What’s new for your SMSF
We’ve listed below the key updates that you need to be aware of as Trustees for your SMSF.
Increased contribution caps
From 1 July 2021, the superannuation contributions caps have increased, which means you can contribute more to your superannuation fund each year. This assumes that you have not already reached the limit of your “transfer balance cap” (see below for more information about this).
The concessional contribution cap will increase from $25,000 to $27,500. Concessional contributions are contributions made into your superannuation fund either by your employer or by you personally. These are tax-deductible.
The non-concessional cap will increase from $100,000 to $110,000. Non-concessional contributions are after-tax (non-tax deductible) that you can make personally into your superannuation fund.
SMSF’s investing in cryptocurrency
If an SMSF transacts in cryptocurrencies, SMSF trustees and members need to be aware of the tax consequences. In each case, these will depend on the nature of the SMSF’s circumstances. SMSFs involved in acquiring or disposing of cryptocurrency must keep records in relation to their cryptocurrency transactions.
While SMSFs are not prohibited from investing in cryptocurrencies, the investment must:
- Be allowed for under the fund’s trust deed
- Be in accordance with the fund’s investment strategy
- Comply with SISA and SISR regulatory requirements concerning investment restrictions.
We strongly encourage SMSF Trustees to seek advice from our KMT advisers before undertaking any new investment in their SMSF, including investments in cryptocurrencies.
An SMSF’s investment strategy outlines its investment objectives and specifies the types of investments it can make. Before investing in cryptocurrency, SMSF trustees and members should consider the level of risk of the investment. Trustees and members may then review and if necessary, update their fund’s investment strategy to ensure the investment being considered is permitted.
The super laws require trustees and members to ensure their fund’s assets are held separately from personal assets. An SMSF’s cryptocurrency investments must be held and managed separately from the personal or business investments of trustees and members. This includes ensuring the SMSF has clear ownership of the cryptocurrency. This means the fund must maintain and be able to provide evidence of a separate cryptocurrency wallet for the SMSF from that used by trustees and members personally.
For tax purposes, gains and losses in the fund are generally treated in the same way as other assets in the fund. Capital gains tax may apply to any gains made on the sale of the currency.
Transfer balance cap
The transfer balance cap began on 1 July 2017. It is a lifetime limit on the total amount of superannuation that can be transferred into retirement phase income streams, including most pensions and annuities.
All retirement phase income streams and retirement phase death benefit income streams a SMSF member receives count towards their transfer balance cap. The age pension (or other types of government payments) and pensions received from foreign super funds do not count towards their transfer balance cap.
Changes from 1 July 2021
Before 1 July 2021, all individuals have a personal transfer balance cap of $1.6 million.
From 1 July 2021, all Individuals will have a personal transfer balance cap between $1.6 million and $1.7 million. Individuals who start their first retirement phase income stream on or after 1 July 2021 will have a personal transfer balance cap of $1.7 million.
SMSF Members will be able to view their personal transfer balance cap in ATO Online Services.
Individuals who had a personal transfer balance account before 1 July 2021 will have a personal transfer balance cap calculated proportionally based on the highest balance of their transfer balance account. Their personal transfer balance cap will not be increased if, at any time before 1 July 2021, the balance of their transfer balance account met or exceeded $1.6 million.
Bring forward arrangements
If you make contributions above the annual non-concessional contributions cap you may be eligible to automatically gain access to future year caps. This is known as the bring-forward arrangement. It allows you to make extra non-concessional contributions without having to pay extra tax.
Eligibility for the bring-forward arrangement depends on your:
- Total super balance on 30 June of the previous financial year
The bring-forward rule enables those under the age of 65 to contribute three years’ worth of non-concessional contributions to your super in one year. From 1 July 2021, a SMSF member may be able to contribute up to $330,000 in one year. Total superannuation balance rules will continue to apply. However, if you have utilised the bring-forward rule in 2019 or 2020, then your contribution cap will not increase until the three year period has passed.
The table below explains the non-concessional contributions and bring forward amounts available:
|1 JULY 2017 TO 30 JUNE 2021||1 JULY 2021 ONWARDS|
|Total Superannuation Balance (TSB)||Contribution Available||Total Superannuation Balance (TSB)||Contribution Available|
|Under $1.4m||$300,000||Under $1.48m||$330,000|
|$1.4m to $1.5m||$200,000||$1.48m to $1.59m||$220,000|
|$1.5m to $1.6m||$100,000||$1.59m to $1.7m||$110,000|
|Over $1.6m||NIL||Over $1.7m||NIL|
Minimum annual payments for pensions
Certain superannuation pensions and annuities are subject to rules that determine the minimum and maximum amounts to be paid in a financial year.
The 50% minimum drawdown reduction due to COVID-19 for account-based pensions and similar products has been extended to 2022.
|Age||Default minimum drawdown rates||2020 to 2022 reduced rates|
|95 or more||14%||7%|
Contact our KMT registered tax agent if you need assistance with your SMSF today!
The article is provided for general information purposes only and is not intended as professional advice. Readers should not act on the information contained therein without professional advice from a suitably qualified accountant.
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