Coalition Policies on Superannuation

With Labor having planned some major superannuation policy changes, there had previously been concerns about their impact on Self Managed Superannuation Funds (SMSF). Now, with the surprise Coalition victory, the Morrison Government has the opportunity to move forward on their proposed changes to superannuation. 

Whilst the Coalition hasn’t proposed any major policy changes to superannuation, it has announced a few minor changes, many of these policies were provided in the 2019 Federal Budget.  This article summarises the Coalition’s main proposals relating to superannuation.  

The Coalition announced three measures that will allow older individuals to make superannuation contributions from 1 July 2020 onwards. 

Work test exemption for ages 65 and 66 

Relaxation of the work test rules relating to contributions so that individuals aged 65 and 66 can make voluntary superannuation contributions (both concessional and non-concessional) even if they do not meet the work test. 

This is in addition to the previously announced ‘Work Test Exemption’ where from 1 July 2019, individuals aged 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test. 

Currently, individuals aged 65 to 74 can only make voluntary superannuation contributions if they meet the work test of working a minimum of 40 hours over a 30-day period in the relevant financial year they seek to make contributions. 

Individuals with a total superannuation balance of $1.6m or over are not eligible to make non concessional contributions, regardless of age. 

Bring-forward extension for ages 65 and 66 

Individuals aged 65 and 66 will also be able to make up to three years of non-concessional contributions under the bring-forward rule, provided their total superannuation balance is less than $1.4m. 

Reduced non-concessional bring forward caps apply if an individual’s total superannuation balance is equal to or greater than $1.4m. 

Currently the bring-forward rules allow individuals aged up to 65 years to make up to three years’ worth of non-concessional contributions to their super fund in a single financial year, subject to their total superannuation balance. The current non concessional contributions cap is $100,000 a financial year. 

This means under the current non-concessional contribution caps, members aged under 67 will be allowed to make a $300,000 non-concessional contribution in a single year; assuming they haven’t already triggered the 3 year bring-forward period and their super balance was less than $1.4m at 30 June prior. 

Spouse contributions allowed up to 74 

The age limit for spouse contributions will be increased from 69 to 74 years. 

Currently individuals aged 70 years and over cannot receive contributions made by a spouse on their behalf. 

Individuals aged between 69 and 74 need to satisfy the work test in order to be eligible to receive the contribution made by their spouse. 

You may be able to claim a tax offset of up to $540 if you make contributions to a complying super fund for your spouse.  Your spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset. 

To be eligible for the maximum tax offset of $540 you need to contribute $3,000 and your partner’s annual income needs to be $37,000 or less. 

There are limits on what can be contributed, please contact our office for more information. 

Simplifying Exempt Current Pension Income (ECPI) calculations 

The Coalition has also proposed changes to the calculation of exempt current pension income, including the removal of a redundant requirement for superannuation funds to obtain an actuarial certificate where all members of the fund are fully in the retirement phase for the whole financial year. 

From 1 July 2020 members with interests in both the accumulation and retirement phases during a financial year will be allowed to choose their preferred method of calculating ECPI. This is a welcome change and should mean that SMSFs will be able to choose the method which provides the most tax-effective outcome.  

Allowing SMSFs to have 6 members 

It is proposed to increase the maximum number of members for a SMSF from four to six. 

Currently SMSFs can have up to four members at any time. 

Expansion and delay of SuperStream Rollover Standard 

The ATO will receive $19m to facilitate the inclusion of superannuation release authorities by electronic request. This will involve expanding the electronic SuperStream Rollover Standard used for the transfer of information and money between employers, superannuation funds and the ATO.

To coincide with this the start date for SMSF rollovers in SuperStream will be delayed until 31st March 2021. 

Please contact our Superannuation Manager Helen Cooper on 08 9316 7000 should you wish to discuss your specific circumstances in more detail. 

Any information provided in this article is general in nature and does not take into account your personal objectives, situation or needs. The information is objectively ascertainable and was not intended to imply any recommendation or opinion about a financial product. This does not constitute financial produce advice under the Corporations Act 2001. 

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End to End Service

Much has been written of late on the impact of Artificial Intelligence (AI) on all facets of our lives. Our industry is not immune to this and in our view has and will continue to benefit greatly from further technological progress.   

At GeersSullivan we have always embraced change as we look for new ways to provide a better customer experience and break the mould of the traditional accountant looking in the rear-view mirror at historical data. 

Two years ago, we implemented a paperless document management system and changed our internal software in both our compliance and superannuation areas of our business.  Not only have we reduced our environmental impact as we reduce the amount of printed paper, but it has allowed us to lease less space as the old compactus filing cabinet room was no longer required.  As we look to the future, we will be working with our clients who also wish to have their final reports provided in a paperless format. 

The introduction of more reliable AI accounting software encouraged us to rethink what an accountant is to our existing and prospective clients and how our tech savvy team could use the benefits of the various software packages to take on the role of internal bookkeeper and external CFO to assist our clients to:  

• Extract meaning from their accounting numbers
• Set goals 
• Establish strategies to achieve these goals; and 
• Measure the progress toward these goals

The above is in addition to our traditional services of attending to the various compliance activities required by the Australian Taxation Office, ASIC and the Office of State Revenue (to name a few).  

We at GeersSullivan have developed our End to End service which has been extremely well received by many of our existing clients already.  This service includes: 

• Bookkeeping services – data entry, accounts payable, accounts receivable, managing payroll via the new Single Touch Payroll system, paying superannuation obligations. 
• Periodic reporting on the Key Performance indicators of your business – this involves developing a report tailored to your businesses specific KPI’s and reporting on these in an understandable and timely basis. 
• Periodic business meeting – this meeting is with one of our senior staff who acts as an external Chief Financial Officer and mentor to discuss the performance of the business and hold you, the owner accountable for implementing the previously agreed strategies. 
• Tax planning – estimating the year end results and final tax position of the group and recommending actions to minimise tax. 
• Attending to all the ongoing compliance needs – including preparation of year end financial statements and tax returns, lodging BAS’ and IAS’, preparing Fringe Benefits Tax Returns and payroll tax returns. 

The above further develops our strengths and experience in compliance and advisory services and packages it in an affordable monthly fee.  To be this involved requires a suitable accounting software package and as a Xero Gold partner we recommend this product however we also are experienced in many other major software providers such as MYOB, Reckon/Quickbooks, Exonet, Sage and Netsuite. 

We understand that some clients may wish to take advantage of all or some of the above and as such we are flexible in building a package that suits your business needs. 

Call us today to discuss how we can help reduce the time you spend on bookkeeping and focussing your attention on achieving your goals. 

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