As we enter a new financial year following the Federal Election, there’s bound to be superannuation changes that may affect you. This article highlights some of the key considerations and actions to ensure your superannuation savings are maximised for the coming year.
The general contribution caps for the year ending 30 June 2020 remains unchanged at $25,000 for concessional contributions and $100,000 for Non-Concessional Contributions (NCC).
Non-Concessional Contributions (No tax deduction to be claimed)
Individuals with a Total Superannuation Balance (TSB) of $1.6 million or more at 30 June of the prior financial year are excluded from making any further NCCs.
Individuals who are less than 65 years of age with a TSB between $1.3 million and $1.6 million at 30 June of the prior year, who would like to access their bring-forward non-concessional contribution (NCC) caps, will only be able to access the bring forward rule on a proportionate basis, such that the individual’s TSB will not exceed $1.7 million. This is illustrated in the following table (i.e. individuals can bring forward as many years of the NCC cap that will take them over a TSB of $1.6 million, but not over $1.7 million).
Superannuation balance at the previous 30 June
NCC and bring forward available
Less than $1.3 million
3 years ($300,000)
$1.3 million to $1.4 million
3 years ($300,000)
$1.4 million to $1.5 million
2 years ($200,000)
$1.5 million to $1.6 million
1 year ($100,000)
More than $1.6 million
The Concessional Contribution Cap for the year ending 30 June 2020 remains unchanged at $25,000 per individual from all sources.
Concessional contributions can include:
- Compulsory contributions paid by an employer (e.g. super guarantee)
- Salary sacrifice contributions
- Member concessional contributions1 (i.e. personal contributions for which a tax deduction is claimed)
- Notional taxed contributions, for members of a defined benefit fund
- Amounts allocated from a fund reserve.
Generally, concessional contributions are taxed at 15 per cent when received by a complying superannuation fund. However, concessional contributions may also be taxed at a higher amount if an individual’s taxable income plus super contributions for the year exceeds $250,000.
A s290-170 Notice (notice of intent to claim or vary a deduction for personal super contributions) must be lodged with, and acknowledged by, the Fund prior to a member lodging their personal tax return, and by no later than 30 June the following financial year.
A tax deduction cannot be claimed where a s290-170 Notice has not been be lodged with, and acknowledged by, the Fund within the prescribed timeframes. The s290-170 Notice will be invalid if it is received by the Trustee after any of the following occur:
- Individual ceases to be a member of the fund
- The member has used the contributions to commence a pension or pay a lump sum benefit
- The member has rolled over the contributions to another complying fund.
The year ending 30 June 2020 is the first opportunity individuals can make ‘catch-up’ concessional super contributions provided their total superannuation balance is less than $500.000.
Individuals can access their unused concessional contribution caps on a five year rolling basis.
Amounts carried forward that have not been used will expire after five years.
To be eligible for the downsizer contributions, the individual must be aged 65 or over at the time of the contribution, and:
- The contribution is from the sale of a single eligible property in Australia (excluding caravan, houseboat or mobile home)
- The contribution is not tax deductible
- The property must be owned for at least 10 years prior to the sale
- The Capital Gains Tax main residence exemption is claimed on the sale of this property
- The contribution is made within 90 days of receiving the proceeds
- The fund is provided with a downsizer contribution form at time of the contribution
- The contract for sale of the property is entered into on or after 1 July 2018
- No previous downsizer contributions have been made.
It is important to note that the downsizer contribution does not count towards an individual’s NCC cap, and the TSB will be recalculated at the end of the financial year. In addition, each spouse can contribute up to $300,000, although it does not need to be a 50/50 split (but no more than $300,000 per member).
Caution: There may be significant tax consequences for exceeding contribution caps.
The ATO has started collecting transactional information from designated cryptocurrency service providers, where cryptocurrency is bought, sold, and transferred. Through its data matching technology the ATO is able to verify ‘purchase and sale’ information, to ensure tax obligations are being met.
The ATO has announced that after it has completed its data-matching exercise, it may contact taxpayers, including SMSF trustees, to verify the information they have collected. The ATO will allow at least 28 days for taxpayers to clarify any information. SMSFs that acquire, dispose or transact in cryptocurrency must keep records of the transactions.
We suggest SMSF trustees review their Fund’s Trust Deed and Investment Strategy to ensure the documents explicitly allow the SMSF to transact in cryptocurrency.
PAYG withholding reporting obligations due
An SMSF Trustee will be required to issue and lodge a PAYG Payment Summary with the ATO for any member who:
- Is in receipt of an income stream while under the age of 60, and/or
- Is in receipt of a Market Linked Income Stream.
SMSF Trustees are generally required to issue and lodge the Fund’s 30 June 2019 PAYG payment summary with the ATO by 14 July 2019, however tax agents are able to request an extension until the due date of the 2019 SMSF annual return (generally 15 May 2020).
Quarterly Transfer Balance Account Report (TBAR)
SMSF Trustees with reportable events who fall into the quarterly reporting regime must ensure the Fund’s next quarterly TBAR is lodged with the ATO by 28 July 2019. The Fund will fall into the quarterly reporting regime where:
- As at 30 June 2017, the Fund had a member with a TSB of more than $1 million who was in receipt of an income stream, or
- An income stream has been commenced since 1 July 2017 for a member who had a TSB of more than $1 million on the commencement date.
As 28 July 2019 falls on a weekend, the TBAR can be lodged with the ATO on Monday 29 July without penalty.
2019 SMSF annual return – guidance on new labels
New labels have been added to the 2019 SMSF annual return. These are:
- Part A Qualifications
In prior years, the annual return required SMSFs to report the auditor’s Part B qualifications i.e. that, in the auditor’s opinion, the Fund had not complied with the SIS Act and regulations.
The 2019 SMSF annual return will also ask whether Part A of the audit report was qualified.
Part A of the report gives the auditor’s opinion on whether the Fund’s financial statements are fairly presented (i.e. there are no material misstatements).
- Limited Recourse Borrowing Arrangements (LRBAs)
A new label has been added to the SMSF annual return’s member sections to report the outstanding LRBA amounts for each member.
In the assets section of the return, cryptocurrencies (which were previously reported at the “other overseas assets” label) now have a dedicated label. All digital assets that have the same characteristics as bitcoin should be included at this label of the return.
- Downsizer contributions
The member section now also has provision to report downsizer contributions. The total value of all downsizer contributions made by the member in 2018-19 will be reported at the “Proceeds from primary residence disposal” label and the date the downsizer contribution was received by the Fund will be reported at the receipt date label.
Superannuation is a complex area, and implementing the right actions and strategies is vital to ensure your superannuation savings are maximised. If you require any assistance, BDO’s Superannuation team is here to help. Don’t hesitate to contact your local adviser to seek assistance and ensure your savings are working for you.
1 Member concessional contributions (tax deduction to be claimed)
Before making any investment or financial decisions you should consider, with or without the assistance of a professional adviser, your particular objectives, and financial circumstance or needs.
The information contained in this article is purely factual in nature and does not take into account your personal objectives, financial situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice.
Further, the above information is provided as an information service only and, therefore, does not constitute financial product advice and should not be relied upon as financial product advice. If you require personal advice that takes into account of your particular objective, financial situation or needs, you should consult your BDO adviser who will be able to assist you in their capacity as Australian Financial Services licensee.