The concessional super contributions cap has increased to $35,000 for:
the 2013-14 financial year - for individuals turning 60 years or older
the 2014-15 financial year - for individuals turning 50 years or older.
The general concessional cap for everyone else remains at $25,000 in 2013-14.
The higher cap of $35,000 replaces the previously announced cap that was to apply from 1 July 2014 for individuals aged 50 years and over with superannuation balances below $500,000.
Excess concessional contributions made on or after 1 July 2013 will be included in an individual’s assessable income and taxed at their marginal tax rate (plus an interest charge) rather than at the top marginal tax rate.
To assist individuals in paying the additional tax bill and charge, they can release up to 85% of their excess concessional contributions from their super fund. Members will also receive a non-refundable tax offset of 15% of their excess concessional contributions. When an amount is released from the fund, it will no longer be counted as non-concessional contributions.
The existing refund of excess concessional contributions measure now only applies to excess contributions made in the 2011-12 and 2012-13 financial years.
The Institute of Public Accountants (IPA) has reminded small businesses that the current small business instant asset write off threshold of $6,500 will go back to $1,000 from 1 January 2014 as part of the Government's repeal of the mining tax. Accordingly, the Institute says eligible small businesses should consider taking advantage of the current threshold before it plummets as of 1 January 2014. "It is understandable that the Government needs to find ways to plug the hole left by the MRRT repeal but we would encourage small businesses to do some asset Christmas shopping if they are in a position to do so," said IPA CEO, Andrew Conway. Mr Conway noted the extra accelerated depreciation claim of $5,000 for motor vehicles will also be scrapped.Contact A Grade Tax Accountants Penrith if you require any clarification or tax advice.
Source: IPA media release, 22 November 2013
The high Australian dollar is one of the major contributing factors influencing the RBA's decision to keep the official cash rate on hold. The economy is showing a slow response to the RBA's fiscal policies and the dollar looks set to impact our tourism, export and commodities markets for some time.
Meanwhile, excellent auction clearance rates throughout the spring period indicate that the Australian property markets are starting to heat up in time for summer. We can expect further improvement in 2014 as interest rates will continue to remain low, at least until the RBA reviews the cash rate again during its next meeting on the first Tuesday in February.
Have you reviewed your home loan this year? If you would like a no obligation review of your home loan, A Grade Tax Penrith can organise an appointment in the comfort of your home with our mobile home loan broker.
Clients intending to lodge a lump sum Family Tax Benefit, Child Care Benefit or Single Income Family Supplement (SIFS) claim for the 2012-13 financial year must do so by 30 June 2014 due to changes to the claim lodgment period administered by the Department of Human Services.
Also, clients who received or expect to receive Family Tax Benefit, Child Care Benefit and/or SIFS for the 2012-13 financial year must lodge their individual income tax returns by 30 June 2014 to receive their benefits.
If any of these clients do not need to lodge an income tax return they must notify Centrelink by 30 June 2014.
Contact A Grade Tax Accountants Penrith for assistance with all your taxation requirements.
Natural disasters - October 2013
In October 2013, bushfires caused significant damage to some areas of New South Wales.
What is the Australian Tax Office (ATO) doing to help?
If your business or residential address is in one of the identified affected postcodes listed below, the ATO will automatically make arrangements to defer the following taxation obligations (you don't need to apply for a deferral):
Lodgment and payment of income tax returns due between October and December 2013 to 28 January 2014
Lodgment and payment of the September quarterly activity statement from the original due date of 28 October 2013 to 28 January 2014
Lodgment and payment of the September monthly activity statement from the original due date of 21 October 2013 to 28 January 2014
Lodgment and payment of the October monthly activity statement from the original due date of 21 November 2013 to 28 January 2014
Lodgment and payment of the November monthly activity statement from the original due date of 21 December 2013 to 28 January 2014.
Exclusions to the above deferrals:
Large withholders (previously withheld more than $1 million annually or are part of a corporate group that has) are not eligible for the above deferrals.
The Commissioner cannot vary the contribution due date or waive the nominal interest on late super guarantee payments.
All deferrals granted for later dates will still apply. If you are affected by a natural disaster and you need further assistance or your business is outside the following postcodes, phone the ATO on 1800 806 218.
Any clients affected by the recent bush fires should not hesitate to contact us at A Grade Tax Accountants Penrith for any assistance with their tax matters.
Max Connelly from A Grade Tax Accountants Penrith has been accredited by ASIC as a Self Managed Super Fund (SMSF) auditor.
Contact A Grade Tax to arrange a quotation for your SMSF audit requirements.
There are three important changes to the simplified depreciation rules that apply from the 2012-13 financial year:
- the instant asset write-off threshold increased from $1,000 to $6,500
- a quicker initial deduction of up to $5,000 for motor vehicles
- the long-life small business pool and the general small business pools have been consolidated into a single pool.
For more information, refer to Changes to small business concessions for 2012-13.
Contact A Grade Tax Accountants Penrith on (02) 4731-1405 for all taxation accounting services.
Back in 1995, Self Managed Super Funds (SMSFs) made up less than 8% of superannuation industry assets. But a swag of appealing characteristics has sent their market share soaring.
The growth in self-managed super funds has been spectacular over the past 19 years. In all important areas – assets under management, membership growth, number of funds and average account balance – SMSFs are thrashing the professionals.
In 1994, there were about 80,000 SMSFs in Australia, with about $11 billion in assets. ATO data shows that in September 2012, there were 478,000 SMSFs, with 913,550 members and a total of $439 billion in assets. That’s almost one-third of the $1.4 trillion Australians have socked away for retirement.
The remarkable growth of SMSFs shows no sign of slowing. Australians are now pouring $26.5 billion into SMSFs every year – that’s just over $500 million into SMSFs every week.
What is driving the growth of the self-managed super fund sector now? With SMSFs typically set up by people approaching retirement, Australia’s large baby boomer generation is having an obvious impact. However, Tax Office figures also point to a noticeable increase in people under 45 joining small funds.
As the following list makes clear, there’s not one simple explanation for the growth of self-managed super funds.
But for both young and old Australians, the appeal of having their retirement fate in their own hands is undeniable.
An SMSF gives investors the ability to apply the same principles to their retirement assets as they apply to their own home.
2. Avoiding larger organisations’ performance problems
The low income super contribution (LISC) is a government payment to help low income earners save for their retirement.
From the 2012-13 income year, your LISC is 15% of the concessional (before tax) super contributions you or your employer make. The maximum payment you can receive for a financial year is $500 and the minimum is $20.
You are eligible for a LISC if:
- You have concessional contributions for the year made to a complying super fund
- Your adjusted taxable income does not exceed $37,000 (if you are required to lodge a tax return)
- You are not a holder of a temporary resident visa (New Zealand citizens in Australia do not hold temporary resident visas and are therefore eligible for the payment)
- 10% or more of your total income is derived from business or employment
- The amount payable is $20 or more.
The ATO will pay a LISC directly to your complying super fund. Make sure your fund has your tax file number as it cannot accept a LISC on your behalf without it. It may take up to 14 months from the end of the financial year for the payment to reach your fund.
Your super fund will show the LISC on your member statement.
For more information about the low income super contribution, refer to Low income super contribution.
See A Grade Tax Accountants Penrith for all your Taxation Services and Self Managed Super Fund advice.
The government have announced a restriction on the tax concessions available to super funds in pension phase. From 1 July 2014, future earnings (such as dividends and interest) on assets supporting pensions will be tax free up to $100,000 a year for each individual. Earnings above $100,000 will be taxed at the same concessional rate of 15% that applies to earnings in the accumulation phase.
This $100,000 threshold will be indexed annually with CPI and will increase in $10,000 increments.
The government has indicated that this reform is expected to affect only around 16,000 Australians who have balances around or above $2,000,000.
Special provisions will apply to capital gains incurred on assets purchased prior to 1 July 2014:
For assets purchased prior to 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024;
For assets purchased between 5 April 2013 and 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; and
For assets purchased from 1 July 2014, the reform will apply to the entire capital gain.
Persons therefore have approximately ten years to determine how they will restructure their superannuation assets to account for the new reforms.
These new reforms will not affect the taxation of superannuation withdrawals, these continue to be tax free after age 60.
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