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Week 8

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Queensland University of Technology

1 AYB240 – SUPERANNUATION REGULATION AND PRACTICE LECTURE 8: SELF MANAGED SUPERANNUATION FUNDS Types of Contributions  Made by: o Members – personal contributions made by an individual of a superfund o Others (e.g. employers, spouse, government co-contribution)  Two types of contributions o Concessional  Super guarantee (SG) payments  Other super contributions  Made by employers  Salary sacrifice contributions made by members  Contributions made by members and claimed as an income tax deduction  Subject to 15% tax on entry to fund o Non-Concessional  Made from after tax money  Business profits or from selling an asset  Spouse contributions  Tax-free portion of any foreign super transferred from overseas to Australian super account  Not taxed on entry to fund o In specie contributions  Contributions other than cash  SMSF o Listed securities o Business real property  Must be at market value  Treated as non-concessional Contribution Caps  Commenced 1 July 2007  Change of emphasis from limiting super benefits paid to limiting benefits going into super  Contribution limits for 20010/11 onwards: Contribution Type Cap: Aged under 50 Cap: Aged 50 or over (transitional to 2011/12)# Concessional Contribution $25,000 p.a. $50,000 p.a. Non-Concessional Cont. $150,000* $150,000* *Can be averaged over a 3-year period (i.e max. of $450,000 in one of the 3 yrs. 2 Bring Forward ‘Rule’  Non-concessional contributions o Contribute a maximum of three times the non-concessional limit in a three year period o Contribute $450,000 in one year, then no further non-concessional contributions for next two years  Must be under 65 when contribution made  Timing of contributions very important  Rule automatically triggered when a contribution >$150,000 made Exclusions  Rollovers  Government co-contributions  Settlements/Orders relating to Personal injuries  Public Sector contributions excluded from assessable income  Small business CGT Assets o Contributions from disposal of small business assets that qualify for CGT small business exemption or retirement exemption o Lifetime “CGT cap amount” $1.155m 20010/11 (indexed in $5000 increments) o Capital gains disregarded under retirement exemption $500,000 o Use of retirement exemption counts towards the limit for the 15 year exemption and vice versa  Others When is a contribution made?  Cheque/cash o When received by the superannuation fund  EFT o When credited to fund’s bank account  In specie contribution o When ownership passes to trustee  Timing important for contribution caps o For example, where a member contributes $5,000 for the 2010 year but is actually received in the 2011 year by the fund, then it counts as part of 2011 annual contributions cap Timing of contributions  Tax deduction applies to contributor where made by 30 June  Impacts assessment of compliance with SGC requirements  Can impact annual contribution limits o For example, where a member contributes $5,000 for the 2010 year but is actually received in the 2011 year by the fund, then it counts as part of 2011 annual contributions cap 3 Age limits  Aged less than 65 o Generally no restrictions  Aged 65 to <75 o Must pass ‘Work Test’ o Accept contributions if person is gainfully employed at least part-time  worked at least 40 hours in a period of not more than 30 days  Aged 75 and over o Only accept ‘mandated employer contributions’ (SG) or contributions made under an industrial award Excess Contributions Tax  Applies where contribution limits exceeded  Concessional contributions exceed cap o 31.5% on amount of excess up to total of non-concessional cap  If exceed non-concessional cap o 46.5% of amount of excess  Liable personally o Can apply to super fund to release money to pay the tax on excess concessional contributions o Pay personally for excess non-concessional contributions Government Co-Contributions  Available to low-income earners  Maximum $1,000  Only available for personal non-concessional contribution  10% or more of assessable income (& RFB) from business/employment  Age < 71 on 30 June  Income test 2009/10 and 2010/11 o AI up to $31,920: up to $1000 o AI $31,921 - $61,920: reduced by 3.333 cents for each dollar income exceeds $31,920  Not taxable as income to receiving fund Spouse Contribution Concessions  Spouse contributions splitting o Contributions made in previous financial year o Maximum “splittable contributions” from 6 April 2007  85% of concessional contributions  Non-concessional contributions not splittable  Spouse contribution tax offset – Max. $540 o Must be a resident & make contribution for spouse o Spouse Assessable Income + Reportable Fringe Benefits
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