Self Managed Super Fund contribution increase

Written on the 21 March 2014 by Macmillans Waller Fry - Accountants in Maitland

The Big News is the increase in the “ordinary” concessional contribution cap from $25,000 to $30,000 and the flow on effect of this increase on the non-concessional contribution cap and the “bring forward” cap.

SMSF advisers and their clients will have to consider whether to trigger the application of the bring forward in 2013/14 (thereby making 2013/14 the first year and locking in $450,000 non-concessional contribution cap for three years) or delaying the contributions and triggering the application of the bring forward for the 2014/15 financial year (thereby making 2014/15 the first year and locking in $540,000 of non-concessional contribution cap for three years).

Over the four year period from 2013/14 to 2017/18 an SMSF investor could contribute, in total, $630,000 of non-concessional contributions if the bring forward is triggered in 2013/14 or, alternatively, the same SMSF investor could contribute, in total, $690,000 of non-concessional contributions if the bring forward is triggered in respect of the 2014/15 financial year.  In both situations the SMSF investor need not incur excess contributions tax as shown below

Contribution Pattern

Contribution strategy 2013/14 2014/15 2015/16 2016/17 Total contributions over the 4 year period
Strategy A $450,000 Nil Nil  $180,000 $630,000
Stratergy B  $150,000  $540,000 Nil Nil

$690,000

 

In Strategy A, the bring forward is triggered in 2013/14 and the maximum contribution (without incurring excess contributions tax) has been made.  This precludes the SMSF investor from making non-concessional contributions in respect of the balance of the “bring forward” period.  The SMSF investor can next make a non-concessional contribution in 2016/17.

In Strategy B, the “bring forward” is triggered in 2014/15 and the maximum contributions (without incurring excess contributions tax) for 2013/14 and 2014/15 have been made.  The SMSF investor can next make a non-concessional contribution in 2017/18.

This illustration only applies to “ordinary” non-concessional contributions.  A separate contribution cap applies to CGT non-concessional contributions.  Personal injury non-concessional contributions are not subject to any contribution cap.

Author: Macmillans Waller Fry - Accountants in Maitland

 

“Building a Better Tax system” What does this mean for you?

The Australian government has launched the Better Tax campaign in order to help inform the public of tax reforms coming into effect. Designed to “better Australia”, here is a look at what this plan is and its meaning for you. What it is:The Better Tax initiative is designed to help prevent bi...
Read More...


Payday loan apps and websites; the pros and cons

Personal loans have become a fast-growing financing option for consumers, with payday apps and websites gaining popularity. For aid between paychecks, payday loans can be very helpful for the pay cycle lull. Taking out a loan is not something to enter into lightly though, there are many variables...
Read More...

associations

 

 

Who we are

 

What we do

 

Macmillans - Accountants

Address:40 Church Street

Maitland NSW 2320

Phone:02 4933 4444

Fax:02 4933 7781

Email

 

Online PaymentContact Us