14 tips to get your self-managed super ready for tax time

If you are running a self-managed superannuation fund (SMSF), the lead-up to June 30 can be a busy time.

Not only do you need to make sure SMSF members are maximising superannuation's valuable tax benefits, but the fund's assets also need to be valued as well as checking that the fund has adhered to SMSFs' many compliance rules.

Here are 14 considerations:

1. Take advantage of tax concessions

There aren't many tax concessions available in Australia, but superannuation is one. If your annual contribution is under the $27,500 contributions cap, it makes sense to top up to the limit to receive a tax concession.

Or you can contribute a non-concessional amount with after tax amounts. But be sure to get your contribution in well before June 30, to be counted in the current financial year. Clearing electronic transfers can be instant, depending on the financial institution, or take a few days.

2. Concessional contributions

If you are under 75 years old, you pay only 15% tax on superannuation deposits up to $27,500. This includes compulsory employer contributions that is 10.5% of your income, which is set to rise to 11% from July 1, 2023.

If you earn over $250,000, you will pay an additional 15% on your concessional contributions to a 30% tax rate.

3. Non-concessional contributions

If you want to boost your superannuation assets and you have the money from a windfall or inheritance, you can contribute up to $110,000 from after tax money that is capped at $330,000 over three years.

To do this, you need to be under 75 and your superannuation balance less than $1.7 million across all your funds.

4. Three-year bring forward rule

Not many people know about non-concessional contributions, says Andrew Yee, director of superannuation at HLB Mann Judd.

"And quite often they haven't made contributions to super or made very few. They just make a super guarantee so that they are not aware that there's a carry forward cap and they can roll it forward," he says.

You can use the three-year bring forward rule, allowing you to contribute $330,000, provided you haven't used it over the last two years.

But if you are over 75, you can't contribute any non-concessional contributions.

5. Over the contributions cap? 

Check that your concessional contributions have not exceeded the $27,500 limit. If they have, check whether the excess can be included within an unused concessional contributions allowance dating back from July 1, 2018. This option requires a total super balance on June 30, 2022, of less than $500,000.

6. Carry forward your concessional contributions cap

You can roll forward any unused concessional contributions cap for five years, after which time they expire, says Yee. "So, if you don't use the full amount of your concessional contributions cap in any year, you can always carry-forward the unused amount and take advantage of it up to five years later."

The 2018-19 year was the first financial year where you can access unused concessional contributions. For example, if you have less than $500,000 in superannuation as of July 1, 2022 and have never made any concessional contributions from July 1, 2018, you may be eligible to make a concessional contribution of up $130,000 in the 2022-23 year.

"For those on a high taxable income, this can be a useful strategy to offset this income provided they have unused cap available and are eligible to make the contribution," says Yee.

7. Split concessional contributions with your spouse

If your spouse has a low superannuation balance, consider splitting up to 85% of your concessional contributions - including any unused carry forward concessional contributions - from an earlier year. Yee says eligible people need to be under their preservation age or under 65. He says it is a good strategy where a spouse has less than $500,000 in their superannuation fund or is closer to retirement. "Contribution splitting can only be done after the end of a financial year," says Yee.

David Busoli, principal at SMSF Alliance says that withdrawals from a member with a high balance and recontributing to a spouse with a lower balance is an opportunity to equalise balances.

8. Downsizer contribution

If you are over 55 and sold your home, you could be eligible for a one-off 'downsizer contribution' of $300,000. Or $600,000 for a couple.

There are no upper age restrictions. The contributions must be made within 90 days of settlement on the property.

9. Draw your minimum pension before EOFY

If you are drawing down a pension from your superannuation fund, make sure that the fund has paid you the minimum government mandated pension before EOFY. The minimum pension for the year is based on your age and is a percentage of your balance at June 30, 2023.

The Government halved the minimum amount because of the effect of COVID but the minimum will be doubled on July 1, 2023.  "People going into the pension phase need to review the investment strategy to determine that there is enough cash in the fund to pay that pension," says Yee.

10. Value your assets.

The valuation of assets at June 30, is an important exercise for SMSFs, says Yee.

"Every year, they need to revalue or get a valuation of the fund assets. And when the assets are not listed, things like property or unlisted shares or collectibles, that becomes a bit daunting, even difficult, for some people," says Yee.

11. In-house assets

Busoli says SMSFs should ensure that any in-house assets do not breach the 5% of gross asset level as at June 30.

This includes the balance of any limited recourse borrowing or loan from a third-party lender. "Be aware that valuations, yet to be determined for the end of this financial year, will be relevant."

12. Distributions and rent

Any current rent or previous year's trust distributions owing from any asset involving related parties must be paid to the fund before June 30, says Busoli.

13. Young adult members of the SMSF

If you have adult children as members of the SMSF who are studying and working part-time or a low-income spouse, access the government co-contribution of up to $500. To qualify, they need to be under age 71, engaged in employment and have a total income of less than $57,016.

The government will co-contribute 50 cents for every $1 of any non-concessional (undeducted) super contributions that you make, up to a maximum of $500.

14. First Home Super Saver Scheme

Adult children or anyone saving for their first home can use the First Home Super Saver Scheme. This is where voluntary contributions to your super fund may be withdrawn to help buy or build your first home.

Under the scheme, you can withdraw up to $15,000 of eligible contributions made over a financial year or up to $50,000 in total for all years, plus an amount that represents deemed earnings. Non-concessional contributions can be withdrawn tax free. Concessional contributions and total earnings will be taxed at marginal tax rates with a tax offset of 30%.

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