When do you con tribute? As an employer, you will have to pay super for each employee who is 18 years or older and is paid $450 or more (before tax) a month. It's not n ecessary that the employee be working full-time, super is also payable for part-time and casual employee.

Apart from your employer's contr ibution, you can contribute extra to your super at any time to increase your retirement savings. However, there are limits on how much you can contribute before you pay extra tax. Different limits (known as caps) apply depend on the type of contributions made into your super fund. What are Concessional (before-tax) contributions? Concessional contributions are contributions made into your super fund from your income before any tax is paid on them. This can include; compulsory super payments made by your employer salary sacrifice contributions costs your employer pays on your behalf, such as super administration fees and insurance premiums personal contributions, such as super payments you make if you're self-employed – if an income tax deduction is allowed if you decide to split your before-tax contributions and give some to your spouse, these contributions still count towards your concessional cap. For Financial Year 2014-15 Concessional Contributions Cap Younger than 50 year on 30 June 2015 $30,000 50 years or older on 30 June 2015 $35,000

What is the new Rich Man's Tax? Starting 1 July 2012, the then Labor Government decided that for individual earning more than /style00K a year, 15% tax on their super was too little! So they decided that all rich people (with adjusted income greater than /style00K a year) will pay 30% tax on their pre-tax super contribution.  This is the new Division 293 tax, fondly called by us as Rich man's Tax. Because of this new tax regime, individuals earning more than /style00K a year will not be able to avail concessional tax rate of 15%!! This reduces their tax savings on super contributions to 19% (49% - 30%).

How to minimise costs in your super?

Many taxpayers hold multiple superfund accounts, usually as a result of their changing jobs. Each superfund charges fees and charges thereby hurting your super savings.  Although not an easy exercise, it is highly advisable to combine your multiple super accounts to any one account of your choice, thereby reducing costs and increasing retirement savings.

Tip! Don't lose your super money! You can transfer super online from one fund to another, by simply using your my.gov.au login.

FOR SELF MANAGED SUPERFUNDS (SMSFs)

Yes! You can manage your own super funds but there are very stringent super provided you conform to super and legal laws that an SMSF has to comply with. Will this suit you, benefit you, challenge you? For more details visit our FAQ.

How is your SMSF Taxed?

• Tax on Contributions – 15%
• Tax on income – Non Pension Phase – 15%, Pension Phase – 0%
• Tax on Capital Gains – Non Pension Phase – 10%, Pension Phase – 0%

Tip! Various strategies such as Super Gearing, TRIS + Salary Sacrifice, Pension drawdown + Recontribution Strageties, etc. can be used in your SMSF to considerably reduce your overall tax bill.

What are the rules governing Accepting Contributions?

As trustee of your SMSF, you can accept following types of contribution;

• Employer contributions
• Personal contributions (pre or post tax) subject to Contributions Caps
• Roll-overs

Tip! SMSFs are now required to set up SMSF SuperStream for accepting contributions from unrelated employers. You can access a list SMSF messaging providers   here .

What investment options are available in SMSFs?

As trustee of your SMSF you are required to choose appropriate investments;

• Short to Long term with focus on retirement benefits.
• Can include direct shares and property investments.
• Can include property purchase through borrowings.
• Can include overseas assets (property, shares, term deposits).

Tip! You can use your SMSF to invest overseas. Stringent rules and regulations apply. Read more on SMSF investment in India in our   newsletter .

What are the rules governing Paying Benefits?

In other words, how and when can you access your super balance. Most super balances are preserved till a 'condition of release' is met. Some of the most common ones are;

• Reaching age of 65.
• Reaching preservation age and starting Transition to Retirement Pension (TRIS)
• Reaching preservation age and retiring permanently
• Accessing funds from Unrestricted Non Preserved Benefits.
• Special Medical Condition
• Death or Terminal Illness
• Severe Financial Hardship or Compassionate Grounds

Tips! By using some of the pension strategies with other strategies, you could reduce our over all tax and increase income in hand. Similarly, you could use a pension + re-contribution strategy to reduce death duty.  However, illegal early access of your super could result in heavy taxes & fines.

What is the new New Penalty Regime?

SMSF trustees can now be held personally responsible for delays and defaults in their duties. See below details of a new penalty regime for SMSFs

 

Breach Part	Penalty Units	Amounts
Failure to appoint an investment manager in writing when one is appointed	5	$850
Failure to provide the Tax Office with information on the approved form within the prescribed period upon establishing a fund	5	$850
Failure to complete a form with requested information provided by the Tax Office as part of its statistical program	5	$850
Failure to comply with Tax Office education directive	10	$1,700
Failure to have financial statements prepared, signed and retained for at least five years	10	$1,700
Failure to keep trustee minutes for at least 10 years	10	$1,700
Failure to keep records of change of trustees for at least 10 years	10	$1,700
Failure to sign trustee declaration within 21 days of appointment and keeping for at least 10 years	10	$1,700
Failure to keep member reports for 10 years	10	$1,700
Failure to notify the Tax Office of a change of SMSF status e.g. fund ceasing to be an SMSF	20	$3,400
Failure to comply with operating standards	20	$3,400
Lending or providing financial assistance to fund members or relatives	60	$10,200
Borrowing, except as permitted e.g. limited recourse borrowing arrangement	60	$10,200
Contravention of in-house asset rules	60	$10,200
Failure to notify Tax Office of an event that has significant adverse effects on the fund's financial position	60	$10,200

With hosts of opportunities and minefield of pitfalls, it is best to tread carefully and ensure you are on the right side of law. As Superannuation Specialists we can help you understand and manage your Tax and SIS Law compliance.  For more details, click here   or book an appointment with us.