More than half of us set a new financial goal at the beginning of 2025, according to ASIC’s MoneySmart website. While most financial goals focus on saving money and paying down debt, the months leading up to 30 June present an opportunity to review your super balance and explore ways to boost your retirement savings.

What you need to consider

If you have more than one super account, consider consolidating them into a single account. Doing so could save you from paying multiple fees and make it easier to keep track of your super.

When transferring your super into one account, do your research and compare options—your current fund may not be the best choice.

Boosting your retirement savings

Making additional contributions on top of the super guarantee paid by your employer can significantly boost your retirement savings, thanks to the power of compounding interest.

Ways to boost your super before 30 June

Concessional Contributions (before tax)

These contributions can be made from your pre-tax salary via a salary-sacrifice arrangement through your employer or by using after-tax money and depositing funds directly into your super account.

In addition to increasing your super balance, concessional contributions may also reduce your tax liability, depending on your marginal tax rate.

Check your year-to-date contributions to ensure any additional contributions do not exceed the concessional (before-tax) contributions cap, which is $30,000 from 1 July 2024. Work test restrictions apply for claiming a tax deduction on personal contributions if you fall in the 67-74 age bracket.

If you exceed the concessional contributions cap of $30,000 per annum, any additional contributions will be taxed at your marginal tax rate, with a 15 per cent offset to account for the contributions tax already paid by your super fund.

Non-Concessional Contributions (after tax)

Provided you are under age 75, you can make personal contributions to super. These are made from your after-tax income, also known as non-concessional contributions. It is important to stay within the non-concessional contributions cap, which is set at $120,000 from 1 July 2024.

Exceeding the non-concessional contributions cap will result in a tax rate of 47% on the excess contributions.

Carry forward (catch-up) concessional contributions

If you have had a break from work or have not reached the maximum concessional contributions cap in the past five years, you may be able to use catch-up contributions to boost your super—especially if you have received a lump sum, such as a work bonus.

These contributions utilise unused concessional caps from the previous five financial years and are available only to those with super balances below $500,000 on 30/06/2024 (for contributions made until 30/06/2025).

Strict rules apply to this type of contribution, making it essential to seek advice from one of our expert financial advisers before making a catch-up contribution.

Downsizer Contributions

If you are over 55 years old, have owned your home for at least 10 years, and are looking to sell, you may be eligible to make a non-concessional super contribution of up to $300,000 per person—or $600,000 as a couple.

The contribution must be made to your super within 90 days of receiving the proceeds from the sale of your home.

Spouse Contributions

There are two ways you can make spouse super contributions:

• Contribution splitting: You can rollover certain contributions you have already made to your own super into your spouse’s super. This is known as a contributions-splitting super benefit.
• Direct contribution: You can contribute directly to your spouse’s super, which will be treated as their non-concessional contribution. If your spouse earns less than $40,000 per annum, you may be eligible for a tax offset of up to $540 per year (based on a $3,000 contribution).

As with all super contributions, there are restrictions and eligibility requirements to consider.

Meanwhile, the fate of the proposed Division 296 tax, which would apply to super balances over $3 million, remains uncertain. It has yet to be debated and voted on in the Senate.

Maximising your super contributions before 30 June can significantly boost your retirement savings and improve your financial future. If you or a loved one needs assistance, we’re here to help— contact your adviser or our team to start planning for a secure and rewarding retirement.

Some investors find it satisfying to take a do-it-yourself approach to retirement savings by managing their own self-managed superannuation fund (SMSF) and taking responsibility for its growth.

While an SMSF gives you full control over how your retirement funds are invested—within legal limits—there are several important factors to consider first. A well-structured SMSF investment strategy is essential to ensure compliance with regulations, manage risk effectively, and achieve long-term financial goals.

Before taking the plunge, carefully weigh up the risks and rewards. This includes understanding super and tax laws, assessing the costs involved, evaluating the level of administration required, and developing a solid investment strategy.

What you need to know

Setting up an SMSF can be complex and time-consuming, with numerous regulations and rules to navigate. Seeking professional advice can help ensure your SMSF is established correctly, allowing you to qualify for the tax concessions available through the super system.

Your financial adviser can guide you through the setup process, ensuring compliance and making ongoing administration easier throughout the year.

The advantages of an SMSF

A SMSF offers several advantages, particularly for individuals who want more control over their retirement savings and investments. Some of the key pros of having an SMSF include:

Investment control

SMSF members have complete control over their investments, you decide where to invest and when assets are disposed. You can also incorporate property as part of your portfolio.

Estate planning

SMSF members can set up binding death benefit nominations to specify how their superannuation will be distributed after they pass away.

Asset protection

SMSFs can protect members from bankruptcy and litigation, and their superannuation benefits are usually protected from creditors.

Diversification

An SMSF has greater access to investment options and a diversified SMSF portfolio could reduce risk and improve returns over time. Speaking to your accountant or financial adviser can help to ensure you SMSF investment strategy is well-structured for long-term success and is well-diversified.

Tax advantages

SMSFs have one of the lowest tax rates in Australia. Other tax credits can help to further reduce the tax rate.

Lower costs

Running your own SMSF can have lower ongoing costs, especially for larger funds.

Lump sum payments

SMSF can pay benefits as a lump sum, a pension or a combination if the payment is under the laws and the trust deed.

The disadvantages of an SMSF

While there are several benefits to having an SMSF, there are also some drawbacks and challenges. Here are some of the main things to consider:

Responsibility and learning

Trustees must understand and comply with legal and financial requirements.

Cost

SMSFs can be expensive to set up and maintain, especially for SMSFs with smaller balances.

Time and effort

Running an SMSF requires a significant amount of time, effort, and expertise. Engaging with your financial adviser for assistance and ongoing support can help ease the burden and ensure your SMSF investment strategy remains aligned with your financial objectives.

Risk

SMSFs are not guaranteed by the government, and investment returns are not guaranteed. If you lose money, you won’t have access to the government compensation scheme.

Get professional help

Establishing and managing an SMSF can be difficult without professional assistance. The legal and regulatory requirements are complex and must be followed to ensure the fund remains compliant. These requirements are also regularly updated or changed, so it’s important to stay informed about any new obligations.

Many trustees require support with the day-to-day management of the fund, as well as meeting ongoing reporting and administrative obligations.

Managing an SMSF comes with both opportunities and challenges, and professional advice can make all the difference. Your financial adviser can help ensure your fund is set up correctly, remains compliant with evolving regulations, and aligns with your retirement goals. They can also assist with SMSF investment strategies, tax efficiencies, and ongoing administration, so you can focus on building your wealth with confidence.

If you or someone you know is considering an SMSF, reach out to one of our trusted advisers for expert guidance and support.

Self-managed super funds (SMSFs) can offer their members many benefits, but one that’s often overlooked is their potential as a multigenerational wealth creation and transfer vehicle.

Family SMSFs are relatively rare. According to the most recent ATO statistics (2022-23), the majority of SMSFs (93.2 per cent) have only one or two members. ⁱ  Just 6.6 per cent have three or four members, and only 0.3 per cent have five or six members (the maximum allowed).

Advantages of a family SMSF

An SMSF is sometimes established when two or more generations of a family share ownership or work in a family business. The fund can then form part of a personal and business succession plan, potentially making it easier to pass on ownership and management of assets to the next generation.

With more members, SMSFs also gain additional scale, allowing them to invest in larger assets, such as property. You can add business premises to the SMSF and lease it back without violating the related parties rule and 5 per cent limit on in-house assets. ⁱⁱ

Reduced tax and administration costs are also benefits of multigenerational funds.

Running a family SMSF means the costs of establishing and administering the fund are spread across more members. This can be particularly helpful for adult children who are beginning to save for retirement.

In addition, more fund members mean more people to share the administrative burdens of running an SMSF, which may be helpful as you get older

A family SMSF does not need to be automatically wound up if you die or lose mental capacity, and it can simplify the process of paying out a member’s death benefit, potentially allowing it to be paid tax-effectively. Note that death benefits paid to non-tax dependent beneficiaries incur a tax rate of up to 30 per cent, plus the Medicare levy. ⁱⁱⁱ

More fund members also make setting up a limited recourse borrowing arrangement (LRBA) easier because their contributions reduce the fund’s risk of being unable to pay the borrowing costs. (An LRBA allows an SMSF to borrow money to buy assets).

Funding pension payments

Another advantage of an SMSF with up to six members arises when the fund begins making pension payments to older members.

If younger members are still making regular contributions, fund assets don’t need to be sold to make pension payments, which helps avoid the realisation of capital gains on assets.

Family SMSFs can also provide non-financial benefits by facilitating the transfer of financial knowledge and expertise between generations. While your children gain a solid financial education from participating in the management of the SMSF, they can also offer valuable investment insights from a different perspective.

Risks and responsibilities

It is important to note that a multigenerational SMSF may not be suitable for everyone.

SMSFs of any size come with certain risks and responsibilities. You are personally liable for the fund’s decisions, even if you act on the advice of a professional, and your investments may not yield the returns you were hoping for.

Before you start adding your children and their spouses to your fund, it’s essential to consider the challenges of running a family SMSF. Developing an asset allocation strategy that caters to different life stages can be complex. Older members may prefer a strategy designed to deliver a consistent income stream, while younger members are typically more focused on capital growth.

Risk profiles are also likely to vary. Generally, younger fund members have a higher appetite for investment risk than those closer to retirement.

Family conflict can also arise when relationships are strained due to divorce, blended families, and personality clashes.

The death of a parent can also create disputes over the distribution of fund assets or forced asset sales. Decisions about the payment of death benefits by the remaining trustees can derail carefully made estate plans and result in expensive legal battles.

Larger families with multiple adult children and partners may also find the six member limit an obstacle, forcing them to look at other options such as running several family SMSFs in parallel.

The process of choosing the best approach for a self-managed superannuation fund depends on your financial situation and goals,

Whether you’re already working with us or just starting to explore your options, we’re here to help. If you’re an existing client, reach out to your adviser to discuss your next steps. If you’re new and looking for guidance, our experienced advisers are ready to answer your questions and help you take the first step toward achieving your financial goals.

Let’s start the conversation today.

Sources

 i SMSF quarterly statistical report June 2024 | data.gov.au

ii Related parties and relatives | Australian Taxation Office

iii Paying superannuation death benefits | Australian Taxation Office

What happens to a Self-Managed Super Fund (SMSF) when a trustee dies or becomes mentally impaired? While these are circumstances that many of us would rather not think about, spending some time planning now could make a significant difference for you and your family in the future.

Australia’s 620,000 SMSFs hold an estimated $933 billion in assets, so there is a lot at stake. ^I

But it’s not just about money; control of the SMSF is also important.

The best way to ensure that your wishes are carried out is with a properly documented succession plan and an up-to-date trust deed.

An SMSF succession plan sets out what will happen if you or another trustee dies or loses mental capacity. It ensures a smooth transition and is separate from your will.

It’s important to be aware that instructions in a will are not binding on SMSF trustees. Therefore, it’s essential to have a valid (preferably non-lapsing) binding death benefit nomination in place so the new trustees are required to pay your death benefit to your nominated beneficiary.

Your will cannot determine who takes control of your SMSF or who receives your super death benefit, as the fund’s trust deed and super law take precedence. ⁱⁱ

Succession plans also reduce the potential for the fund to become non-compliant due to overlooked reporting or compliance obligations. They can even provide opportunities for death benefits to be paid tax-effectively. ⁱⁱⁱ

Selecting successor trustees

Super law requires SMSFs with an individual trustee structure to have a minimum of two trustees, so it’s important to consider what will happen after the death or mental incapacity of one of the trustees.

An alternative to appointing a successor trustee is introducing a sole-purpose corporate trustee structure for your SMSF, as death or incapacity then does not pose an issue. This structure makes it easier to keep the SMSF functioning and fully compliant when a trustee transition is required. ^iv

Appoint a power of attorney

SMSF succession planning also means ensuring that your will is updated to reflect your current family or personal circumstances.

It requires having a valid Enduring Power of Attorney (EPOA) in place to help keep the SMSF operating smoothly if you lose mental capacity. Your EPOA can step in as a fund trustee and take over administration of the fund or make necessary decisions about the fund’s investment assets.

Checking compliance

When reviewing or creating a succession plan, it’s essential to ensure your wishes are fully compliant with the SIS Act and do not inadvertently compromise your SMSF’s compliance status. This should be part of your regular reviews with your adviser, who can ensure your trust deed, the SMSF’s circumstances, and the ever-evolving super legislation are all in sync.

Tax is an important consideration in estate and succession planning, as super and tax laws use different definitions for who is and isn’t considered a dependant.

Your SMSF can pay super death benefits to both your dependants and non-dependants, but the subsequent tax bills vary based on the beneficiary’s dependency status under tax law.

Problems that can arise due to the differences between super and tax law dependency definitions were highlighted in recent private advice (1052187560814) provided by the ATO. It found that even if a beneficiary was receiving “a reasonable degree of financial support” from a deceased person just before they died, they would not necessarily be considered a death benefit dependant under tax law.

There is also the potential for capital gains tax to be payable if fund assets need to be sold because your super pension ceases when you die. Nominating a reversionary beneficiary for your pension ensures payments continue automatically without requiring any asset sales. ^v

Inadequate planning can have far-reaching implications, impacting not only your assets but also your loved ones and their future. If you would like to discuss or require assistance with drawing up your SMSF succession plan, contact one of our financial advisers today.

Sources

i https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-newsroom/highlights-smsf-quarterly-statistical-report-march-2024
ii https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/paying-benefits/death-of-a-member
iii https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/administering-and-reporting/how-we-help-and-regulate-smsfs/how-we-deal-with-non-compliance
iv https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/setting-up-an-smsf/choose-individual-trustees-or-a-corporate-trustee
v https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/in-detail/smsf-resources/smsf-technical-funds/funds-starting-and-stopping-a-pension