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Super Concessional Contributions

Caroline Gillies • May 23, 2024

Concessional contributions are payments made into your Self-Managed Super Fund (SMSF) that count towards the SMSF's assessable income. These contributions are taxed at a concessional rate of 15%, often called the 'contributions tax'.


The most common types of concessional contributions include employer contributions, such as super guarantee and salary sacrifice contributions. They also include personal contributions made by members for which an income tax deduction is claimed.


Annual Cap on Concessional Contributions


Concessional contributions are subject to an annual cap:

·        From 1 July 2024: The general concessional contributions cap is $30,000 for all individuals regardless of age.

·        For the 2021-22, 2022-23, and 2023-24 financial years: The cap was $27,500 for all individuals regardless of age.

·        For the 2017-18, 2018-19, 2019-20, and 2020-21 financial years: The cap was $25,000 for all individuals regardless of age.

·        For the 2014-15, 2015-16, and 2016-17 financial years: The cap was $30,000 per financial year, increased to $35,000 for members aged 49 or over.


Since the 2013-14 financial year, if your contributions exceed the cap, the excess amount is included in your assessable income and taxed at your marginal tax rate instead of being subject to excess contributions tax.

 

Unused Concessional Cap Carry Forward


Starting from 1 July 2018, you can make 'carry-forward' concessional super contributions if your total superannuation balance is less than $500,000. You can access your unused concessional contributions caps on a rolling basis for five years. Amounts not used within five years will expire.


For example, if you have an unused cap amount from the 2019-20 financial year, it will expire if not used by the end of the 2024-25 financial year.

Lifeblood of Your Business

By Caroline Gillies • February 9, 2025
 The metaphors we use when talking about money are both intriguing and revealing. When we overspend, we say we're "bleeding" cash; when it arrives out of the blue, it's "pennies from heaven." Money holds such importance in our lives, yet so many businesses seem to throw it around without a clear budget. Sticking to a budget is a fundamental aspect of financial health. It also signals to others that you're in control and on top of things. Keeping your business on budget doesn’t have to be a hassle—think of it as a creative challenge. If you're open to putting in the work and making some tough choices, sticking to a budget can be the best workout for your business mind. Do you know how to build a budget that keeps your business safe from financial troubles? We do, and we’re here to help you create a budget that works—and ensures you stick to it. If you need help with your budget give us a call today 4688 2500.

Clearance Certificates - Australian Residents

By Caroline Gillies • January 16, 2025
From 1 January 2025 all Australians selling property need a clearance certificate to prevent a portion of the sale price from being withheld. While it is understood that most lawyers are handling this process for their clients, it’s important for everyone involved to be aware of this requirement. Clearance certificates for Australian residents All Australian residents (for tax purposes) selling or disposing of Australian real property (property) must have a clearance certificate and give it to the purchaser at, or before settlement. Without a clearance certificate, the purchaser must withhold up to 15% of the sale (or market value if not sold at arm's length) for foreign resident capital gains withholding (FRCGW) purposes. Example: the importance of getting a clearance certificate early – 15% withheld from sale Willow and Stanley are Australian residents for tax purposes. On 1 September 2024 they decide to sell their family home, their main residence. They need the funds from the sale to purchase a new residence. They are both listed as owners of the property on the certificate of title, so both must apply for their own clearance certificate. They find a purchaser on 8 January 2025 and sign the contract of sale, with a settlement 30 days later on 6 February. They don’t apply for a clearance certificate until 15 January and don't have both of their clearance certificates at, or before settlement. The property sold for $600,000, however: • Willow's clearance certificate issued and was given to the purchaser • Stanley was still waiting for his clearance certificate. The sale goes through and settlement occurs. As Stanley didn't have a clearance certificate at settlement, 15% of Stanley's share of the sale ($90,000) must be withheld by the purchaser and paid to us. Stanley must wait until his 2025 tax return is lodged and processed for a refund. As the purchaser had received a clearance certificate from Willow, there's no withholding required on her share of the sale. (Example provided by the ATO website) If you would like to read more about Clearance Certificates, please click on the below link: https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/foreign-resident-capital-gains-withholding/australian-residents-and-clearance-certificates#ato-ClearancecertificatesforAustralianresidents

Good news for Clients with Student Loans - Study loan indexation change

By Caroline Gillies • December 5, 2024
We wanted to bring to your attention some important changes regarding student and training loan indexation that have just passed through Parliament. The law is changing how the indexation on student loans is calculated. In the past, indexation has been based solely on the Consumer Price Index (CPI) . However, moving forward, the indexation rate will be based on the lower of either the CPI or the Wage Price Index (WPI) . This new rule will be backdated to 1 June 2023 , which means it will affect loans from that date onward. Here’s how the updated indexation rates break down: 3.2% for 1 June 2023 (reduced from 7.1%) 4% for 1 June 2024 (reduced from 4.7%). Impact on Your Loan If your loan has been over-indexed in the past two years, you may be entitled to a refund . The Australian Taxation Office (ATO) will automatically adjust your account to reflect the new, lower rates and will process refunds for any excess amounts already paid. This means: If after the adjustment, your account is showing a credit (i.e., you've paid more than required), this excess will be refunded to your nominated bank account provided you have no outstanding tax or other Commonwealth debts . If your loan is in credit after the adjustment, any remaining funds may be transferred to offset your income tax account (if applicable), and the remainder will be refunded to you. What You Need to Do For most clients, there’s nothing you need to do at this stage. The ATO will automatically recredit excess amounts to your account once the legislation receives Royal Assent , and this process will begin soon after. You should expect to see these credits applied to your account by the end of January 2025 . However, in some cases, due to the complexity of individual accounts, it might take a bit longer. Unfortunately, the ATO cannot provide a list of exactly which clients will receive refunds, as they will only know once all recredits are processed. We drew inspiration to write this article from the ATO
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