For SMSF clients we are looking at any that have a considerably higher taxable income in 2021 that is not expected to continue like from sale of an investment property or shares.
Strategies that have been considered is utilising Concessional Contributions to their full extent. There is potential for fund members to make double the contribution for 2021 in June (using the 2021 cap of $25,000 and 2022 cap of $27,500) with the $27,500 is placed in a SMSF “Contributions Allocation Account” and only allocated after 1 July 2021 and before the 28th July 2021. Noting that funds in the Allocations Account must be allocated within 28 days of the end of the following month.
There has also been a review of Non-Concessional Contribution strategies on the back of the Federal Budget. If the budget passes, then it is likely members have a much longer time to implement contribution of after-tax money or recontribution strategies. The aim there is to build balances, improve the tax components of the accounts or even up the balances between partners.
Last but certainly not least, members need to ensure they have taken the minimum pensions for the year. If they have taken more than the 50% reduced minimum, then there is an ability to organise an “election” at the start of the year to treat any amount above the minimum as a Lump Sum Commutation from accumulation or the pension with the highest taxable component. This again improves the tax components and frees up sum space under the Transfer Balance Cap.
Liam Shorte is a partner at Verante Financial Planning.
This post and some supporting materials may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we may have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. The material in this post is correct and complete as of the data it was posted. Viridian is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this site.