End of Financial Year Preparations

Steps towards Financial Independence for Women
April 30, 2018

As 30 June looms ahead, it is timely that we turn our mind to tax planning and other end of financial year considerations.

Firstly, be mindful of the correct timing of superannuation contributions. Every year we hear stories of people who made contributions to super, only to find out – too late – their contribution wasn’t made in time.

As 30 June falls on a Saturday this year, planning ahead is especially important.

Where possible, make your super contributions early so there is plenty of time for it to be received. You would think that in this modern age of electronic transactions, making a super contribution by way of electronic transfer or BPAY would be pretty straightforward. However, getting the timing of contributions right can be a real case of ‘hit and miss’, particularly if contributions aren’t being made until close to the end of the financial year.

If you leave your super payment until the last minute, there are a number of things that could derail your plans:

1. When making a super contribution by electronic funds transfer, the contribution is not deemed to be made until it appears in the super fund’s bank account. If you initiate the transfer on 29 June 2018 (a Friday), it may not appear in the super fund’s bank account until early in the following week – around 2 or 3 July.

2. As the contribution was not technically received by the super fund until early July, it is unlikely you will be able to claim a tax deduction for your contribution until the 2018-19 financial year. This may result in you paying more tax than planned this year.

3. Your contribution will be counted against your contribution cap for the 2018-19 financial year. While this may generally be fine, it can create an undesirable outcome if you have also planned to maximise contributions in the 2018-19 year.

4. What if you have turned 65 in the 2017-18 financial year and had retired at some point during the year? As you are now 65, you will need to meet the work test (be gainfully employed for at least 40 hours worked within a period of 30 consecutive days) for the super fund to be able to accept the (2018-19) contribution.

5. Even if you weren’t intending to claim a tax deduction, but instead wanted to maximise your non-concessional contributions, not having made your 2017-18 contribution in time will have similar ramifications, particularly where you intended to maximise contributions both this year and next.

Ursula Boorman
Ursula Boorman
Ursula Boorman holds a Bachelor of Economics degree, a Diploma of Financial Planning and is a Certified Financial Planner. She has worked in banking and financial services since 1988. Ursula is particularly skilled in developing the financial strategies that enable clients to achieve their goals through her understanding of the way that superannuation, taxation and social security legislation interact with each other. Ursula is passionate about giving clients the confidence they need to take control of their financial situation and provides strategies to help them plan for their future.