Superannuation contributions
It is time to remind clients that Superannuation Contributions have been reduced. The concessional contributions for clients under the age of 50, is now $25,000. Arrangements for clients over the age of 50 continue, but at a reduced level. The contribution is now $50,000 up to 30 June 2012.
As a result of the contribution reduction the risk of making an excessive contribution has increased. The Superannuation Guarantee Payments, for example, may result in excessive contributions. Furthermore, contributions paid by another entity on behalf of the Superannuation fund, such as accounting expenses could result in an excess contribution – a fact highlighted in a recent Tax Ruling on Superannuation Contributions (TR2010/1).
As 30 June 2010 draws near, it is important that you be aware of the contribution limits and if they are likely to exceed those contributions, they need to contact their Chartered Accountant so that an appropriate strategy can be put in place.
Your Chartered Accountant may suggest that:
- Subject to the Trust Deed of the Superannuation Fund, there may be an opportunity to return a contribution to a member within 30 days of the trustee becoming aware of the excess contribution.
- The contribution be held in reserve for 25 days. Depending on the timing that could result in a situation where the money is held in reserve until, or after 1 July of the calendar year, therefore ensuring the contribution is applied to a future year.
If you have any concerns, you should contact your Chartered Accountant on this matter.