Welcome to our first ever SMSF newsletter. If you missed our announcement last week, we are splitting our monthly newsletter into four topic-based newsletters – Super booster, Retirement planner, Retiree and SMSFs.
Learn more about the changes to SuperGuide newsletters and subscription plans here.
SMSF reminder for March
Consider the capital gains tax position of your fund. The end of the financial year might seem some time away but if you want to sell any lumpy assets to offset realised capital gains, now is a good time to start arranging these sales. You should seek the advice of an appropriately qualified tax expert before taking any action.
Q&A of the month
Q: I am 71, retired for 5 years and drawing a pension from my SMSF; I have used up my $1.6m TBC; I have a TSB of $1.8m ($1.7m in pension and $100k in accumulation); I have a $700k taxable/non-taxed component.
Given the above, can I use the Recontribution strategy to help decrease the taxable component for estate planning purposes? Can I use the downsizer strategy to add to my pension (via accumulation)?
A: Where a members’ Total Super Balance is not below the general transfer balance cap ($1.6 million from 2017–21; $1.7 million from 2021–22) as determined at the prior 30 June, their non-concessional cap for the current year is $0 – so any non-concessional contribution that is made would be deemed to be an excess contribution and can result in adverse tax outcomes. Therefore the re-contribution strategy would not be available to those who are in this position.
However, an exemption from the restriction on making non-concessional contributions exists for Downsizer contributions, whereby a member is able to make a downsizer contribution even if their total super balance is above the general transfer balance cap ($1.6 million from 2017–21; $1.7 million from 2021–22). As per the ATO website: “A downsizer contribution doesn’t count towards any of the contribution caps and will not affect your total superannuation balance until it is re-calculated at the end of the financial year.”
See the following articles for more information:
- Super recontribution strategy: How it works
- Recontribution strategy case study: How superannuation tax components impact estate planning
Important: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.