2018 Federal Budget & Year End Tax Planning
Government delivers SMSF friendly 2018-19 Federal Budget
An SMSF friendly budget is the good news coming out of the 2018-19 Federal Budget. With SMSF members still working through the wide-reaching and complex superannuation changes which took effect from 1 July 2017, this Federal Budget will provide much needed stability while looking to reduce costs for SMSFs and prove additional flexibility.
The key changes proposed for SMSFs and superannuation are:
Three‑yearly audit cycle for some self‑managed superannuation funds
The Government will change the annual SMSF audit requirement to a three yearly requirement for SMSFs with a history of good record keeping and compliance. The measure will start on 1 July 2019 for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.
Expanding the SMSF member limit from four to six
As already announced, the Federal Government confirmed its decision to expand the number of members allowed in an SMSF from four to six. Expanding the definition of an SMSF to a fund with a maximum of six members will provide greater flexibility in how funds can be structured.
Work test exemption
The Government will provide more time for Australians aged 65 to 74 to boost their retirement savings, by introducing an exemption from the superannuation work test.
This exemption will apply where an individual’s total superannuation balance is below $300,000 and will permit voluntary superannuation contributions in the first year that they do not meet the work test requirements.
Life insurance cover in super to be opt-in for individuals under 25 years of age
The Government will legislate that life insurance cover in superannuation will be opt-in for those individuals under 25 years of age or with account balances under $6000 to ensure that unnecessary fees do not erode smaller balances. Life insurance cover will also cease where no contributions have been made for a period of 13 months.
Year end tax planning – what does your SMSF administrator needs to know?
With another financial year end less than two months away, now is the time to ensure your SMSF is ready for 30 June. Here is a quick checklist of what we need to know as your fund administrator:
- Do you have any other superannuation outside of your SMSF?
- it is crucial we are made aware of this as this can impact your fund under last year’s super reforms which commenced 1 July 2017 (eg. do you have an industry, retail or defined benefit super fund)
- if you are unsure whether you have any lost super you can check under your “myGov” login. More information can be found at:
- Will your June 2018 salary sacrifice contribution be made in June or July 2018?
- If the June and/or any previous month’s salary sacrifice contribution will be paid into your fund in July 2018, this will be counted towards the 2018/19 concessional contribution cap of $25,000 (for all ages) and not the current year cap
- Do you have insurance premiums being paid by your employer from another fund that is not your SMSF?
- if so then these are counted towards your concessional cap
- Are your death benefit nominations up-to-date?
- as superannuation generally does not automatically form part of your estate, it is important to ensure your SMSF has current death benefit nominations in place
- Does your employer have the correct Electronic Service Address (“ESA”) for SuperStream?
- in order for your SMSF to receive contribution data from your employer, they need the correct ESA for their payroll systems