With 30 June 2012 only a few weeks away we have put together a list of some of the key end of financial year actions to consider. Please contact us up you would like to discuss any of these points in further detail.
Concessional contribution limits re-set on 1 July 2012 at a flat limit of $25,000 for all persons regardless of age. In order to maximise your contributions in the current financial year all contributions (employer, personal or self-employed) must be deposited and banked to the receiving super fund no later than Friday 29th June 2012.
The relevant limits for the financial year ending 30 June 2012 are:
- Non-concessional contributions (post tax)
- $150,000 per individual; or
- $450,000 in a 3-year period if aged <65.
- Concessional contributions (pre-tax / tax deductible)
- $25,000 for individuals aged <50; or
- $50,000* for individuals aged >50.
*Note: from 1 July 2012 this limit will reduce to $25,000 per annum therefore there is opportunity for individuals aged >50 to maximise their concessional contributions prior to 30 June 2012.
Superannuation Pension Withdrawals
If you have a self managed superannuation fund in pension phase it is important to ensure you have met your minimum required pension withdrawal before 30 June 2012. Failure to do so can result in the fund incurring additional tax expense on investment income.
Please check with us if you are unsure if you have met your minimum pension withdrawal.
If your assessable income is less than $31,920 and you make a non-concessional contribution to superannuation the Government will match the contribution dollar for dollar up to a maximum co-contribution of $1,000.
If your assessable income is greater than $31,920 but less than $61,920 you may still qualify for a partial co-contribution.
From 1 July 2012 the matching rate will reduce to 50% (e.g. an eligible $1,000 contribution will receive a $500 Government co-contribution) so to take advantage of the 100% matching rate the eligible contribution must be made by Friday 29th June 2012.
If your spouse has assessable income less than $10,800 and you make a spouse (post tax) contribution to their superannuation account on their behalf, you will receive a tax offset of 18% of the contribution value up to a maximum offset of $540 (i.e. maximum spouse contribution of $3,000).
Flood Levy – Additional 1% tax in FY2011/12
For those required to pay the 1.0% flood levy this year (ending 30 June 2012) any deductions or opportunities to defer income may be more valuable this financial year.
Remember to finalise any donations before 30 June 2012 if you wish to claim the tax deduction in the current financial year.
Prepaying interest in advance can be an effective way to secure a lower rate of interest and gain cashflow certainty for the fixed period (because interest payments won’t change).
Where the loan has been drawn for investment purposes there may be the added benefit of bringing forward up to 12 months of tax deductible interest payments into the current financial year.
In our view there are some attractive fixed interest rates available right now.
Private Health Insurance – Opportunity
From 1 July 2012 the Private Health Insurance Rebate will reduce for singles earning >$83,000 or couples/families earning >$166,000, resulting in an increase in premiums of between 14%-43% for those earning over these amounts (assuming premium rates remain unchanged).
There will be no rebate where income exceeds $129,000 for singles or $258,000 for couples/families.
Some private health insurers allow members to prepay premiums in advance. If this is paid prior to 30 June 2012 then members can still benefit from the 30% rebate for an “extra” 6-12-18 months which could save additional premiums.
If your income exceeds the above thresholds we suggest you call your private health fund today for more details.