Learn the new superannuation contribution rules you should be aware of and understand how they could affect your super savings. Nigel Smith, Netwealth technical consultant, discusses ahead of June 30, 2018.

1. Super contributions:
New rules and key issues
for June 30
Presented by
Nigel Smith, Technical Services Consultant, Netwealth Investments Limited
13 June 2018

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• Slides will be sent to you after the webinar
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Housekeeping
Super contributions

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This webinar and information has been prepared and issued by Netwealth Investments Limited (Netwealth), ABN 85 090 569 109,
AFSL 230975. It contains factual information and general financial product advice only and has been prepared without taking into
account the objectives, financial situation or needs of any individual. The information provided is not intended to be a substitute for
professional financial product advice and you should determine its appropriateness having regard to you or your client’s particular
circumstances. The relevant disclosure document should be obtained from Netwealth and considered before deciding whether to
acquire, dispose of, or to continue to hold, an investment in any Netwealth product.
While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person,
including Netwealth, or any other member of the Netwealth group of companies, accepts responsibility for any loss suffered by any
person arising from reliance on this information.
Disclaimer
Super contributions

4. | netwealth Super contributions4
Nigel Smith
Technical Services Consultant
Netwealth Investments Limited
Meet today’s speaker

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1. Total super balance and transfer balance accounts
2. Concessional contributions
3. Personal deductible contributions
4. Non-concessional contributions
5. Spouse contributions
6. Super co-contribution
7. Three common contribution problems to avoid
8. Carry-forward of unused concessional contributions
9. Downsizer contributions
10. SMSF’s – June 30 reminder
5
Agenda
Super contributions

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New: Total Super Balance (TSB) - $1.6m
• Generally calculated at June 30 of each financial year
• Values the total super interests at a certain date
• Equals accumulation accounts + pension accounts
(retirement phase) + rollovers in transit
• Relevant when working out eligibility for:
– Unused concessional contribution cap carry forward
– Non-concessional contributions cap and bring
forward
– Government co-contribution
– Spouse contribution tax offset
– Implications for SMSF asset segregation
New: Transfer Balance Cap (TBC) - $1.6m
• Is the total limit that can be transferred to tax-free
retirement phase (pensions)
• Has no impact on eligibility to make contributions to
super
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Both $1.6m, both begin from 1 July 2017 - but very different concepts
Total super balance vs. Transfer balance cap
Super contributions

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New: From 1 July 2017, the concessional
contributions cap is $25,000 regardless of age
(previously $30k or $35k depending on age)
• Unchanged: Taxed at 15% by the fund at point of entry
• Unchanged: Need to complete a s290-170 “Notice of
intent to claim a deduction”
Key points
• Check salary packaging & existing contribution
arrangements against $25k cap to avoid breach
• If making personal deductible contributions, must
complete the “Notice of intent” form & receive an
acknowledgement before the deduction is valid
– Notice must be given prior to certain events (details
later)
• Can only deduct up to the available assessable income
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Pre-tax or deductible contributions
Concessional contributions
Super contributions

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New: From 1 July 2017, most people regardless of any
employment arrangement, can claim a full tax
deduction for personal super contributions until
turning 75
• From age 65 onwards, the work test must still be met:
– Must be gainfully employed for at least 40 hours over
30 consecutive days during the financial year
– Must meet the test prior to making the contribution
• If claiming a deduction:
– The $25,000 concessional contributions cap applies
to total contributions (employer, SG & personal
deductible)
– Must still complete the “Notice of intent to claim …”
(s290-170) and receive acknowledgment from
trustee
Key points
• Useful if no access to salary sacrifice arrangements
• Useful if primarily self-employed coupled with
employment arrangement
• Useful to top up super from unexpected cash resources
- e.g. bonus or inheritance
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Amounts contributed to super fund from after-tax income (from take-home pay)
Personal contributions
Super contributions

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New: From 1 July 2017, non-concessional
contribution cap will reduce to $100,000 p.a.
(previously $180k)
• New: From 1 July 2017 the Total Super Balance (TSB)
must be under $1.6m to make a non-concessional
contribution of any amount
• Unchanged: No tax payable upon contribution to fund.
Earnings still taxed as normal
• Unchanged: Forms part of the tax free component
• Unchanged: Available up to age 75, must meet work
test from age 65 onwards to contribute
New: Bring Forward Rules from 1 July 2017
• Still available but reduced to $300,000 over 3 years
(previously $540k)
• The actual amount that can contributed depends on the
total super balance (TSB) – see table next page
• Must have a TSB of under $1.6m at June 30 previous
financial year
• Under 65 years of age for at least 1 day in the triggering
year
• Must contribute more than $100,000 (2017-18 FY)
• Care needed if triggered in previous years
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Contributions from after tax money with no tax deduction claimed
Non-concessional contributions
Super contributions

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Non-concessional contributions
New: How much can an individual bring forward?
Total super balance Non-concessional cap for the 1st year Bring forward period
Less than $1.4m $300,000 2 years
$1.4m to less than $1.5m $200,000 1 years
$1.5m to less than $1.6m $100,000 No bring forward allowed
$1.6m or more Nil N/A
Note: There may be transitional rules in place if where the bring forward was triggered in the 2015-16 or 2016-17 financial years.
Source: Australian Tax Office
Super contributions

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From 1/7/2017 there are changed eligibility criteria
• New: Spouse income thresholds have increased:
– Full tax rebate available if spouse income is $37,000
p.a. or less (formerly $10,800)
– Gradually reduces & phases out when spouse
income reaches $40,000 (formerly $13,800)
• New: Contributing spouse NOT entitled to tax offset if
receiving spouse:
– Exceeds their non-concessional contributions cap for
the Financial Year (FY), or
– Has a TSB equal to or exceeding $1.6m (2017–18)
as at June 30 of the previous FY
• Unchanged: Other eligibility criteria, including the
following key ones, remain in place:
– Both spouses must be Australian residents
– Spouses must not be living separately on a
permanent basis when contributions made
– Contributions must NOT be deductible to contributing
spouse (i.e. is a NCC)
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Making a contribution to a spouse account & claiming the $540 tax offset
Spouse contributions
Super contributions

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From 1/7/2017, there are changed eligibility criteria
• New: The income* test threshold has increased in line
with Average Weekly Ordinary Time Earnings
(AWOTE)
– Lower threshold is $36,813 p.a. (formerly $36,021)
– Higher threshold is $51,021 p.a. (formerly $50,454)
• New: The individual’s TSB must be $1.6m or less at
June 30 of previous FY
• New: The individual must not have contributed more
than their NCC for that FY
* Income = assessable income + reportable fringe benefits total + total reportable
super contributions less allowable business deductions
• Unchanged: The other eligibility criteria, including the
following key criteria, remain:
– 10% eligibility income test: 10% or more of income
must come from employment activities or business
– The individual has made 1 or more personal super
contributions & has not claimed a tax deduction
– The co-contribution does NOT count against the
individuals NCC cap
– The individual is under age 71 at the end of the FY
– The individual has lodged their tax return for the
relevant year
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Subject to certain eligibility criteria, the Govt may contribute up to $500 to an individuals super fund
Super co-contribution
Super contributions

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Super co-contribution
The amount varies depending upon the income test thresholds and contribution made
• $0.50 for each $1.00 contributed up to the maximum co-contribution of $500
The following table shows further examples for contributions made in the 2017-18 financial year:
Income
Personal super contribution
$1,000 $800 $500 $200
$36,813 or less $500 $400 $250 $100
$39,813 $400 $400 $250 $100
$42,813 $300 $300 $250 $100
$45,813 $200 $200 $200 $100
$48,813 $100 $100 $100 $100
$51,813 or more $0 $0 $0 $0
Source: Australian Tax Office
How much co-contribution?
Super contributions

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Timing of contribution – when is the contribution received?
• Cash payment by you = Cash is received by super
provider
• EFT by you = Date funds are credited to super
providers account
• Cheque sent by you = Received by super provider so
long as promptly presented and honoured
“Notice of intent to claim form” (s290-170) must be
completed and acknowledged prior to deduction
• If you withdraw, rollover or begin an income stream (full
or partial) prior to making s290-170
– Will lose or only get partial deduction
– Cannot be rolled back or back dated to correct
Super deduction greater than assessable income
• Excess deduction lost but 15% tax still deducted
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Issues to be aware of as June 30 approaches
Contributions - three common problems
Super contributions

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New: From 1 July 2018, individuals will be able to
'carry-forward' any unused amount of concessional
contributions cap over a rolling 5 year period
Applies to people who:
• receive contributions from an employer into super
• salary sacrifice into super
• make personal contributions to their super and claim a
tax deduction for the contributions
The following criteria must be met to take advantage
of this new opportunity
• Amounts carried forward that have not been used after
five years will expire
• The first year in which unused concessional
contributions is available is 2019-20
• Only able to utilise any carry-forward unused
concessional contributions cap if the TSB at the end of
June 30 of the previous financial year is less than
$500,000
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Carry forward concessional contribution unused caps
Super contributions

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Carry forward concessional contribution unused caps
New: The table below provides an example of how this may work:
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Concessional
contribution –
incl. SG
$10k $10k $10k $40k $10k $60k
Available
unused cap
$15k $15k $15k - $15k -
Cumulative
available
unused cap
$15k $30k $45k $30k $45k $10k
Super contributions

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New: From 1/7/2018, if you are 65 or older, you may be
able to make a downsizer contribution into super of
up to $300,000 from the proceeds of selling your
home
Eligibility criteria include
• 65 or older at the time the downsizer contribution made
(there is no maximum age limit)
• No work test required to contribute
• $300k limit available to both spouses for a total of
$600k
• Only valid if the contract of sale is on or after 1 July
2018 (not settlement)
• Home was owned by member or spouse for 10 years or
more prior to the sale
• Home is in Australia and is not a caravan, houseboat or
other mobile home
• Must be wholly or partially eligible for the “main
residence CGT exemption”
• The contribution is made within 90 days of receiving the
sale proceeds
• Max is $300k but cannot be more than total sale
proceeds
• Must advise super fund using the “downsizer
contribution form” either before or when contributed
• Must not have previously made a downsizer
contribution
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Downsizer contribution
Super contributions

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Not a non-concessional contribution
• It is not a non-concessional contribution and will not
count towards the contributions caps
• Timing and order of contribution could be important if
further NCCs need to be made
Total Super Balance (TSB)
• It can still be made if an individual has a TSB greater
than $1.6 million
• It will not affect the TSB until the individual’s TSB is re-
calculated to include all contributions, including
downsizer contributions, on June 30 at the end of the
financial year
Transfer Balance Cap (TBC)
• It will also count towards the TBC, but only when it
moves from the super accumulation account to
retirement phase (pension)
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New: Interaction with NCC, TSB and TBC
Downsizer contribution
Super contributions

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New: Transitional CGT Relief to provide temporary
relief from certain capital gains that might arise as a
result of complying with the introduction of the
transfer balance cap, or the TRIS reforms
• From 1/7/17, due to the introduction of the transfer
balance cap, a member may need to reduce amounts in
retirement phase super pensions to comply with the
$1.6 million TBC.
• From 1/7/2017, for a TRIS that continues in the
retirement phase, CGT relief may be available where
amounts supporting this TRIS are reduced to comply
with the transfer balance cap rules.
• Trustees, that qualify, must elect to take the transitional
CGT relief and, if appropriate, may also elect to defer
the payment of CGT.
• The election is due by or before the date trustees are
required to lodge the 2016-17 tax return
• The ATO has extended the 2016-17 lodgement date to
30/6/2018
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Self managed super funds
Super contributions

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New: Event-based reporting (TBAR – transfer balance
account reporting)
From 1/7/2018, new reporting obligations for the new TBC
& event-based reporting framework:
• Will allow ATO to record & track Transfer Balance Cap
& Total Super Balances
• Generally no need for SMSFs to start TBAR until
1/7/2018, but:
– Need to document all income stream valuations &
decisions in 2017–18 FY for reporting after 1/7/2018
– No 'special circumstances' discretion for
contraventions of the TBC - SMSF need to self-
monitor
When to report
• Pensions in retirement phase & being received at
30/6/2017 reported on or before 1/7/2018
• From 1/7/2018 generally:
– All member balances less than $1.0m, then at same
time as Annual Return
– Any member balance $1.0m or greater, then 28 days
after end of quarter in which event occurs
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Self managed super funds
Super contributions

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Need to report
• Pensions being received at 30/6/2017 that continued to
be paid AND are in retirement phase
• New retirement phase pensions & death benefit
(reversionary or otherwise) and any commutations
• Some Limited Recourse Borrowing Arrangements
(LRBAs)
• Personal injury (structured) settlements
No need to report
• Pension payments
• Investment earnings & losses
• Pension cessation due to assets exhausted
• Death of a member
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New: Transfer Balance Account Reporting (TBAR)
Self managed super funds
Super contributions

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There are many new rules and changes to “old” rules
– particularly contributions caps
They are complex and extensive – wise to seek help
from a qualified financial professional
Avoid three common mistakes
1. Timing – do not leave contributing until the last minute
2. Notice of intent to claim lodged and acknowledged prior
to rollover, starting a pension or withdrawing
3. Claiming an amount higher than assessable income
Carry-forward of unused concessional contributions
coming from 1/7/2018 (available in the 2019-20 FY)
Downsizer contributions available to eligible people
from 1/7/2018
SMSFs have TBAR responsibilities starting from
1/7/2018
SMSFs may have transitional CGT choices up to the
date they lodge their 2016-17 tax return – extended to
30/6/2018
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Key points
Summary
Super contributions

23. Questions
Thank you
Callum Keats
Client Relations
(03) 9657 1437
callum@netwealth.com.au

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This webinar and information has been prepared and issued by Netwealth Investments Limited (Netwealth), ABN 85 090 569 109,
AFSL 230975. It contains factual information and general financial product advice only and has been prepared without taking into
account the objectives, financial situation or needs of any individual. The information provided is not intended to be a substitute for
professional financial product advice and you should determine its appropriateness having regard to you or your client’s particular
circumstances. The relevant disclosure document should be obtained from Netwealth and considered before deciding whether to
acquire, dispose of, or to continue to hold, an investment in any Netwealth product.
While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person,
including Netwealth, or any other member of the Netwealth group of companies, accepts responsibility for any loss suffered by any
person arising from reliance on this information.
Disclaimer
Thank you
Super contributions