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From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.

2019-20 is the first year you are entitled to use carried forward unused amounts. Unused amounts are available for a maximum of five years, and after this period will expire.

For example, if you had concessional contributions of $3,000 in 2018-19, your unused concessional amount carried forward to 2019-20 is $22,000. Your general concessional contributions cap in 2019-20 is $25,000, allowing a maximum concessional contribution in 2019-20 of $47,000.

The superannuation concessional contribution cap for the 2019-20 financial year is $25,000.

Concessional contributions include:

- compulsory employer contributions (superannuation guarantee)
- any additional concessional contributions your employer makes
- salary sacrifice payments made to your super fund
- contributions you are allowed as an income tax deduction*

*  Eligible employees are now able to claim a tax deduction for contributions personally made to a superannuation fund.  The total of all concessional contributions including superannuation guarantee, salary sacrificed contributions and personal deductible contributions must not exceed $25,000 per year.

OPT-IN OR LOSE YOUR INSURANCE COVER

The Government has recently passed new legislation that now requires you to opt-in by  1 July 2019 to retain the insurance cover you  have in your superannuation fund.

If your superannuation fund account has not received a contribution from you or your employer or a rollover in the previous 16 months, superannuation funds are required by law to discontinue your cover. 

This new legislation applies regardless of your superannuation fund's balance and applies to all types of insurance; life insurance, total and permanent disability (TPD) insurance and income protection insurance.

The insurance opt in requirement is part of a reform package called Protecting Your Super Package that commences on 1 July 2019 and includes:

• Insurance becoming opt-in for members whose accounts have been inactive for 16 months
• Fund members with balances under $6,000 whose accounts have been inactive for 16 months will have their accounts paid to the ATO, who will then chase taxpayers to consolidate their superannuation accounts
• Fee caps will be imposed on certain fees for account balances under $6,000
• Exit fees will not be charged for moving money from a superannuation account

NSW GOVERNMENT REBATES

A family with two children could save $1,000 by using Energy Switch and claiming the Active Kids voucher, Creative Kids voucher and the CTP Green Slip refund.

A pensioner concession card holder could save $1,200 if eligible for the Low Income Household Energy Rebate, Gas Rebate, CTP Green Slip refund and free rego.

First and second year apprentices registered with the NSW Department of Education and Training can apply for a registration rebate to help with the costs of registering their motor vehicle.

Frequent toll users who spend on average $25 per week or more in tolls or $1,300 over the year are eligible for one free 12 months registration for a car, ute 4WD or motorcycle for registrations due between 1 July 2018 and 30 June 2019.

For more information on Service NSW Cost of Living rebates: www.service.nsw.gov.au/campaign/cost-living

From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made if an individual has a total super balance greater than $1.6 million.

You can only make downsizing contributions for the sale of one home. You can't access it again for the sale of a second home. You or your spouse must have owned the home for 10 years or more prior to the sale.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

From the 1st of July 2017, for the first time, employees are eligible to claim a tax deduction for personal contributions made to superannuation. Until this year only self-employed people were eligible to claim this type of deduction.

To be eligible to make the claim employees must be under 65 or under 75 and still working and contributions must be received by the superannuation provider prior to the 30th of June 2018. Employees must inform their superannuation fund of their intention to claim the deduction prior to lodging their 2018 personal income tax return.

The concessional contribution cap for the 2018 financial year is $25,000. This means that the total of all superannuation guarantee contributions made by a person's employer, plus their salary sacrifice superannuation

contributions, plus their personal contributions to superannuation that they are claiming a tax deduction for, must not total more than $25,000.

On 1 July 2017, changes to the tax offset for spouse superannuation came into effect with an increase in the spouse income threshold from $10,800 to $37,000.

Taxpayers are eligible to claim the maximum tax offset of $540 if:

> they contribute $3,000 to a spouses eligible super fund, and

> the spouses assessable income plus total reportable fringe benefits plus reportable employer super contributions is less than $37,000.

Effective 1 July 2017, most individuals under 75 years of age can claim a tax deduction for personal superannuation contributions without needing to have less than 10% of their income from salary and wages.

Deductions for personal superannuation contributions are now available to taxpayers who get their income from: salary and wages, self-employment, investments, government pensions, foreign sources, and partnership or trust distributions.

Concessional contributions, including employer contributions and personal contributions for which the member claims a tax deduction, are capped at $25,000 for the 2017-18 financial year for all individuals regardless of age.

WHAT'S NEW?

From 1 July 2017, the 10% test that previously applied to personal deductible contributions has been removed. As a result, all individuals under the age of 75 (including those aged 65 to 74 who satisfy the work test) will be eligible to claim a tax deduction for personal superannuation contributions.

Prior to 1 July 2017, individuals who were employees at any time in the financial year must have earned less than 10% of their income from employment (the 10% test) to be eligible to claim a tax deduction for personal super contributions. This generally meant that only individuals who were self-employed or not employed (eg. retirees) were eligible.

Benefits

The predominate benefit of making a personal deductible contribution is that individuals are able to claim the contribution amount as a tax deduction to offset their assessable income.

The tax saving for individuals is the difference between their marginal tax rate (including Medicare levy) and contributions tax of 15% on every dollar they make as a personal deductible contribution.

CONTRIBUTION LIMITS

From 1 July 2017, the concessional contributions cap is $25,000 for all individuals regardless of age. Concessional contributions include employer superannuation guarantee contributions, salary sacrifice contributions and personal contributions for which the individual is claiming an income tax deduction.

Salary Sacrifice v Personal Deductible Contributions

In terms of tax savings, there's little difference between making ongoing salary sacrifice contributions and making regular personal contributions into super followed by a Notice of Intent to Claim within required timeframes.

However, there are some differences worth noting:

• Cashflow – Compared to salary sacrificing, making regular personal contributions from after tax income will leave the individual with less net take home income. If individuals are going to make one-off or irregular personal deductible contributions they need to save up after tax income to do so.

• Administration – both salary sacrifice agreements and personal deductible contributions have challenges. A salary sacrifice agreement must be agreed upon in advance with the employer. A personal deductible contribution requires the individual to lodge a valid Notice of Intent to Claim within required timeframes and claim the deduction in their tax return.

If you would like specific advice regarding the relevance of the changes to personal tax deductible contributions on your personal situation, please speak to Twomeys' Financial Advisor Michael Gay on 02 69 420 300.

SUPERANNUATION UPDATE

Tax Deduction for Employee Superannuation Contributions

From 1 July 2017 employees will be eligible to claim a tax deduction for contributions personally made to a superannuation fund. The total of all deductible contributions, including superannuation guarantee, salary sacrificed contributions and personal deductible contributions is capped at $25,000 per annum.

Low Income Superannuation Tax Offset

Eligible taxpayers who earn up to $37,000 a year will get a tax offset, equal to 15% of before tax (employer and salary sacrifice) superannuation contributions, up to $500. The offset will be paid directly to the superannuation fund.

Spouse rebate

A tax rebate of 18% is available to individuals who make an after tax contribution of up to $3,000 for the benefit of a low income earning spouse. From 1 July 2017 the income the receiving spouse can earn is increasing from $10,800 to $37,000 for full eligibility with the phase out limit increasing from $13,800 to $40,000

Superannuation Co-Contribution

A government co-contribution is available to individuals who make an after tax superannuation contribution of up to $1,000. The co-contribution of $0.50 for each dollar contributed up to $500 is available for individuals under 71 with income under $36,021. The level of co-contribution phases out up to an income of $51,021.

Superannuation contribution splitting

Spouses are able to split up to 85% of concessional contributions (superannuation guarantee and salary sacrifice contributions) to their spouse's superannuation fund. The receiving spouse must be under 65 and not retired.

Section 293

From 1 July 2017 individuals with adjusted taxable income of more than $250,000 will be liable for an additional 15% tax on concessional contributions made on their behalf. This income limit is being reduced from its current level of

$300,000.