McAdam Siemon : Accountants and Business Advisors

The Five-Minute Business Coach - May 2010

In this issue:  Your superannuation before 30 June 2010

We’ve been talking with many of our clients in recent months about the value of us all regularly reviewing how we contribute to superannuation. At McAdam Siemon, we encourage all our clients to be aware of their current situation, and objectively evaluate their arrangements on a regular basis.

As we approach the end of the 2010 financial year, now is the time to review the contributions you’ve made to your fund for the year to date.  Contributing can be a very effective way to minimise your tax whilst boosting your retirement savings.

Here is a useful reference guide to some of the terms used for superannuation:

Super Explained:

• Concessional Contributions are made from pre-tax income.

One of the best things about superannuation is the concessional tax rates, and these contributions are taxed at 15%.  The entity making the contribution to the super fund is entitled to claim a deduction for the amount contributed, however there are caps on how much you can contribute to super and whilst still enjoying the benefits of the concessional tax rate.  For the year ended 30 June 2010, the contribution cap is $25,000 for people aged less than 50 years and $50,000 for people aged 50 years and over.

• Non-concessional Contributions are made from after tax income.

Non-concessional contributions are not taxed in the super fund and the entity making the contribution to the super fund is not entitled to claim a deduction for the amount contributed.  There are caps on the amount that you can contribute to super as a non-concessional contribution.  For the year ended 30 June 2010 the contribution cap is $150,000 per person.  For people aged under 65 you can bring forward two years of contributions, to allow you to contribute $450,000 over three years.

• Excess contributions can attract a penalty for exceeding the contributions caps.

If you breach your cap, the excess amount is subject to additional tax of 31.5% on top of the initial 15% paid by the super fund. You’re likely to exceed the contributions cap if you’ve entered into salary sacrifice arrangements and haven’t reviewed the amounts being paid into their superannuation fund.  For example, if your employer is paying an amount into the fund to cover your life insurance premiums, these payments will count towards your concessional contribution limits. 

As we approach the end of the financial year, if you are considering a review of your personal or business financial situation, the highly professional and proactive team at McAdam Siemon would welcome the opportunity to discuss the ways we can meet your needs.