The SMSF Association has recommended trustees act well before 30 June if they are intending to take advantage of the existing contributions caps to boost their superannuation balances.
“Trustees sometimes leave it until the last minute to make either concessional or non-concessional contributions, only to discover they have left it too late and those contributions become part of the following financial year’s contribution cap,” SMSF Association chief executive John Maroney said.
Current concessional contributions caps are $30,000 a year and $35,000 for people aged 49 or over, with the annual non-concessional cap set at $180,000. From 1 July this year, the concessional contributions cap will be lowered across the board to $25,000 a year and the non-concessional contributions cap will decrease to a yearly limit of $100,000.
Maroney pointed out the timing of the financial year close was also something trustees needed to take into account if looking to make additional contributions before the new parameters are introduced.
“This year it’s particularly important they move early with the lower contribution caps taking effect on 1 July 2017. Remember, too, 30 June falls on a Friday, so don’t leave contributions till the end of the last week of June to make a deposit because transactions can take up to two or three days to clear and your funds could become a 2017/18 financial year contribution,” he warned.
In addition, he stressed it was necessary for SMSF members to know how many contributions they have made in the current financial year prior to embarking on a strategy to top up their balances.
“It can happen that trustees can make a mistake with their contributions, so take the opportunity before 30 June to make sure you are inside the legal limits,” he said.
“Although excess contributions, either concessional or non-concessional, do not have the strong tax penalties that they used to have, going over the caps is still an unneeded compliance issue that is best avoided with the right planning.”
Seeking advice from an adviser who is an SMSF specialist before implementing any strategies regarding the super reforms was prudent, he added.
