Superannuation considerations

You may be able to claim a tax deduction for personal contributions that you make to a super fund, upon meeting certain conditions. You must provide a Notice of Intent form which could be obtained from the Australian Taxation Office (ATO) or your super fund within the required timeframe and receive an acknowledgement from your fund.

More information is available from this ATO webpage.

There are aged based restrictions on certain contributions to superannuation. Generally, you can make voluntary contributions to superannuation until the age of 74 within the allowable limits.

However, if you are aged 67-74 and you intend to claim a tax deduction on your voluntary contributions, you will need to satisfy the ‘work test’ which is defined as 40 hours of work, including self-employment over a consecutive 30-day period. Alternatively, you may be eligible to use a one-off work test exemption if you have met the work test in the previous financial year and your total super balance was less than $300,000 as at 30 June of the previous financial year.

Once you turn 75, generally, you can’t make voluntary contributions to superannuation, however you can continue to receive Superannuation Guarantee or other compulsory contributions from your employer.

You may also be eligible to contribute up to $300,000 upon selling your home after age 60 and meeting further conditions.

More information is available from this ATO webpage.

Non-concessional contributions are usually made to your super fund from savings outside of superannuation. These are contributions for which you don’t claim a tax deduction and are not taxed when they are contributed into the fund.

More information is available from this ATO webpage.

There are limits in terms of how much you can contribute to superannuation without paying additional tax. These limits depend on your age, your total super balance and the type of contribution you make.

Currently, the limit on concessional contributions, which includes salary sacrifice, contributions for which you claim a tax deduction and any other employer contribution is $27,500 per annum. You may be eligible for a higher concessional contributions cap if you  haven’t used the concessional contributions cap in full starting from 1 July 2018 and your total super balance is less than $500,000.

Currently, the limit on non-concessional contributions is $110,000 on an annual basis. These are usually made from your savings outside of superannuation. You may be eligible to contribute three times the annual non-concessional contribution limit in one year, referred to as bring-forward arrangement, if you meet certain conditions.

More information is available from this ATO webpage.

To access your superannuation, you generally need to have reached a minimum age referred to as preservation age (55-60 depending on your date of birth) and be retired or reach age 65. You could also access your super under a transition to retirement arrangement, where you could access up to 10% of your super in a financial year upon reaching your preservation age.

You may also be eligible to access your super early if you meet certain other conditions such as disability, severe financial hardship and compassionate grounds.

More information is available from this ATO webpage.

Generally, you need to be retired to access super. There may be situations where you can access super but continue to work. Common situations where you can access your super and continue to work are:

• Accessing super at age 65 and continuing to work
• Terminating an employment arrangement on or after age 60 which meets the definition of retirement and continuing to work in a new arrangement
• Retiring but then having a change of intention in the future where you start working

As long as you are eligible to withdraw your super (generally on retirement after preservation age), you can generally then use those funds for whatever purpose you desire, including starting a new business.

Generally, payments (lump sum or regular income) you receive from a taxed super fund (such as a retail, industry, corporate or a SMSF) are not included in your taxable income if you are 60 or over.

However, payments you receive from an untaxed super fund (such as certain public sector super schemes) may be included in your taxable income.

You can usually leave your superannuation to your dependents such as spouse, child of any age, anyone who is financially dependent on you or anyone with whom you are considered to be living in an interdependency relationship. You can do this by nominating these beneficiaries directly through your super fund.

You can also leave your superannuation to your estate and making provisions in your will regarding who you want to benefit from your superannuation.

More information is available from this ATO webpage.

Super generally belongs to the owner of the account and cannot be ordinarily transferred to your spouse. However, there are two common situations where you could transfer to your spouse:

• By withdrawing from your super when eligible and contributing the withdrawn amount to your spouse as long as they are eligible to receive the amount
• If you have made concessional contributions to your super, you may be able to split 85% of those contributions to your spouse

For more information on contribution splitting, please refer to this ATO webpage.