Contributions to Super

Discussion in 'Superannuation, SMSF & Personal Insurance' started by thesuperman, 13th May, 2017.

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  1. thesuperman

    thesuperman Well-Known Member

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    If you are between the ages of 65 and 75 and want to make an after-tax non-concessional contribution to your SMSF, to satisfy the work test it says "you must work for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make a super contribution"

    1. Does that mean if you work for 40+hours in 30 consecutive days (eg. month of July) then stop work in August (retire/get fired/or go on a holiday), then just before June 30th you can still make a contribution to your SMSF even though you haven't worked for many months?

    2. Also, if you sell an investment property there will be CGT payable. Is it possible to make a partly concessional contribution to your SMSF (up to the max limit) from that property sale?

    Co-contribution Scheme

    3. It says "For individuals to be eligible for the co-contribution scheme, you must earn 10% or more of your income from eligible employment, or 10% or more of your income from carrying on a business, or a combination of both". If all you do for "work" is share trading therefore have no real job listed on your tax return (occupation is blank), would that qualify as "carrying on a business" to satisfy that rule?

    4. How does the ATO know if you made a contribution for the co-contribution scheme? I remember many years ago I made a $1k after tax contribution to my SMSF and they never did give one cent of the 100% matching co-contribution they were meant to give at that time.
     
    Last edited: 13th May, 2017
  2. 10225

    10225 Member

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    Some great questions, love to hear other opinions on this, but here's my thoughts;

    1. Yes
    2. Yes
    3. Bit of a tricky one, but I would say yes, as long as your share trading is in fact being treated as a business, and this is a question of fact.
    4. Because the contribution will be labelled as a 'personal' contribution with your SMSF, all personal contributions are eligible for the co-contribution, after you have lodged your individual tax return, the ATO will assess your eligibility from there, and pay you automatically if the conditions are met. If you did this previously, and did not receive a co-contribution, you mustn't have been eligible, or perhaps there was an error made when completing your individual tax return.

    Hope that helps

    Steve
     
  3. thesuperman

    thesuperman Well-Known Member

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    Ok thanks for your comments Steve :)
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The SIS regulations (Reg 7.01 (3)) state the following:

    (3) In this Part, a person is gainfully employed on a part-time basis during a financial year if the person was gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year.

    Note: Gainfully employed is defined in regulation 1.03.

    Relevant definitions from regulation 1.03 include:
    • gainfully employed means employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment.
    • full-time, in relation to being gainfully employed, means gainfully employed for at least 30 hours each week.
    • part-time, in relation to being gainfully employed, means gainfully employed for at least 10 hours, and less than 30 hours, each week

    1. Yes.
    2. Yes provided the taxpayers taxable income prior to the deduction for the contribution is more than the sum contributed. You would be limited to $35,000 prior to 30 June 2017. You will also need to ensure that the deductible contribution process is followed and hold the written confirmation before you lodge.
    3. Seek tax advice. Share trading is not always a business. Refer to the above gainfully employed definition. There can be an inconsistency between being gainfully employed as a share trader and just doing it it on an adhoc part time basis. This can expose the taxpayer to issues easily attacked if the dates and timing and frequency of the trades is not consistent with a share trading business. It could also mean the wrong method to calculate gross profit is used.\
    4. All contributions are reported by the fund and the ATO assess caps and eligibility to the co-contribution using that data. A person aged 71 or older is ineligible.

    Super co-contribution
     
  5. thesuperman

    thesuperman Well-Known Member

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    Ok thanks for the info also Paul.
     

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