End of financial year a key time for SMSF members

By Reporter

March 12 2020
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Strategies based around an SMSF’s total super balance (TSB) should keep in mind the 30 June deadline when it comes to checking the eligibility of future contributions into a fund, according to an actuarial services provider.

In a presentation at the Tax Summit in Sydney yesterday, Accurium technical services manager Melanie Dunn noted that the TSB of an SMSF can affect strategies around carry-forward concessional contributions, non-concessional contributions, the ability to use the bring-forward rule, co-contributions, spouse tax offsets and how a fund that is moving into retirement phase must claim exempt current pension income (ECPI).

“If we receive significant additions or contributions or rollovers into a fund in a year such that it impacts your total super balance to an extent it’s going to impede your ability to use some of these contribution strategies, you need to look at ways to maximise the contributions in the current year knowing you won’t be eligible next year,” Ms Dunn said.

“So, consider opportunities to maximise contributions in that year that where you’re likely to be impacted next year. Recognise that money coming in has impacted a member’s total super balance and it’s likely to change what you can do next year. Take account of these types of monies that are coming in.”

As an example, Ms Dunn said working out TSB strategy becomes interesting when it comes to the case of death benefit pensions.

She noted that if a member receives an automatically reversionary pension as a death benefit income stream, then for transfer balance cap purposes, that won’t count for the member until 12 months’ time.

But when it comes to total super balances, Ms Dunn said it does count from the day of death.

“[It counts] from the day they receive it. So that’s one trigger point that might mean someone could jump to be over these types of thresholds that you need to be aware of,” Ms Dunn said.

“If, however, you’re receiving a death benefit income stream that was not an automatically reversionary income stream, we know death benefits need to be paid within a reasonable time frame.

“But if we can be in a situation where you can maybe slightly defer the commencement of that death benefit income stream to 1 July of the following year, then that would give you an extra 12 months before that balance hits that member’s transfer balance cap from an eligibility perspective for contribution rules.”

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Retirement