Superannuation Changes and what it means to you!
In the coming months, we will see some big changes to Australia’s Superannuation Rules.
Did you know that from 1st July 2017:-
- If you are under 75 years old, you are eligible to make tax deductible super contributions at any time rather than resorting to salary sacrifice;
- Before-tax contributions will reduce to $25,000 and after-tax contributions will reduce from $180,000 to $100,000 per year;
- Individuals will have a limit of $1.6 million held in a super pension account which is tax free. Anything over this amount needs to be invested in a taxed superannuation fund;
- Tax-free investment earnings will no longer be beneficial with transition to retirement pensions;
- If your spouse earns less than $40,000 per annum and you make super contributions to your partner’s superfund, you are entitled to claim the $540 low Income Spouse Contribution Tax Offset.
Now is the time to start reviewing your Superannuation and assess how these changes will affect you.
Here are some ideas on what to look into before these changes come into effect:-
- Planned Asset Sales are a good way to increase your Superannuation prior to the new financial year;
- Think about increasing your salary sacrifice prior to the lower caps start for pre-tax contributions;
- Take advantage of after-tax contributions capped at $540,000 now, before it decreases to $300,000 in the new financial year
Small business taxpayers have access to a range of tax concessions. Some of the recent concessions available are:
•instant write-off for assets costing less than $20,000 each
•immediate deduction of professional expenses for small business start-ups
•tax discount of 5% up to $1,000 for unincorporated small businesses
•1.5% small business company tax cut
•no fringe benefits tax for providing multiple electronic devices to employees
•no income tax liability for asset roll-overs when a small business is restructured
•accelerated depreciation for primary producers.
To qualify for the first six concessions businesses must have a total turnover of less than $2 million for the year they use the concession or the year before that. However, all primary producers can access accelerated depreciation regardless of turnover.
Click here for additional information.
As usual if you require any clarification on any tax issues, please contact A Grade Tax Penrith.
The Australian Tax Office use industry benchmarks and other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income.
Businesses that report expense and profit figures outside of the Tax Office benchmarks are at increased risk of audit. For more information click here.
Australian Tax Office benchmarks can be located here.
As usual, contact us at A Grade Tax Penrith for any advice in this area.
All small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000. (Previously, the threshold was at $1,000).
This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements start from Budget night 12th May 2015 and continue until the end of June 2017.
Further information on accelerated depreciation is available on the ATO website.
The Government is reducing the tax rate for the more than 90 per cent of incorporated businesses with annual turnover less than $2 million. The company tax rate for these businesses will be reduced by 1.5 percentage points to 28.5 per cent.
To help all Australian small businesses grow, the Government will also provide a 5 per cent tax discount to unincorporated businesses with annual turnover less than $2 million from 1 July 2015. This delivers a tax cut of $1.8 billion over the next four years.
Further information on tax cuts for Small Business is available on the ATO website.
Contact A Grade Tax Accountants Penrith on 4731 1405 for support on all tax matters.
Please ring for an appointment to complete your Tax Returns this year with either Donna, Tynna, or Max.
It is important that anyone considering an investment proposal seeks our advice with regard to the taxation consequences and options available to minimize taxation. For example there can be very significant tax advantages available by holding an investment in a Self Managed Super Fund rather than your own name.
We provide a full range of taxation services including:
- Advice regarding the best tax structure for the formation of new businesses. It is always best to discuss your new business proposal before committing to any new venture.
- Company & Family Trust returns.
- Formation & administration of Self Managed Super Funds.
- Investment property tax advice.
- Our mobile lending service offers a wide range of finance options for home & investment loans plus vehicle financing.
Please review the above PDF of our checklist and tax tips, to assist with the preparation of your returns.
See you soon and thank you again for your referrals over the past year.
B.Comm (NSW Uni.) FIPA JP
The Mature Age Worker Tax Offset has been abolished and cannot be claimed in taxpayer's 2015 tax return.
The 2014 tax return was the last tax return in which the offset could be claimed.
Read more here.
Contact A Grade Tax Accountants Penrith for clarification on this or any tax matter.
The net medical expenses tax offset (NMETO) is being phased out.
To be eligible for the NMETO for 2014–15, taxpayers must have received an amount of the NMETO in both of their 2012–13 and 2013–14 income tax assessments.
The eligibility rule for the NMETO does not apply to clients with out-of-pocket medical expenses relating to disability aids, attendant care and aged care. These expenses can continue to be claimed until 30 June 2019 in the Total net medical expenses label.
Meaning of 'received'
‘Received’ means that taxpayers must have had an amount of NMETO greater than zero shown on their notice of assessment, refer to subsection 159P(1C) of the Income Tax Assessment Act 1936.
If taxpayers 2012–13 Notice of Assessment shows an amount of zero for NMETO they wouldn't have received this offset in their income tax assessment and so are not eligible to make a claim in 2013–14 or 2014–15.
Section 63-10 of the Income Tax Assessment Act 1997 requires tax offsets against gross tax to be applied in a priority order. This means that tax offsets including the seniors and pensioners tax offset and the low-income tax offset must be applied before NMETO or other non-refundable tax offsets are considered.
Contact us at A Grade Tax Penrith should you require any further clarification.
Boost your super at tax time
Here are some tips to help you boost your super and benefit from superannuation's favourable tax treatment:
- You can claim up to $500 in government co-contributions if you’re a low to middle income earner and you make after-tax contributions of up to $1,000 to your super.
- You can receive a tax offset of up to $540 if your spouse is a low income earner and you contribute up to $3,000 in after-tax contributions towards their super.
- You can contribute up to $30,000 in before-tax contributions to your super at the ‘concessional’ tax rate of 15% — or $35,000 if you’re aged 50 or over.
- You can contribute up to $180,000 a year (or $540,000 over three years) in after tax-contributions. Since this is from your after-tax income the full contribution reaches your super account, and no tax is deducted when the contribution reaches your super fund.
- You can start a transition to retirement strategy once you’ve reached your super preservation age (the age at which you can access your super, which will be between 55 years to 60 years of age depending on your date of birth)—this can allow you to draw up to 10% of your super as a pension.
If you need any clarification on the taxation implications in respect of superannuation, contact us at A Grade Tax Penrith on 4731 1405.
SMSF Limited Recourse Borrowings & Pension Phase
Can a SMSF engage in limited recourse borrowing while in pension phase?
While there may be good reasons for an SMSF which is in pension phase not to engage in limited recourse borrowing – for instance, if the borrowing arrangement will be cash flow negative – the issue is whether the SIS Act or Regulations prevent a SMSF in pension phase from engaging in a limited recourse borrowing.
It has been suggested that SIS Regulation 1.06(9A)(d) which states that “the capital value of the pension and the income from it cannot be used as a security for a borrowing” prevents a SMSF in pension phase from engaging in limited recourse borrowing.
Our view is that SIS Reg 1.06(9A)(d) is directed to the mischief of a member attempting to charge their pension rights rather than being directed to the trustee (or holding trustee) imposing a charge on the assets of the fund as permitted by s67A. The expression “capital value of the pension” means, for account pensions, the pension account balance rather than the assets underlying the pension.
Consequently, it seems that this prohibition does not preclude a SMSF from entering into or maintaining a limited recourse borrowing arrangement if one or more members are in pension phase or if one or more members convert to pension phase while the borrowing arrangement is on foot.
Should you require clarification on this or any other tax related matter, don't hesitate to contact A Grade Tax Accountants Penrith.
The Schoolkids Bonus is a payment from the Federal Government to a parent or carer receiving Family Tax Benefit Part A for a dependent child in primary or secondary education. It provides $422 a year for each child in primary school and $842 for each child in secondary school. This year, from 1 January 2015, payments will be subject to an income test and will only be payable to families with an adjusted taxable income of $100,000 or less. You can find out more about eligibility at the Department of Human Services website.
Assistance for Isolated Children
If you have a child at primary or secondary school-age who can’t go to a state school because of geographical isolation, disability or health reasons, the Assistance for Isolated Children scheme may provide tax-free payments exempt from income and assets tests. Find out more at the Department of Human Services website.
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