The following outlines what has changed.
An increase in the age required for the work test.
From July 1, 2020, the age required rose from 65 to 67. The main benefit of this change is that it provides, where possible, an additional opportunity to implement voluntary super contribution strategies.
What taxable contributions can be made for the year ending June 30, 2021?
There is a cap of $25,000 per person for those able to make extra contributions to their super during the 2020/21 financial year. Any excess over this concessional contribution (CC) cap is taxed at the individual’s marginal tax rate.
CCs are contributions where a tax deduction is claimed and include:
The CC cap will, in most cases, exceed employer contributions in 2020/21. If this is the case, then consideration could be given to adding personal taxable contributions to get you up to the $25,000 limit.
The higher your income, the greater the tax savings and keep in mind that there is no upper age limit for being eligible to receive SGCs.
Carry forward provisions
An individual can carry forward CCs if their total superannuation balance (TSB) is less than $500,000.
Unused contributions can be carried forward for five years. This option came into effect in 2019/20.
An important consideration prior to June 30, 2021 is to see if you can utilise this carry forward option to bolster your CCs before the date noted.
If an individual is under 67, there is no work test required to be able to make a contribution.
The work test is where, once you turn 67, you must be able to show that you have been gainfully employed for 40 hours or more in any 30-day period in a financial year.
If an individual is between the ages of 67 to 74, they must meet the work test in order to make a contribution.
Splitting of contributions
An individual can split their CCs that are made on their behalf to a spouse but they need to meet certain requirements.
The main reasons to split contributions are to:
Spouse rebate for super contributions
A spouse rebate, up to a maximum of $540, can be claimed for superannuation contributions for the year ending June 30, 2021.
If your spouse earns less than $37,000 per year and you contribute $3,000 into superannuation for them, you can claim a tax rebate of $540.
Spouse contributions can be made if you are aged under 75 from July 1, 2020.
What tax-free contributions can be made for 2020/21?
Non-concessional contributions (NCC) are those contributions made into a super fund from after tax income. In this case, an individual is not claiming a tax deduction. There is a cap for NCCs of $100,000 for the 2020/21 year.
Members under 65 have an option to contribute up to $300,000 over a three-year period, depending on their total superannuation balance (TSB). The rule works as follows:
TSB NCC and bring forward amount
< $1.4M $300,000 over 3 years
> $1.4 & < $1.5M $200,000 over 2 years
> $1.5 & < $1.6M $100,000 over 1 years
> $1.6M $0 (nil)
To be able to make an NCC, a member must meet the work test, as described above.
The increase from age 65 to 67 also impacts on the ceasing work contribution rule as of July 1, 2020 by given more time to make a NCC.
NCCs can be made on a once-off basis in the financial year after you have ceased employment if your TSB is less than $300,000 as of June 30 in the previous financial year. You also need to be under 75.
Downsizing contributions and how this applies to those over 65 years of age.
From July 1, 2018, anyone 65 years or older can make a downsizer contribution of up to $300,000 from the proceeds of selling their residential home.
The contribution is not an NCC and does not count towards the contribution caps, so it goes into superannuation as a tax-free contribution.
If a member has more than $1.6 million in superannuation, they are still allowed to make a downsizer contribution.
If the downsizer contribution is made and is placed into retirement phase, it will count towards a member’s transfer balance cap, which is $1.6 million.
If you are thinking of downsizing then speaking to a financial planner will help clarify eligibility requirements.
Get more from your super
If you have any questions on the above then simply ask us.
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.
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).
Jane Lim is a friendly character with a bubbly personality. She has the unique ability of making complex information sound simple and easy to digest.
Jane entered the financial services industry in 2006, and worked with big blue-chip financial companies such as Count Financial Limited and AMP Financial Planning Pty Ltd.
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.
Mortgage Broker/Financial Planner
Paul has been a financial planner for over 15 years helping individuals and families successfully achieve their financial planning goals. He is very focused on building successful long-term harmonious relationships with his clients.
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:
Away from his professional life, he enjoys spending his time with his family doing various activities such as coaching his son and taking him to games. He is a very avid sports fan and a cricket enthusiast.
Client Services Manager
Christian joined Capitalwise as Client Services Manager, with backgrounds in both customer service and administration.
Christian is passionate in providing excellent customer service by being attentive to client’s need as well as being able to circumnavigate challenges.
He holds a Master's degree in Commerce specialising in Marketing through the University of New South Wales.
Volunteering is one of his delights in life, where he had spent time being involved with the Centre for Volunteering, St Vincent de Paul's Society, and Sculpture by the Sea in a variety of positions.
Jenny is a University of New South Wales graduate who joined the team as an Administration Assistant. She is keen to put her customer service and organisational skills to use, making sure day to day operations run as smoothly as possible.
Outside of work, Jenny focuses her efforts on karate and ice hockey. She can often be found coaching and practicing karate at her alma mater. The rest of her time is spent at one of Sydney’s many ice rinks playing, practicing, or officiating ice hockey.
B Econ (Hons) Cert IV FS (MB) Dip. FS (FP) AFB MeSAFAA
Max has over 20 years experience in the finance and lending industry of which over 15 years has been in financial advice. Max attained a Bachelor of Economics honours degree at The University of Sussex in 2004, after which he settled in Australia with his family.
Max has never stopped studying as he is always looking at ways he can better assist his clients and has studied many courses in financial advice, lending and technical analysis as he continues to try and stay ahead of his competitors in terms of the knowledge he can share with his clients.
Max has worked for several large and successful organisations before starting his own business in 2014. He has gained valuable experience from the likes of Lloyds Bank, American Express, HSBC, General Electric, Commonwealth Bank and Westpac. He draws on this vast experience to benefit his clients whilst bringing a much more personal touch than you would get from one of these larger organisations.
Max’s philosophy is to always put his clients first, which is what makes him so successful and popular with his clients, having built a thriving business primarily through referrals from very happy clients.
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