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Personal tax deductions for superannuation contributions should be a major area of focus for firms and clients ahead of this end of financial year, according to a leading accountant.
Speaking to Public Accountant, Change Accountants & Advisors chief executive, Timothy Munro, highlighted personal tax deductions for super contributions as an item high on his firm’s agenda since it will be the first tax time since the changes were put in place.
The Institute of Public Accountants 2016 member of the year reminded clients of their need to lodge a notice of intent to claim a tax deduction from their fund.
“We recommend doing that before 30 June this year because if they don't do it and they roll out of the fund to do something, then they can end up being disqualified from claiming that as a tax deduction. That's something not a lot of people are aware of,” Mr Munro said.
“Generally, you've got until the time of lodgement, but we recommend that you actually lodge a notice of intent before 30 June.”
Mr Munro also said clients need to be aware of the consequences of any excess transfer balances.
“The big key thing is the tax-deductible contribution cap of $25,000. If your cash allows, and if it's within a client's overall wealth creation strategy, you can maximise your contribution each year and top it up to make certain that you contribute the full $25,000,” he said.
SMSF Association chief executive John Maroney said this financial year is the first where lower concessional and non-concessional contribution caps have been in place.
He said clients should review their contributions to ensure they are inside the legal limits.
“It is also the first year where the ‘10 per cent rule’ is removed for personal deductible contributions, meaning all individuals are able to contribute $25,000 in personal contributions and claim a deduction for them rather than only those who were self-employed,” Mr Maroney said.
In addition, transitional Capital Gains Tax (CGT) relief and transfer balance account reporting were items Mr Maroney said should all be on the radar of both clients and their accountants as they prepare for the end of financial year.
He noted that trustees have until Monday, 2 July 2018 to lodge their 2016-17 SMSF annual return, which is also the deadline for SMSF trustees to make an election for transitional CGT relief as part of the super changes that took effect on 1 July 2017.
“The CGT relief rules allow funds to reset the cost base of assets affected by the introduction of the transfer balance cap and changes to transition to retirement income streams,” Mr Maroney said.
“This is a valuable, one-off opportunity for SMSF members to minimise the impact of the changes on their retirement savings and should not be overlooked.”