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End of Financial Year

End of Financial Year check list – June 30 fast-approaching.

Chris Morcom
Partner/Private Client Adviser
19 May 2011

It is now just over a month until the end of this financial year – are your affairs all in order?

Is there anything you should be doing before the end of the financial year?

There are a few things you might like to check out, just to make sure don’t end up paying more tax than you need to and can get the most out of your super, retirement and investments.

  1. Superannuation
    • Contributions
      • Make sure you have not exceeded your maximum contribution cap limits – $25,000 for those under 50 and $50,000 for those over.  These caps include your employer compulsory contributions plus any salary sacrifice contributions made.  For the self employed, it is the contribution for which you claim a tax deduction.  And don’t forget, your super fund must receive your contribution (in the bank) by 30th June to count for this year.
      • If you plan to or have deposited your own money into super, you must not exceed $150,000 in one year, or for those under 65 $450,000 over three years.
      • If you have room in your cap and you expect to get a bonus, why not discuss with your employer putting some of the bonus directly into super – remember that an effective salary sacrifice arrangement can only be made in advance, not retrospectively after the bonus has been earned.
      • Review your salary sacrifice arrangements – can you afford to increase your superannuation contributions without exceeding your caps?  This action will help you accumulate more for retirement, and save on income tax as well.
      • Have you earned less than $31,920 – if so, a personal contribution of $1,000 will be matched dollar for dollar by the government.  You might like to start contributing $20 a week from July so that you reach the $1,000 mark for the next financial year.
      • Have a look at next year – are you in danger of exceeding your caps next year.  Make plans now to ensure you don’t incur extra tax by going over a cap.
    • Superannuation Splitting
      • If you have a spouse with a much lower superannuation balance than yourself, consider splitting 85% of your last year’s concessional contributions to them.  This will help even up your balances.
      • The government are proposing that those who are over 50 and have superannuation balances below $500,000 will be able to make concessional contributions up to $50,000 beyond June 2012.  Splitting your contributions now might keep you below that limit and allow you to continue maximising contributions to super in a tax effective manner.
    • Pensions
      • Are you drawing a pension from your fund?  If so, make sure you have drawn at least the minimum amount required – the table below sets out the limits for the current and next financial years.

* Your account balance at 1 July of the current year

  • If you are drawing a pension via a Transition to Retirement strategy, make sure you do not draw more than 10% of your balance (as at 30 June 2010).
  1. Retirement
    • If you are considering retirement in the next month, why not delay until July.  This will ensure any lump sum payments for unused leave would be received in the next financial year, when your tax rate will be lower.
  2. Review your investments
    • It is always a good time to review your investments – perhaps you have some investments that are no longer appropriate, and have a loss that could be realised.  Maybe it is time to take some profits on some investments that have done well.
    • When making changes to your investments, be wary of “wash sales”.  A wash sale is the sale and immediate repurchase of the same investment, with the intention being to either crystalise a capital loss or reset the cost base of the investment.  Such actions are disregarded and ineffective.

For those in business, you should be meeting with your accountant and adviser to ensure your affairs are in order for the current year, and you are on a good footing for the next. 

Seeking quality advice is always a good start to your planning.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.