Do you feel time is running out to save for your retirement!

The cut-off age to make personal superannuation contributions is 75 years, and with the current concessional contributions cap of $30,000 per annum and non-concessional contributions cap of $180,000 per annum for everyone, you need to consider all your options to accumulate wealth in your self managed superannuation fund (SMSF) while you still can. 

Here are some options you might like to consider:

1. Increase the number of members in your SMSF:  An SMSF can have up to four (4) members.  The more members there are in an SMSF, the more that can be contributed into the SMSF. For example, four members under the age of 65 can contribute a total of $540,000 x 4 = $2,160,000 in one financial year using the two year bring forward rule.  This may allow your SMSF to acquire larger investment assets sooner, resulting in quicker wealth accumulation.

2. Lend money to your SMSF:   If you have cash available, you could lend money to your SMSF.  The loan is not counted as a contribution and will allow your SMSF to acquire larger assets to accumulate wealth.

3. Transfer your business premises into your SMSF: If you own the premises that you conduct your business from, you could sell the property to your SMSF and lease it back.  The lease payment is not considered a contribution and will help accumulate more money in your SMSF.

4. Purchase a property via a related entity:  You can establish a company or a unit trust and jointly own a property with your SMSF via this entity. This will allow your SMSF to receive rental income via dividends or trust distributions without the need to enter into any borrowings.

5. Transfer assets you own to your SMSF:  If you are “cash poor” but “asset rich”, you might consider transferring assets you own, such as listed securities or business real property, into your SMSF.  These assets can be transferred as in-specie contributions into your SMSF or purchased by your SMSF directly by cash payment or via a limited recourse borrowing arrangements. You do need to consider your contributions caps if transferring assets as contributions, but not if you are selling the assets.  You also cannot transfer residential properties to your SMSF.

6. Purchase a property jointly with your SMSF:  Another way you and your SMSF can acquire a property together is via a tenants-in-common arrangement. If the property is a business real property, it can also be leased back to you.  If it is a residential property that is not used in any business, it cannot be leased to you.

7. Small business Capital Gains Tax (CGT) concessions:  If you qualify for the small business CGT concessions, you can sell your business premises and contribute either the capital gains or the sale proceeds into your SMSF without the money being counted towards your contributions caps. This means you can contribute an additional $1,355,000, which is the maximum lifetime CGT limit.

8. Personal injury payment:  In the event that you received compensation for a personal injury, consider contributing the money into your SMSF as it is not counted towards your contributions caps.  There is no limit on the amount that can be contributed as long as the payment meets certain requirements.

9. Exceed your concessional-contributions cap:  If you want to make contributions into your SMSF in excess of the concessional contributions caps, the excess amount will attract 47% tax plus the Medicare Levy and will also be counted against your non-concessional contributions cap.  As long as you don’t exceed the non-concessional contributions cap also, it would mean you are paying tax at your highest marginal tax rate.  Paying the maximum tax on contributions may not matter to you if the investment earnings from the investment of this money are taxed in your SMSF at the maximum concessional rate of 15%, instead of it being taxed at your marginal tax rate if you held the investment outside of your SMSF.  The tax payable on the investment earnings is reduced to 0% once your SMSF is in pension phase.

10. Exceed your non-concessional contributions cap:  If you contribute more than your non-concessional contribution, the excess contribution is taxed at 47% plus the Medicare Levy.  Again, you may not care as you will be paying this rate of tax anyway if you received the income outside of an SMSF.  The good thing is the investment earnings are taxed at the maximum rate of 15% in your SMSF and 0% once your SMSF is in pension phase.

For Gold and Platinum members read on for examples of how you can put more money into your SMSF. 

This article was prepared by Monica Rule who worked for the Australian Taxation Office for 28 years and is an SMSF Specialist Adviser.  Monica is the author of The Self Managed Super Handbook – Superannuation Law for Self Managed Superannuation Funds in plain English - www.monicarule.com.au

Build these documents now:

• Self Managed Superannuation Fund Deed
• SMSF - Deed Update
• Pension Pack for Self Managed Super
• The Self Managed Super Handbook