10 Things to Tidy Up! (Pre June 30)

Michelle Bromley CFP®, Director – Strategy and Advice

“Well, it’s Groundhog Day …. Again”

Here in Melbourne, I am emulating one of my favourite characters, Phil Connors (hilariously played by Bill Murray), in the movie Groundhog Day, waking up to yet another cold, rainy stage 3 lockdown.

If you’ve not seen the movie, Phil was forced to relive the same day over and over unable to get out of a long cold Punxsutawney Pennsylvania winter, and thanks to our fourth lockdown in 12 months I am stuck in metro Melbourne and missing my weekender in beautiful Warburton!

Last lockdown I took the opportunity to give the house a good old clean and tidy, but this time we’re “cleaning house” metaphorically. 

Below are my top ten things to tidy up pre June 30 (please discuss with your adviser).

  1. Make sure you pay out your minimum pension from your SMSF.

    Contact your accountant to find out what your minimum requirement for the 2020/21 financial year is, noting that the Government reduced the minimum by 50% due to COVID.

    Make sure you’ve drawn at least that amount out of your SMSF, otherwise you may not be considered to have remained in ‘pension phase’ and that could have tax consequences for your fund.

    If you’ve got a personal pension account (such as retail, wrap or industry fund account) the minimum should be paid by the trustee by 30 June, but call your adviser if you’re unsure.

  2. Top up your concessional contributions to the $25,000 cap.

    If you’re eligible to contribute, don’t forget that you can claim a tax deduction for personal contributions you make to super before 30 June.

    First, you must find out how much your employer will contribute for you in total, either from payslips, your fund records, or by accessing your ATO record through your my.gov.au account.

    Subtract that total from $25,000 and that’s the amount you can likely add to your super and claim as a tax deduction without exceeding the concessional cap.

    You’ll need to lodge a Notice of Intent to Claim a Tax Deduction (“Deduction Notice”) with your super fund for any personal contributions you want to claim as a Tax Deduction.

    Unused concessional cap amounts accruing since 1 July 2018 can potentially be used to make a larger personal deductible contribution before 30 June; but check with your adviser on that one because there are a few eligibility rules to meet.

  3. Lodge that overdue notice and income tax return to claim last year’s personal contributions!

    If last year’s tax lodgement got away from you, don’t make the mistake of missing out on claiming the deduction for personal contributions you made last financial year (i.e. 2019/20) because once 30 June ticks over, the opportunity is gone.

    The Deduction Notice needs to be lodged before the earlier of the date you lodge your tax return or 30 June of the year following the year when the contribution was made.

    Lodge your notice, get the letter, and get up to date on your tax lodgements! 

  4. Contact payroll to review your superannuation salary sacrifice from 1 July.

    It’s good practice to review your superannuation salary sacrifice each June, and more so this financial year because from 1 July 2021 (1) the Superannuation Guarantee Rate is rising from 9.5% to 10.0% and (2) the concessional cap is rising from $25,000 to $27,500.

    Make sure you take full advantage of the increases while remaining within the cap.

  5. Get your tax return information together, ready for an early lodgement.

    Make the most of your time in lockdown! Find those tax receipts for charitable donations, income protection premiums you’ve paid from your own pocket, work related expenses and other documents needed to substantiate earnings and tax deductions.

    Don’t forget to pre-pay expenses to maximise those deductions.

  6. Get a my.gov.au account

    My.Gov is a fantastic resource that links a number of Government services all in one place.

    Using my.gov you can find out what your total super balance was at 30 June last year to understand your contribution eligibility for this year; if your tax affairs are straight-forward you can lodge your tax return or claim franking credits; you can apply for Centrelink benefits and update your income and assets for means test assessments; and you can access your My Health and Medicare records.

  7. Don’t miss out on free super from the Government!

    If you earn at least 10% of your income from employment, the Government may give you up to $500 as a Government co-contribution.  You need to be less than 71 years old, earn less than $39,837 and make a $1,000 non-concessional contribution to get the full $500 but you can still get some co-contribution if you earn up to $54,837.

  8. Gifting

    If you want to help out your family, remember that the annual gifting threshold for social security purposes is reset on 1 July each year.  The rule is $10,000 p.a. up to a maximum of $30,000 over a rolling 5-year period (whether you are single or a couple).

    Any amount gifted over the thresholds is counted as an asset for a further 5 years and may reduce social security entitlements such as the Age Pension.

  9. Review your ‘Transition to Retirement’ income stream

    A Transition to Retirement income stream can generally be started once you reach ‘preservation age’ (currently age 58) while still working.  These TTRs are not ‘retirement phase’ income streams and so are taxed at up to 15% on all investment earnings.

    However, if you have met a condition of release such as a change of employment over age 60, you qualify to covert your TTR into a retirement phase income stream (called an Account Based Pension) which enjoys a 0% tax environment!

  10. The BIG one – last chance non-concessional contributions!

    If you are close to having $1.6 million in super, this might be your last chance to get extra after-tax contributions into your super fund.

    The ‘Transfer Balance Cap’ of $1.6 million limits the amount of after-tax contributions that you can make to your fund.  This limit increases to $1.7 million on 1 July 2021.

    The rules around this are complex, so you need to speak to your adviser urgently if you have the ability to contribute larger amounts.

Unlike Phil Conners who had to spend 33 years and 350 days reliving Groundhog Day to become a better person, you’ve only got four weeks remaining to 30 June to get your end of financial year organised and there’s more to do and less time to do it in than you think!

So please do not hesitate to phone your adviser if you need assistance.

To speak to our client services team, please call 1800 064 959 or click here to contact us.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (www.primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.

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