End of Financial Year Checklist

The End of Financial Year (EOFY) is once again fast approaching – providing an opportunity to review your position ahead of the new year to come. Given the inevitable June end rush, as well as processing and cut-off times, we believe it prudent to consider important actions in advance of deadlines. The following is an outline of key planning strategies that may require review. However, this may not cover all of your EOFY planning requirements – where appropriate please consult with your accountant or licenced tax adviser.

Minimum Pension Payments

As part of the government’s response to the financial impacts of COVID-19, a temporary reduction to the minimum pension drawdown requirements were implemented. During the previous four financial years, minimum drawdown rates were halved. This is the first financial year since 2018/19 that minimum pension payments return to their normal calculations.

Contribution Caps

Outside of relying on investment returns, the best way to ensure that your retirement assets grow over time is through superannuation contributions. There are two main types of contributions – concessional and non-concessional. Following the release of Average Weekly Ordinary Time Earnings (AWOTE) data, the required increase has occurred such that the contribution caps will be lifted from 1 July 2024.

Concessional Contributions

As we move closer to the end of the financial year, attention often turns towards personal tax planning. This is where the use of concessional contributions and even carry forward concessional contributions can be particularly useful. With income tax cuts beginning 1 July 2024 on the horizon, the flexibility afforded with the current rules are discussed within the below.

Gifting

A query that surfaces occasionally comes to gifting money to adult children. It is common for people to be aware that there are certain rules surrounding gifting, but it is important to note that the limits don’t necessarily apply to all situations.

Non-Concessional Contributions

When it comes to building up assets within superannuation, most people acknowledge that their regular employer contributions do a large portion of the work. Separate to this, non-concessional contributions can also provide significant opportunities. The important rules associated with making non-concessional contributions are highlighted below.

Superannuation Contribution Splitting

In a perfect world, the superannuation balances of spouses would be fairly evenly matched, but often due to differences in work histories this isn’t the case. Fortunately, there’s a way to help equalise balances with a strategy known as superannuation Contribution Splitting.

Reducing Death Benefits Tax in Superannuation

Superannuation law sets out who a death benefit is payable to, whilst taxation law sets out how a death benefit is taxed. Death benefit tax can apply if superannuation is paid to a non-tax dependant. This means that when adult children inherit your superannuation, they will likely have tax to pay. To reduce this potential liability, many consider the use of a re-contribution strategy.

Minimum Pensions

Over the past four completed financials years up to 30 June 2023, the Government reduced the minimum annual payment required for account based and market linked pensions. For the current 2023/24 financial year, the 50% reduction in minimum pension drawdowns no longer applies. This throws up some considerations for retirees and those transitioning into retirement, as the extra funds may require further attention.

HECS-HELP loan

There are a number of loans available from the Australian Government to help people complete further training and study. A HECS-HELP loan can pay for study when attending university or an approved higher education provider. On 1 June 2023, existing loans were indexed at a rate of 7.10%. We outline some considerations within the below.