So if you do it all this year you will only be able to put $450,000 in and nothing for the next two years, not even the $30,000 a year you missed out on. If you just put $150,000 in this year you will be able to put in $540,000 ($180,000 x 3) in the 2014/2015 year, a total of $690,000 over the next few months but then nothing again until 2017/2018.
If you are over 65 years of age the rules are a bit different. First you must satisfy a work test of at least 40 hours in a 30 day period in the year you make the contribution and you are not entitled to pull back from future years. 
If you are under 65 years of age at any time during the 2013/14 year you are still entitled to draw back the two years. So if you turn 65 during the 2013/2014 financial year you have to choose between putting $450,000 now and not being able to put any more in until the 1st July, 2016 and then still needing to satisfy the work test or continuing to work until you have done 40 hours in July 2015 and putting $150,000 in in 2013/2014, $180,000 in 2014/2015 and $180,000 in $2015/2016. Fortunately, if you don’t have that much you don’t have as much to worry about and may even be able to retire sooner. 


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Disclaimer: Please note in many cases the legislation referred to above has only just passed through parliament. The full effect is not c lear yet but it is already necessary to make you aware of the ramifications despite the limited commentary available. On the other side of the coin by the time you read this information it may be out of date. The information is presented in summary form and intended only to draw your attention to issues you should further discuss with your accountant. Please do not act on this information without further consultation. We disclaim any responsibility for actions taken on the above without further advice as to your particular circumstances.