What impact will the EOFY have on Self Managed Super Fund (SMSF) clients?

What impact will the EOFY have on Self Managed Super Fund (SMSF) clients?

What impact will the EOFY have on Self Managed Super Fund (SMSF) clients? 150 150 Liam Shorte

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.

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