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Personal super contributions and the 10% test

With Labor threatening to reinstate the 10 per cent test if elected, SMSF clients may want to make the most of their ability to claim deductions for personal contributions this financial year, says a technical expert.

 

 

BDO partner, superannuation, Mark Wilkinson said that clients who are deriving assessable income of any description should be looking to see whether it’s in their interest to make a personal super contribution given the removal of the 10 per cent test.

Prior to the removal of the test from 1 July 2017, the 10 per cent test prevented individuals from being able to claim a tax deduction for personal super contributions if more than 10 per cent of their income was earned from employment, Mr Wilkinson explained.

“So, it’s now a lot easier to claim a deduction this year, but people need to work out whether that’s beneficial,” he said.

Labor has announced that if it wins the next federal election, it will reintroduce the 10 per cent test, which will see personal contributions restricted again.

“The reinstatement of the 10 per cent test would be a bad move that doesn’t make any sense. I just don’t see the justification,” Mr Wilkinson said.

Labor’s plans to bring back the 10 per cent test have copped considerable backlash from the SMSF industry, with SuperConcepts non-executive director Stuart Forsyth labelling it as a retrograde step.

Mr Forsyth said previously that the removal of the 10 per cent test was very much welcomed by the ATO and everybody else because it essentially put everybody in the same position in terms of being able to make a concessional contribution provided they’ve got assessable income.

“I think it’s a policy that would be a retrograde step. I don’t see why it matters whether assessable income is from salary or wages or from other sources. It doesn’t seem to be material and it seems to be a decision to be motivated by the desire to reduce the cost of the concession,” Mr Forsyth said.

He also noted that reintroducing the 10 per cent test now would be especially problematic given the total superannuation balance rules.

 

Miranda Brownlee
27 March 2019
smsfadviser.com

 


Sam El Shammaa

Sam El Shammaa

Director/Financial Planner

For more than 20 years, Sam has been a financial planner helping individuals and families achieve their financial planning goals, by providing advice on Investment Planning; Insurance Planning; Tax Planning; Retirement Planning; and Estate Planning. Working with a network of highly skilled professionals in Sydney he is dedicated to providing high-quality advice and integrated wealth management solutions that simplify and enhance the quality of his clients' lives.

Sam established his own firm in 1997 and has overseen its steady development and growth. Attention to detail, good listening skills and great empathy are symbols of his appreciation by his clients. He has built long-term relationships with his growing client base and aims to provide excellent customer service.

Sam began his financial planning career in 1993 after completing a Bachelor of Science degree in 1991. Since this time he has accumulated many professional qualifications such as:

Sam has volunteered with the Cancer Council of NSW and can be seen almost every year volunteering or participating in the 7 bridges walk.

Away from the business, he enjoys spending weekends with his son. He is also a football (soccer) tragic and is a massive Chelsea FC fan.



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George Pereira

Financial Planner

Having worked for national financial planning companies in the past, George has extensive experience in the provision of advice in risk insurance, investments and retirement planning and is focused on forming long-term relationships with his clients.

George has been awarded a Masters of Commerce (Financial Planning) and a Bachelor of Commerce through University of Western Sydney as well as having the Diploma of Financial Services (Financial Planning).


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She holds a Master's degree in Applied Finance through Macquarie University, and she is a member of the Million Dollar Round Table.

Being a self-confessed "tennis nut", Jane spends many weeknights in the tennis court, and is a frequent member of Sydney's Eastern Suburbs Tennis Competition.

Being a highly motivated professional, Jane is always eager to help her clients on a wide range of financial planning needs.

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Financial Planner

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He provides a holistic approach on various aspects of financial advice encompassing areas such as Investment Planning; Insurance Planning; Tax Planning; Retirement Planning and has extensive experience and knowledge in these fields.

Paul's professional qualifications are:

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