Skip to main content
LifestyleRetirementSuperannuationCurrent

Comprehensive Guide to Navigating SMSF Regulations Before EOFY

By April 30, 2024No Comments

As the end of the financial year approaches, here are some tips and reminders to ensure you navigate the SMSF regulations successfully and you’re ready for 30 June 2024:

Superannuation Guarantee Increase:

The Superannuation Guarantee has risen to 11% for the current 2024 FY and will rise again to 11.5% as of 1 July 2024.

Concessional Contribution Caps:

The concessional contribution caps based on members’ Total Super Balance as of June 30, 2023 are:

Members Total Super Balance at 30 June 2023Cap Amount
Standard Contributions$500,000 or over$27,500
“Catch-up” ContributionsLess than $500,000$27,500 + “Unused Concessional Contribution Amount”

Catch-up / “Unused” Concessional Contributions:

Members with a Total Super Balance below $500,000 as of 30 June 2023, may have an opportunity to make use of their unused concessional contributions caps on a rolling basis spanning five years. The 2024 financial year marks the final opportunity to utilize any remaining concessional contributions from the 2019 financial year. Your “Unused Concessional Contribution Amount” is diligently monitored by the ATO and can be conveniently accessed through your myGov account or via your personal tax agent.

Work Test for Personal Concessional Contributions:

The work test (being employed for a minimum of 40 hours over 30 consecutive days) applies to people aged between 67 and 74 who intend to claim a tax deduction for voluntary contributions made into their SMSF (personal concessional contributions). This requirement can be fulfilled at any point during the financial year.

For individuals reaching the age of 75 in the year they plan to make a personal concessional contribution, they must not only satisfy the work test but also ensure that the contribution is made no later than 28 days after the month following their 75th birthday.

Notice of Intent to Claim Personal Super Contributions:

When contributions are made, they are automatically classed as a non-concessional contribution until a valid notice of intent to claim a deduction is submitted to the SMSF in accordance with ITAA1997s.290-170. This notice of intent to claim can be lodged at the same time the contribution is made or by the earlier of:

  • the date the tax return is lodged for the financial year the contribution was made; or
  • the end of the financial year following the financial year in which the contribution was made.

Validity of Notice of Intent Rejection:

An SMSF will have to reject the notice of intent to claim in circumstances such as when the:

  • member has left the fund
  • contribution(s) being claimed have been rolled over to another fund
  • contribution(s) being claimed have been withdrawn as a lump sum
  • contribution(s) being claimed have been used to commence a pension.

Non-Concessional Contribution Caps:

Dive into the details of non-concessional contribution caps based on Total Super Balance. Tailor contribution strategies to optimize available caps and avoid excess contribution penalties.

Contributions for Individuals <75 Years Old:

All non-mandated contributions can be accepted except for downsizer contributions which are subject to eligibility rules. This includes salary sacrifice, personal concessional and non-concessional contributions, spouse contributions and co-contributions. For individuals turning 75, contributions must be received no later than 28 days into the month after they turn 75. Furthermore, if they are intending to claim a personal concessional contribution a valid notice of intent needs to be submitted within the above time frames.

Bring Forward Rule for Non-Concessional Contributions:

If you’re under 75 years of age at any time in a financial year, you’re eligible to use the bring-forward arrangement in that financial year, subject to the age-related and other restrictions on the types of non-concessional contributions your fund may be able to accept.

If you’re 75 years or older for all of the financial year, you’re not eligible to use the bring-forward arrangement in that financial year.

The amount of the non-concessional contributions cap you can bring forward depends on your total super balance (TSB):

  • If your TSB on 30 June of the previous financial year was less than $1.68 million – you can contribute 3 times the annual non-concessional contributions cap over 3 years (that is, $330,000). That is, in the 2023–24 financial year, if your TSB on 30 June 2023 was less than $1.68 million, you can contribute 3 times the annual non-concessional contributions cap over 3 years (that is, $330,000).
  • If your TSB on 30 June of the previous financial year was $1.68 million or above but less than $1.79 million – you can contribute 2 times the annual cap over 2 years (that is, $220,000).
  • If your TSB on 30 June of the previous financial year was $1.79 million or above – you can’t bring forward any amount, but you can make a current year contribution of up to $110,000.

These limits are based on the non-concessional contributions cap being $110,000 and the general transfer balance cap being $1.9 million.

Contribution Deadline for Individuals Turning 75:

The individual must not have triggered the bring-forward rule in the 2022FY or 2023FY.

Example 1: Wilson turns 75 on 25 December 2023 so he has until 28 January 2024 to make a non-concessional contribution of $330,000 and no work test is required.

Example 2: Dianne turns 75 on 25 June 2024 so although she is eligible to make contributions until 28 July 2024, she cannot utilise the bring forward rules and can only contribute $110,000 in non-concessional contributions in the 2024FY and 2025FY if she wishes to do so. (Note: this assumes the $1.68m threshold remains unchanged at 1 July 2024).

Rejection of Contributions Over Caps:

Trustees of an SMSF cannot reject contributions based on the amounts anymore. The only time they could do this is if there has been a breach of SISR 7.04 when the contribution can’t be accepted in the first place and this only applies to members that do not meet the age 75 deadline of 28 days in the month following their 75th birthday. That means, any contributions made in excess of the applicable contribution cap will result in either an excess concessional or non concessional contribution.

Excess Concessional Contributions:

If you exceed your Concessional Contributions Cap in a financial year the ATO will issue an:

  • Excess Concessional Contributions Determination notice;
  • Excess Concessional Contributions Election form; and
  • Amended (Personal) Income Tax Return Notice of Assessment.

The excess concessional contributions will be included in your assessable income and taxed at your marginal tax rate less a 15% tax offset. Then the two options are:

  1. withdraw up to 85% of the excess concessional contributions from the SMSF using the election form then:
    • wait until the ATO processes the election and issues a Release Authority to the SMSF
    • only then can the SMSF proceed to release the excess concessional contributions and pay the ATO
  2. leave the excess concessional contributions in the SMSF which means:
    • the SMSF does not need to do anything further (ie.do not submit the election form)
    • the member pays the additional personal tax liability as a result of the excess concessional contributions from their savings outside of the SMSF
    • the excess concessional contributions will count towards your non concessional contribution cap for the same financial year, and there is a risk you could inadvertently exceed that cap too

Excess Non-Concessional Contributions:

Similarly, if you exceed your Non Concessional Contributions Cap in a financial year the ATO will issue an Excess Non Concessional Contributions Determination notice outlining the excess, the associated earnings amount and the total release amount. Then the two options are:

  1. withdraw the total release amount including the excess non concessional contributions from the SMSF and:
    • wait until the ATO issues a Release Authority to the SMSF
    • only then can the SMSF proceed to discharge the total release amount and pay the ATO
  2. leave the excess concessional contributions in the SMSF then:
    • log into your MyGov account and elect not to release the excess non concessional contributions
    • wait until the ATO issues an Excess Non Concessional Contributions Tax Assessment which will be calculated at 47%
    • wait until the ATO issues a Release Authority to the SMSF for the Excess Non Concessional Contributions Tax liability
    • only then can the SMSF proceed to release the required amount and pay the ATO within 10 business days.

Total Super Balance and Transfer Balance Cap Increase:

Both the Total Super Balance Cap and General Transfer Balance Cap increased to $1.9m (up from $1.7m) on 1 July 2023.

Personal Transfer Balance Cap:

Every member will have their own personal Transfer Balance Cap depending on whether they have ever had a retirement phase pension or received a death benefit pension prior to 1 July 2023. That is, not everyone will have the $1.9m General Transfer Balance Cap so it is imperative that this is checked prior to commencing any new retirement income streams to ensure their Personal Transfer Balance Cap is not exceeded.

Government Co-contribution Increase:

The income eligibility threshold for Government Co-contributions is now $43,445 – $58,445 (up from $42,016 – $57,016), with the maximum entitlement remaining at $500.

Accessing Superannuation Benefits:

SMSFs have strict rules on when super monies can be withdrawn from the fund, most commonly when a member satisfies a form of retirement and/or reaches a certain age.

Your super can be accessed:

  • when you turn 65 (even if you haven’t retired); or
  • when you reach preservation age and retire; or
  • under the Transition to Retirement (“TTR”) rules, while continuing to work.

Definition of Retirement:

Depending on your age, a different “retirement” definition applies and this will determine if you can withdraw money from your super fund. Below are the definitions you will need to satisfy should you wish to access your superannuation monies.

Aged 55 and less than age 60

  • you’ve met your preservation age; and
  • ceased gainful employment ie. stopped meeting the work test; and
  • have no intention of returning to work for 10 hours or more each week

Aged 60 and less than age 65

  • you’ve met your preservation age; and
  • ceased one form of gainful employment ie. stopped meeting the work test

Aged 65 and over

  • you are deemed retired irrespective of your working status

Preservation Age:

Date of BirthPreservation Age
Before 1 July 196055
1 July 1960 – 30 June 196156
1 July 1961 – 30 June 196257
1 July 1962 – 30 June 196358
1 July 1963 – 30 June 196459
From 1 July 196460

Minimum Pension Requirements:

As the temporary 50% reduction in the minimum pension requirement due to Covid-19 no longer applies the minimum percentage has reverted to the standard rates. Please ensure the fund has sufficient cashflow to meet the minimum pension payments no later than 30 June 2024.

 

AgePercentage of account balance at 1 July 2023
Under 654%
65-745%
75-796%
80-847%
85-899%
90-9411%
95 or more14%

 

Special Circumstances for Accessing Super:

Yes, there are special circumstances in which super may be accessed including:

  • Permanent incapacity
  • Terminal illness
  • Severe financial hardship
  • Compassionate grounds
  • Death

If you have any questions about the attached or are unsure how this may impact you, reach out to your Treysta Accountant or contact us to see how we can help make sure you are prepared and also leveraging the best outcome for yourself, from your SMSF.

Article contributed to by Karl Beste (Director of Accounting) and Gary Cooper (Director of Accounting), from Treysta Accounting.

Disclaimer: any information we share is general in nature and does not take into account your personal situation. You should consider if the information is appropriate for your needs and, where appropriate, seek professional advice.

Leave a Reply