The rules are complicated, I didn’t know about this pitfall. In a hypothetical scenario, if I sold an IP toward the end of a FY, are you saying it would be best to use the bring forward contributions to super after June 30 (i.e. in the new FY)? If I was to use the bring forward contribution in the same FY as I sold my IP, my Super balance would likely tip over 500K as well.
Firstly, I'm not suggesting you do anything other than seek personal financial advice ;) Secondly, a few important points to note on your comment here. Utilising the carry forward concessional contribution can tip you over the $500k limit, it's just that your super balance must be below $500k as at the most recent June 30 to use it. It's also important to note that any deductions such as the concessional contributions must be made in the same financial year as the capital gain is realised to be valid.
@AustralianExpatFinance Thanks for the reply. Yes, I would not make any decisions without first seeking financial advice, as I realise your advice is only of a general nature. Could you please confirm if my understanding is correct here though. From 1st July 2024, the general concessional contributions cap is $30K. Members can make 'carry-forward' concessional super contributions if they have a total superannuation balance of less than $500,000 on a rolling 5 year basis. From 1 July 2024, the non-concessional contributions cap is $120K. Members have access to up to 3 years of future "bring forward" contributions ($360K) provided their total superannuation balance is less than $1.66M. It was these second non-concessional contributions I was referring to in my hypothetical example, but I think my terminology was wrong.
@@waffle_burger8499 To clarify, the $500,000 limit is just at the most recent 30 June, so it could have been above $500,000 during the financial year but dropped to $499,000 on 30 June, and this would still be available. In terms of the non-concessional, yes, you're about spot on in terms of the caps on the bring forward rule. $360,000 up to $1.66M $240,000 for $1.66M - $1.78M $120,000 for $1.78M to $1.9M Please also bear in mind these limits can and do change as I'm sure you're already aware.
I'm American, but that's an interesting and confusing system. I've used the same financial advisors for over 30 years. I let them take care of that stuff - yikes.
Hi, enjoy your informative videos. Can you put this onto a spreadsheet/one pager with comparisons please as I am sure many are more visual people? I am returning next year from UK and could fall into the same trap and want to be very clear. Thanks in advance.
Thanks for your note here Katherine - I'll certainly be sure to create some additional resources to add more value here. Given your move, I would certainly suggest reaching out to your Expat Financial Adviser and Accountant to ensure that nothing is missed for you. Having the right plan in place with such a big move can be an incredibly valuable tool.
Hi Jarrad, Thank you for the informative show. I have a specific question . I am 59 , currently employed with 120k salary and salary sacrifice in full also took advantage of carry forward rule while by balance was below 500k. Also I have two investment properties with almost 50% mortgage. I am thinking of selling one pay the mortgage portion and move the rest into my super. What would be the most tax effective option for me? BTW, my capital gains would be around 200k. Thanks
Great to hear you've been maximising your superannuation options. There could be many options to consider here such as prepaying interest on the loan to offset the tax on the sale of the other, not selling the property at all, making a concessional super contribution, to name just a few. In this case, I would strongly recommend you speak with your Financial Tax Adviser and run the scenarios to work out which is the best option here.
Thanks for your question Deborah. There is no 'best super' as what's right for one, could be wrong for another. It's important to work out which has the right features that you're looking for and suits you best.
Hi Jarrad, a question. Does what you've advised refer to residsnts in Australia? I only have $30,000 in my super. But I have an investment property bought 2002 $150,000 which is now worth $500,000. If I sell it, I will be due for a $350,000/2 = $175,000 +$35,000 (other rental income) = $210,000 taxable income (Tax: 78,638 using a simple tax calculator). I do not need the money to live by, and can put as much into super as need be to reduce my tax. How much can I put into super to reduce my taxes entirely? We are a retired couple. My husband do not have any income at all. We're self funded retirees because of our investment properties. Thank you.
Thank you for your question here. Firstly, yes it applies to Australian residents also, however the tax rates are different between residents and non-residents which is important to consider. The maximum contribution is this year's concessional contribution ($30,000) plus up to the last 5 years' of unused concessional contributions, which can be added at once to offset other taxable income. However, there are many factors that can impact the tax calculation here for you such as; accumulated capital losses, ownership of the property, tax-free thresholds, other costs that have impacted the cost base of the property and more. Given the complexity involved here, I would highly recommend you reaching out to your Adviser for some formal advice and guidance.
If making contributions to super, ask your accountant about division 293 tax also. Your numbers look ok for being under the threshold as long as that’s your total income AND super contributions come under $250k. And if haven’t been making catch up payments for previous thresholds, then there’s probably close to $120k you can contribute at a tax rate of 15%. Plus non conventional contributions on top of that. Definitely need to consult your accountant here, it can get very confusing and cost you tens of thousands if not done correctly
@@NoRegertsHere Absolutely - ALWAYS seek advice from your Adviser before making contributions or any key changes to ensure you're doing what's right for YOU.
It's important to note that there's a lot more to consider when calculating your ROI than just the tax rate. i.e. gross capital gain, deductibility of property holding costs, interest rates, gross rental yields and much more.
![ILLSLICK X YOUNGOHM - We're The same [Official Video]](http://i.ytimg.com/vi/yUJNkobYR0E/mqdefault.jpg)
The rules are complicated, I didn’t know about this pitfall. In a hypothetical scenario, if I sold an IP toward the end of a FY, are you saying it would be best to use the bring forward contributions to super after June 30 (i.e. in the new FY)? If I was to use the bring forward contribution in the same FY as I sold my IP, my Super balance would likely tip over 500K as well.
Firstly, I'm not suggesting you do anything other than seek personal financial advice ;)
Secondly, a few important points to note on your comment here. Utilising the carry forward concessional contribution can tip you over the $500k limit, it's just that your super balance must be below $500k as at the most recent June 30 to use it.
It's also important to note that any deductions such as the concessional contributions must be made in the same financial year as the capital gain is realised to be valid.
@AustralianExpatFinance Thanks for the reply. Yes, I would not make any decisions without first seeking financial advice, as I realise your advice is only of a general nature.
Could you please confirm if my understanding is correct here though. From 1st July 2024, the general concessional contributions cap is $30K. Members can make 'carry-forward' concessional super contributions if they have a total superannuation balance of less than $500,000 on a rolling 5 year basis.
From 1 July 2024, the non-concessional contributions cap is $120K. Members have access to up to 3 years of future "bring forward" contributions ($360K) provided their total superannuation balance is less than $1.66M.
It was these second non-concessional contributions I was referring to in my hypothetical example, but I think my terminology was wrong.
@@waffle_burger8499 To clarify, the $500,000 limit is just at the most recent 30 June, so it could have been above $500,000 during the financial year but dropped to $499,000 on 30 June, and this would still be available.
In terms of the non-concessional, yes, you're about spot on in terms of the caps on the bring forward rule.
$360,000 up to $1.66M
$240,000 for $1.66M - $1.78M
$120,000 for $1.78M to $1.9M
Please also bear in mind these limits can and do change as I'm sure you're already aware.
I'm American, but that's an interesting and confusing system. I've used the same financial advisors for over 30 years. I let them take care of that stuff - yikes.
It’s certainly very different to the US retirement system, which can certainly make it challenging for Aussies in the US.
Hi, enjoy your informative videos. Can you put this onto a spreadsheet/one pager with comparisons please as I am sure many are more visual people? I am returning next year from UK and could fall into the same trap and want to be very clear. Thanks in advance.
Thanks for your note here Katherine - I'll certainly be sure to create some additional resources to add more value here.
Given your move, I would certainly suggest reaching out to your Expat Financial Adviser and Accountant to ensure that nothing is missed for you. Having the right plan in place with such a big move can be an incredibly valuable tool.
Hi Jarrad,
Thank you for the informative show.
I have a specific question .
I am 59 , currently employed with 120k salary and salary sacrifice in full also took advantage of carry forward rule while by balance was below 500k.
Also I have two investment properties with almost 50% mortgage.
I am thinking of selling one pay the mortgage portion and move the rest into my super.
What would be the most tax effective option for me?
BTW, my capital gains would be around 200k.
Thanks
Great to hear you've been maximising your superannuation options.
There could be many options to consider here such as prepaying interest on the loan to offset the tax on the sale of the other, not selling the property at all, making a concessional super contribution, to name just a few.
In this case, I would strongly recommend you speak with your Financial Tax Adviser and run the scenarios to work out which is the best option here.
Which best supper you recomend thanks 🙏
Thanks for your question Deborah. There is no 'best super' as what's right for one, could be wrong for another. It's important to work out which has the right features that you're looking for and suits you best.
Thanks
Was capital gains 50% exemption applied in this case example?
Great question. No, it wasn’t as he was a non-resident for the majority of the holding period.
Hi Jarrad, a question. Does what you've advised refer to residsnts in Australia? I only have $30,000 in my super. But I have an investment property bought 2002 $150,000 which is now worth $500,000. If I sell it, I will be due for a $350,000/2 = $175,000 +$35,000 (other rental income) = $210,000 taxable income (Tax: 78,638 using a simple tax calculator). I do not need the money to live by, and can put as much into super as need be to reduce my tax. How much can I put into super to reduce my taxes entirely? We are a retired couple. My husband do not have any income at all. We're self funded retirees because of our investment properties. Thank you.
Thank you for your question here.
Firstly, yes it applies to Australian residents also, however the tax rates are different between residents and non-residents which is important to consider. The maximum contribution is this year's concessional contribution ($30,000) plus up to the last 5 years' of unused concessional contributions, which can be added at once to offset other taxable income.
However, there are many factors that can impact the tax calculation here for you such as; accumulated capital losses, ownership of the property, tax-free thresholds, other costs that have impacted the cost base of the property and more. Given the complexity involved here, I would highly recommend you reaching out to your Adviser for some formal advice and guidance.
If making contributions to super, ask your accountant about division 293 tax also. Your numbers look ok for being under the threshold as long as that’s your total income AND super contributions come under $250k. And if haven’t been making catch up payments for previous thresholds, then there’s probably close to $120k you can contribute at a tax rate of 15%. Plus non conventional contributions on top of that. Definitely need to consult your accountant here, it can get very confusing and cost you tens of thousands if not done correctly
@@NoRegertsHere Absolutely - ALWAYS seek advice from your Adviser before making contributions or any key changes to ensure you're doing what's right for YOU.
Niave people. Should have bought in New Zealand. Zero CGT
It's important to note that there's a lot more to consider when calculating your ROI than just the tax rate. i.e. gross capital gain, deductibility of property holding costs, interest rates, gross rental yields and much more.
If they putting in 110 000 each into super Im sure that 22k wont be much of a worry. 1st world problem....
Thanks for sharing your thoughts Brian.