Input search
Search service error

22 April 2024

A quick reference source to help with some of the key year-end planning matters that may need to be considered for clients.

Managing successful, tax-efficient financial planning strategies is generally a continual process throughout the year. Nevertheless, clients will be prompted to think about their tax planning as the end of the financial year approaches.

We have consolidated some useful reminders and references for financial services professionals to help address some of the main end-of-year questions and issues that may be encountered. This guide provides a quick reference source to help with some of the key year-end planning matters that may need to be considered for clients.

Year end strategies

Super accumulation

Optimise super contributions

Understand Total Superannuation Balance (TSB)

Personal super contributions – claiming deductions

Salary sacrifice strategies - are they effective?

Spouse contribution tax offset

Government co-contribution eligibility

Spouse contribution splitting

Optimise super contributions

Review contribution types and amounts to ensure contributions have been optimised.

Contribution caps for 2023-24
  • non-concessional: $110,000 (unchanged from 2022-23), provided the client’s total superannuation balance (TSB) was less than $1.9 million as at 30 June 2023.
    Access to the non-concessional contribution (NCC) bring-forward rule also depends on the client’s TSB as at 30 June 2023.
    TSBNCC cap
    Less than $1.68 million$330,000 over three years
    $1.68 million to less than $1.79 million$220,000 over two years
    $1.79 million to less than $1.9 million$110,000 annual cap
    (Bring forward not available)
    $1.9 million or moreNil NCC cap

If the bring-forward cap is triggered, but not used in full in the 2023-24 year, the remaining cap can only be used in the 2024-25 year where the individual’s TSB is less than $1.9 million at 30 June 2024.

  • concessional: $27,500 (unchanged from 2022-23) unless the individual carries forward their unused concessional contribution (CC) cap.

The carry-forward CC cap is applied if:

  • actual CCs are greater than the annual CC cap
  • TSB is less than $500,000 at 30 June of prior financial year (ie 30 June 2023 for contributions made in the 2023-24 year), and
  • they have unused CC cap available from any or all of prior 5 financial years.

small business CGT concession cap: $1,705,000 (lifetime limit).

Tips
  • Check whether the client has any unused CC cap amounts they can use in the current year

In many cases, it will make sense for a client to use these amounts, but not always.

A client who has an unusual boost in their assessable income (for example due to a net capital gain) may benefit from using their carry-forward CC cap to take advantage of tax concessions. However, if their additional CCs will be subject to Division 293 tax (due to the income boost) when this wouldn’t ordinarily be the case, then they may be better off waiting until the following income year. Of course, other factors need to be considered too, including whether the client’s TSB will likely remain within the $500,000 threshold to be eligible to make use of the carry-forward cap.

Also note that unused CC cap amounts can be carried forward for a maximum of 5 years. For example, the last year the unused CC cap from 2018-19 can be used will be the 2023-24 year.

  • Check the timing of your clients’ contributions.
    • Check the super fund’s cut off dates to ensure contributions are received in the intended year. Cut off dates for Macquarie products can be found here
    • Contributions received by a super fund after 30 June 2024 will generally count towards the contributions cap in the 2024-25 financial year, even if they relate to 2023-24. This may impact the client’s contributions caps for next financial year.
    • For Superannuation Guarantee (SG) contributions, employers have until 29 July 2024 (ordinarily 28 July, which falls on a weekend this year) to make contributions for the quarter ending 30 June 2024.
    • A non-concessional contribution can only be accepted up until the 28th day after the month the individual turns 75.
       
  • Check the contributions made into all of your clients’ super funds to ensure the relevant caps have not been exceeded.

  • Check the classification of the contributions. Contributions not made by the member themselves (excluding spouse contributions and non-employer contributions made for a child) are generally treated as concessional contributions and count towards the concessional contributions cap. However, contributions made by an employer from the take-home (after-tax) pay of the client are considered by the ATO to be non-concessional contributions.

Further help

Understand Total Superannuation Balance (TSB)

A client’s TSB determines eligibility for the superannuation measures outlined in the table below. TSB is generally measured each 30 June to determine eligibility for the relevant superannuation measure in the following financial year.

Determines eligibility for…

TSB threshold for 2023-24

Non-concessional contributions cap and the bring-forward rule

$1.9 million (member TSB)

Carry forward of unused concessional contributions cap

$500,000 (member TSB)

Government co-contribution

$1.9 million (member TSB)

Spouse contribution tax offset

$1.9 million (receiving spouse’s TSB)

SMSFs using the segregated method to calculate exempt income

$1.6 million* (member TSB)

An exemption from meeting the work test in the year following retirement (relevant for claiming deductions for personal contributions)

$300,000 (member TSB)

*this threshold is not subject to indexation

 

Tip
  • If a client’s TSB is approaching the relevant threshold, consider strategies to minimise the client’s accumulation and/or pension balances at 30 June. For example, consider splitting concessional contributions with a spouse or reviewing the timing of contributions or withdrawals.

Further help

Personal super contributions – claiming deductions

Clients intending to claim a deduction for personal super contributions must lodge a deduction notice (using the approved form) with the fund before the earlier of:

  • the day they lodge their tax return for the year in which the contribution was made; or
  • the end of the financial year after the financial year in which the contribution was made.

Key information on how to claim or vary a deduction for contributions made to the Macquarie Superannuation Plan is contained in the Guide to completing the Deduction Notice for Personal Superannuation Contributions.

Tips
  • A deduction for a personal super contribution cannot add to or create a tax loss.
  • Where a client rolls over or withdraws part of their super benefit before a deduction notice has been lodged, the amount of the personal contribution that can be claimed as a deduction will be reduced. This is because part of the contribution is considered to be included in the rollover/withdrawal amount.
  • Where a client uses part or all of their super benefit to commence a pension, a deduction notice cannot be lodged after the pension commences for contributions made prior to the pension commencing.
  • Check the classification. A common trap involves contributions made for self-employed clients being incorrectly classified as employer contributions. Any contributions incorrectly classified as an employer contribution will need to be reclassified as a personal contribution before a deduction notice can be accepted.
  • Be mindful of the concessional contribution cap ($27,500 for the 2023-24 financial year). Excess concessional contributions will be included in the client’s assessable income and taxed at marginal tax rates (less a 15% offset for tax paid by the super fund). Clients may elect to withdraw up to 85% of the excess contribution amount. If a client does not withdraw this amount, the excess concessional contribution will count towards the non-concessional contribution cap.

Further help 

Salary sacrifice strategies - are they effective?

Review current and planned salary sacrifice contributions to ensure they are or will be within the concessional contributions cap. Be mindful of employer Superannuation Guarantee contributions relating to the 2022-23 year that may have been received by the client’s superannuation fund after 30 June 2023. These contributions may count towards the client’s concessional contributions cap in 2023-24.

Also review salary sacrifice arrangements for the 2024-25 financial year to ensure an ‘effective salary sacrifice arrangement’ is in place ahead of your client earning the right to certain benefits. The concessional contribution cap is increasing from $27,500 to $30,000 in the 2024-25 year in line with indexation arrangements.

Tip
  • From 1 July 2022, no work test applies to salary sacrifice contributions, or personal non-concessional contributions. A work test still applies for individuals aged 67 to age 75 (up to the 28th day after the month they turn 75) who make personal contributions they wish to claim as a tax deduction. Therefore, for clients who are within that age bracket who do not meet the work test (or work test exemption), utilising a salary sacrifice arrangement may be a tax effective way to contribute to superannuation.

Further help 
  • TR 2001/10 Income tax: fringe benefits tax and superannuation guarantee: salary sacrifice arrangements

Spouse contribution tax offset

Clients who have a spouse with assessable income, reportable fringe benefits and reportable employer contributions of less than $40,000 could consider making a non-concessional contribution to their spouse’s super fund.

The offset is calculated as 18 per cent of the contribution, up to a maximum of $540 where the spouse's income is below $37,000. A reduced offset may apply where the spouse’s income is between $37,000 and $40,000.

Tip
  • No offset is available where:
    • the spouse’s income is above the $40,000 threshold
    • the spouse has excess non-concessional contributions
    • the spouse’s Total Superannuation Balance exceeds $1.9 million as at 30 June 2023.

Further help 

Government co-contribution eligibility

Is your client's assessable income, reportable fringe benefits and reportable employer super contribution minus deductions from carrying on a business less than $58,455?

  • The client could consider making a non-concessional contribution of up to $1,000 to super.
  • Maximum co-contribution is 50 per cent of the contribution, up to a maximum $500 for income below $43,455.
Tip
  • The co-contribution will not be available where the client has excess non-concessional contributions or their TSB exceeds $1.9 million as at 30 June 2023. 
  • Eligibilty requires that a minimum of 10% of assessed income relates to income from employment or carrying on a business.

Further help 

Spouse contribution splitting

Clients can split up to 85 per cent of concessional contributions made during a financial year (up to the concessional contribution cap) with their spouse, provided the spouse is not aged 65 or over, or reached their preservation age and retired.

This includes concessional contributions which utilises the client’s carry-forward unused concessional contribution cap. For example, someone who contributed $37,500 in 2022-23 (being their 2022-23 cap of $27,500 plus $10,000 of their carry forward cap) would be able to split up to $31,875 (i.e. 85 per cent of $37,500) to their spouse.

The application to split contributions must generally be made before the end of the financial year immediately after the financial year in which the contribution was made. This means that the application to make split contributions for 2022-23 must be made by 30 June 2024 (unless the fund applies an earlier date).

Tip
  • The concessional contributions will still count towards the cap of the spouse who made the contributions and not the cap of the spouse who receives the split contributions.

Further help 

Self managed superannuation funds (SMSFs)

SMSF contribution issues

SMSF trustee issues

Transfer balance account report

Exempt current pension income

SMSF contribution issues

Timing of contributions:

  • Contributions are taken to be made when they are received by the SMSF
  • In-specie contributions can be taken to be made when the SMSF receives all completed documentation necessary to transfer ownership of the asset.

However, depending on the terms of the trust deed, a super fund may accept contributions into a suspense account and allocate them to member accounts within a certain period after the contribution is made. Superannuation law generally requires a trustee to allocate the contribution within 28 days after the end of the month in which the trustee received the contribution (an exception being contributions made via SuperStream which must be allocated within three business days). In the ATO’s view, contributions that are allocated to a member account under these rules will count towards the applicable cap in the financial year in which they are allocated.

Tips
  • For concessional contributions there is a specific form SMSF trustees can use to notify the ATO if this strategy is used to ensure contributions are correctly allocated in both financial years. This form should be completed and lodged with the ATO either before or along with the fund’s annual return.
  • Personal payments of accounting, audit fees and other expenses of an SMSF may be considered to be contributions to the fund.

Further help 

SMSF trustee issues

  • Review and value fund assets to ensure in-house assets are within the five per cent limit.
  • Rebalance portfolios and/or review investment strategies to ensure compliance with the SMSF’s investment strategy.
  • Review meeting minutes to ensure all issues are documented.
  • SMSF trustees are also required to:
    • consider if it is appropriate to hold insurance for fund members
    • regularly review the SMSF’s investment strategy, and
    • ensure the SMSF’s assets are valued at market value for reporting purposes.
Further help

Transfer balance account report

Superannuation funds, including SMSFs, have an obligation to report certain events to the ATO that will impact a member’s transfer balance cap. The transfer balance account report (TBAR) is separate to the SMSF annual return. 

Those SMSFs with a retirement phase pension that was in place on 30 June 2017, or a member who has exceeded their transfer balance cap needed to lodge a TBAR prior to 1 July 2018.

Reporting for all other SMSFs commenced from 1 July 2018, with the TBAR required to be lodged either annually or quarterly, depending on whether the fund has any members with a TSB of $1 million or more.  For TBAR purposes, TSB was measured as at 30 June 2017 for members who had an existing pension or commenced a pension during 2017-18. For later years, TSB is measured as at 30 June of the year before the fund commences to pay its first pension.

All SMSFs must report TBAR transactions on a quarterly basis from 1 July 2023. In addition, all TBAR transactions for the period to 30 June 2024 must be reported by 28 October 2024.

Further help 

Exempt current pension income

From 1 July 2017, certain SMSFs were prohibited from using the segregated method to calculate the fund’s exempt current pension income. This restriction applies to funds where a member:

 

  • has a TSB of more than $1.6 million at the prior 30 June, and
  • is receiving a retirement phase income stream (either paid from the SMSF or another fund).

Impacted funds are required to use the proportionate method (also known as the unsegregated method) to calculate exempt current pension income.

Further help 

ATO: Exempt current pension income

Benefit payments

Ensure minimum pension requirements are met

Clients starting an account based pension

Ensure minimum pension standards are met

Clients with account based pensions must be paid at least the minimum amount from their pension account before the end of the financial year. For pensions commenced between 1 June 2024 and 30 June 2024 no pension payment needs to be paid in 2023-24.

The temporary halving of the minimum pension payment percentages for the 2019-20, 2020-21, 2021-22 and 2022-23 financial years has ended. For the 2023-24 year, the minimums have returned to standard rates.

Tip

Where the minimum pension has not been paid, the pension may be treated as having ceased at 1 July and will be taxed as an accumulation account. The ATO has published guidance on minimum pension payment requirements for income streams payable from SMSFs. The guidance is useful for SMSF trustees who are dealing with situations where the minimum pension payment requirements are not met in a financial year.


Further help 

 

Clients starting an account based pension

Ensure tax deduction notices for personal contributions are lodged

Ensure any tax deductions for personal contributions are claimed (i.e. deduction notice is lodged with the fund and acknowledgement received) prior to commencing the pension. Once a pension has commenced, a deduction notice (including a variation to a valid notice) cannot be accepted in relation to contributions made prior to commencement.


Check clients’ Transfer Balance Caps

From 1 July 2023, the general Transfer Balance Cap (TBC) increased with indexation from $1.7 million to $1.9 million. Clients who already had a transfer balance account before 1 July 2023 may be entitled to a proportional increase. However, clients who had a transfer balance account prior to 1 July 2023 and at any time met or exceeded their personal TBC are not entitled to indexation.

Tip
  • Ensure you have accurate personal transfer balance cap information for your clients by, asking them to access this information from ATO online services, or check with their tax agent.

Further help

Personal Taxation

Stage 3 personal income tax cuts

Employment termination payments (ETPs)

Prepay expenses

Work from home deductions

Stage 3 personal income tax cuts

The third stage of the tax cuts that were announced in the 2018-19 Budget and amended in the 2019-20 Budget have been further amended by legislation enacted in March 2024.

The new changes mean the tax rates for 2024-25 are as follows.

Taxable income

Tax payable* - residents

Tax payable – non-residents^

Up to $18,200

Nil

30%

$18,201 - $45,000

Nil + 16%

$45,001 - $135,000

$4,288 + 30%

$135,001 - $190,000

$31,288 +37%

$40,500 + 37%

Above $190,000

$51,638+ 45%

$60,850 + 45%

* Plus Medicare levy

^ For working holiday makers, 15% tax applies to the first $37,000 of income from 1 July 2017 to 30 June 2020 and the first $45,000 of income from 1 July 2020, with resident rates and thresholds applying thereafter.

To the extent clients can influence the timing of their income and deductions, they may seek to defer income until after the 2023-24 year and/or bring-forward deductible expenses to the 2023-24 year to take advantage of the tax rate changes.


Further help

Employment termination payments (ETPs)

Clients facing a termination of employment should consider delaying the receipt of any payments until the following financial year if other taxable income is expected to be lower in that year.

Note - From 1 July 2019 the cut off age for genuine redundancy and early retirement schemes was increased from age 65 to pension age. This change has broadened the range of people who will benefit from the associated tax concessions.


Further help

Prepay expenses

If certain requirements are met, clients may be able to claim a tax deduction for up to 12 months of prepaid expenses, including interest paid in advance on an investment loan, premiums on an income protection policy or trade publication subscriptions. Note the prepayment rules do not apply to SMSFs in relation to limited recourse borrowing arrangements.


Further help

Work from home deductions

In 2023-24, there are two methods available to calculate work from home expenses:

  • Revised fixed rate method
    • 67 cents per hour worked from home
    • Excludes decline in value of depreciating assets which can be claimed separately
    • No longer requires a dedicated home office
  • Actual cost method
    • The actual expenses incurred as a result of working from home.

Further help

Looking ahead to 2024-25

Expiry of unused concessional contribution amounts

Indexation of contribution caps

Expiry of unused concessional contribution amounts

Unused CC cap amounts from the 2019-20 year will expire at the end of 2024-25. Clients who still have unused CC cap from 2019-20 may therefore wish to ensure they use it up before 1 July 2025.


Further help

Indexation of contribution caps

From 1 July 2024, the following contributions caps will increase with indexation.

Contribution cap

Cap in 2024-25

Concessional contribution cap

$30,000

Non-concessional contribution cap

$120,000

CGT cap amount

$1,780,000

The indexation increases have implications for the non-concessional contribution cap bring-forward arrangements. The new thresholds for 2024-25 are as follows.

TSB

NCC cap in 2024-25

Less than $1.66 million

$360,000 over three years

$1.66 million to less than $1.78 million

$240,000 over two years

$1.78 million to less than $1.9 million

$120,000 annual cap
(Bring forward not available)

$1.9 million or more

Nil NCC cap

 


Further help

Insights

The EOFY Hub
A person holds a large textbook in one hand in a dimly lit room.

Big Black Book
Mature woman playing with dog on beach at sunset

10 tips to improve your financial health

Related products

Cash management account

Purpose built for advisers.

    View this product
     

    Macquarie Wrap

    The platform that delivers the advice tools you need to deepen your client relationships and grow your business.

    View this product
     

    Managed accounts

    With managed accounts you can change client conversations from administration to strategy.

    View this product
     

    Subscribe to our monthly newsletter

    We bring you technical updates, financial insights and industry expertise.

     

    WVOW newsletter
     

    Thank you for subscribing.

    Please try again.

    Simply fill out your details below:

    Privacy policy / Request a call

    The information you provide on this form will be retained and handled by Macquarie in accordance with our Privacy Policy and we may contact you about products or services we feel may be of interest to you. If you do not wish to provide all details or receive information of this nature, please phone us on 1800 806 310. Phone calls to and from Macquarie may be recorded for quality and assurance purposes. If you do not want your call to be recorded, please advise the Macquarie staff member. If you have used our calculator we have also collected this information to assist with your enquiry.

    By submitting this enquiry, I acknowledge that I have read the Macquarie Group privacy policy, and understand that Macquarie will use my personal information to contact me in relation to my enquiry, and for other general marketing purposes.

    You can change your marketing preferences by telephoning Macquarie on 1800 806 310 or customising your preferences with the unsubscribe link included in our marketing communications. Please note that all of our calls are recorded. If you do not want your call to be recorded, please advise the Macquarie staff member.

     

    Contact us

    Need help? If you’re an adviser, please contact us via live chat in Adviser Online. If you’re a client, please call

    1800 806 310

    Talk to us today

    To speak to a specialist complete this form and we'll be in touch.

    Request a call

    Help and support

    Visit our Adviser Help Centre and search our adviser FAQs.

    Your questions answered

    Important information

    This information is provided by Macquarie Investment Management Limited ABN 66 002 867 003 AFSL 237 492 (MIML or We). MIML is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MIML’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 AFSL 237502. Any investments are subject to investment risk including possible delays in repayment and loss of income and principal invested. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML.

    This information is provided for the use of financial services professionals only. In no circumstances is it to be used by a potential investor or client for the purposes of making a decision about a financial product or class of products. The information provided is not personal advice. It does not take into account the investment objectives, financial situation or needs of any particular investor and should not be relied upon as advice. Any examples are illustrations only and any similarities to any readers’ circumstances are purely coincidental.

    While the information provided here is given in good faith and is believed to be accurate and reliable as at the date of preparation, 22 April 2024, it is provided by MIML for information only. Neither MIML, nor any member of the Macquarie Group gives any warranty as to the reliability or accuracy of the information, nor accepts any responsibility for any errors or omissions. MIML does not accept any responsibility for information provided by third parties that is included in this document. We accept no obligation to correct or update the information or opinions in it and opinions expressed are subject to change without notice. This information does not constitute legal advice and should not be relied upon as such. MIML will not be liable for any direct, indirect, consequential or other loss arising from reliance on this information.

    MIML does not give, nor purport to give, any taxation advice. The application of taxation laws to each client depends on that client’s individual circumstances. Accordingly, clients should seek independent professional advice on taxation implications before making any decisions about a financial product or class of products.

    Copyright 2024 Macquarie Group Limited.