Superannuation: 4 Hot Tax and Super Tips

Supercharge your SMSF superannuation wealth! Explore SMSF tactics, navigate property development, and conquer the new super cap. Let’s make your financial future shine!

How to take advantage of the 1 July superannuation cap increase

The amount you can contribute to superannuation will increase on 1 July 2024 from $27,500 to $30,000 for concessional super contributions and from $110,000 to $120,000 for non-concessional contributions.

The contribution caps are indexed to wages growth based on the prior year December quarter’s average weekly ordinary times earnings (AWOTE). Growth in wages was large enough to trigger the first increase in the contribution caps in 3 years.

For those with the disposable income to contribute, superannuation can be very attractive with a 15% tax rate on concessional super contributions and potentially tax-free withdrawals when you retire. For business owners who might have had an exceptional year or sold their business, it’s an opportunity to get more into super. However, the timing of contributions will be important to maximise outcomes.

If you know you will have a capital gains tax liability in a particular year, you may be able to use ‘catch up’ contributions to make a larger than usual contribution and use the tax deduction to help offset your capital gain tax bill. But, this strategy will only work if you meet the eligibility criteria to make catch up contributions and you lodge a Notice of intent to claim or vary a deduction for personal super contributions, with your super fund.

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Salary sacrifice vs employee contribution

When an employee salary sacrifices from their pre-tax basis towards the fringe benefit that has been or would be provided, they agree to give up a portion of their gross salary on a pre-tax basis and receive the relevant fringe benefit instead.

As a starting point, the taxable value of the fringe benefit will be the full value of what has been provided such as the expense that has been paid by the employer.

An employee contribution is made from post-tax income. The employee must still recognise the gross salary and wages as income in their tax return. However, the payment of an after-tax employee contribution as consideration for the fringe benefit that the employer provides would generally have the effect of reducing the taxable value of the fringe benefit that was provided to them by the employer.

If the employer is registered for GST, there could also be GST obligations concerning employee contributions, depending on the fringe benefit provided. The full GST-inclusive contribution amount is applied against the taxable value of the fringe benefit provided by the employer regardless of whether some of that contribution ends up being paid to the ATO as GST.

Depending on the nature of the benefit provided, receiving a payment from the employee as consideration for the benefit provided would generally be a taxable supply for GST purposes. However, if the contribution relates to the provision of an input taxed (e.g., residential accommodation) or GST-free supply, no GST liability should arise.

Can my SMSF invest in property development?

An SMSF can invest in property development if trustees ensure the investment complies with the rules. And, there are a lot of rules. A key is the sole purpose test.

Trustees need to ensure the fund is maintained to provide benefits for retirement, ill health or death. Breaches of this fundamental tenet are serious and include the loss of the fund’s concessional tax treatment and civil and criminal penalties.

By its nature property development is high risk and fund trustees need to ensure that the SMSF is not simply a handy cash-cow for a pipe dream, particularly when the developers are related parties.

There are multiple ways an SMSF can invest in property development if the investment strategy of the fund allows:

  • Directly developing property
  • An ungeared unit trust or company (the parties can be related)
  • Investment in an unrelated entity
  • A joint venture

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SMSF Super death benefit nominations


What happens to your super after you pass away? As super does not automatically form part of your estate, it can’t be dealt with via your Will. So how do you ensure your super passes to your loved ones in the way you would wish?

Generally, you have three options:

  1. Make a preferred/no nomination
    You ask the super fund trustee to consider your beneficiaries and other information but the trustee is not bound by it. If you do not make any nomination, the trustees will have the discretion to pay the death benefit.
  2. Make a death benefit nomination
    Binding death benefit nominations (BDBNs) are nominations where the trustee of the super fund must pay your super death benefit to the beneficiaries you nominate, in the proportions you listed in your nomination.
    Non-binding death benefit nominations are ones where the trustee of your super fund will look at the benefit nomination you make, but it still retains the final say over which of your beneficiaries receives your super and in what proportions.
    Lapsing or non-lapsing. A lapsing nomination generally automatically lapses after three years and needs renewal whereas a non-lapsing nomination does not lapse automatically and remains in place until you cancel it or replace it with a new binding death benefit nomination.
  3. Make a reversionary nomination (pension accounts only)
    If you start a new pension or income stream, your super fund may allow you to make a reversionary nomination. Under a reversionary nomination, your income stream automatically reverts to your beneficiary, usually your spouse, who starts receiving the regular pension payment instantly after your passing.

Often, there is confusion about which of the different types of nominations to implement. Given everyone’s situation, there is no one-size-fits-all solution.


Luxury car tax and fuel-efficient vehicles

The Government plans to update the Luxury Car Tax (LCT) system by tightening the definition of a fuel-efficient vehicle and updating the indexation rate for the LCT value threshold for all other luxury vehicles. These changes would apply from 1 July 2025.

Cars with an LCT value over the relevant threshold attract LCT at a rate of 33%. There are two thresholds for the LCT:

  • A higher threshold applies to fuel-efficient vehicles and
  • A lower threshold that applies to all other luxury vehicles.

The Government plans to tighten the definition of a fuel-efficient vehicle for LCT purposes by reducing the maximum fuel consumption from 7 litres per 100km to 3.5 litres per 100 km.

The Government also plans to update the LCT value threshold indexation rate for all other luxury vehicles from the headline CPI to the motor vehicle purchase sub-group of the CPI, aligning it with the indexation of the LCT value threshold for fuel-efficient vehicles.

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