Last, but not least, in the tax tips series this year are five additional savings for businesses. If you need assistance please call to discuss 02 8090 4112
Category Archives: Tax Advice
SMSF year end Checklist
Six essential checks pre June for your SMSF. If you need assistance, call me to discuss on 02 8090 4112
Six Year End Tax Tips for All
Updates & Deadlines
A few reminders and pointers for you as we race towards June ..
- All our clients will shortly be receiving an offer to take up our optional ATO audit insurance offer for 2017/18. Remember the ATO can audit returns many years after they are lodged & (unlike normal law) you are deemed guilty until you can prove otherwise. Our policy even covers you for returns prepared by a different agent. Note the new way of paying the premium this year – direct to the insurers, not via me.
- The current newsletter can be accessed in the normal manner here. Don’t forget to check the website for updates regularly. This month looks at deductions for work clothing and further details about the $1.6m super balance cap.
- Finally, the deadline for 2016 returns is only 6 weeks away. So if you are still to submit your paperwork, please do so soon. Note it’s first come, first served and I am away for a week in May, horse-riding through the Kimberly so won’t be working then!
Lindsay
Managing the $1.6m Super Cap
It is often the case where one partner slogs away at home bringing up the family and the other escapes on a regular basis to go to work, that at the end of the day your superannuation balances may be very uneven.
With the introduction of the $1.6m cap it is more important then ever to utilise the strategies available to help even out these balances. Some of these strategies will continue to be available after 1 July 2017 but some will not.
So if uneven balances are a problem for you please call to discuss your options.
Lindsay 02 8090 4112
Quick – get those Non Concessional Contributions in now
Finally, the proposed super reforms have gone through with many changes to take place from July 2017.
One of these well publicised reforms is a change to the Non-Concessional Contribution (NCC) cap, which is to be reduced to $100k p.a. (previously $180k).
However, there are further changes to the NCC affecting those of you lucky enough to have $1.6m in super, or those who hope to attain those lofty heights in the medium to near term, which have had less press.
As an aside, to maintain reading interest & due to popular request, this is our fairly recent new family member (the horse not the child) which seems to be somewhat reducing our capacity for NCC’s, at least in the short term. He is lots of fun though, especially when I get to ride him while short-thing is at school, and then send her a selfie to really rub it in!
Anyway back to the point….
After 1 July 2017, if you have a total of more than $1.6m in super (whether in pension, transition to retirement pension, or super) you will not be allowed to put any NCC’s into super at all. That’s none whatsoever. Nil. Only the $25k concessional contributions will be allowed (eg SGC, salary sacrifice and personal deductible).
You may ask, why would I want to put more in super as earnings on balances over $1.6m will be taxed? This is quite correct, but the earnings will be taxed at a mere 15% on income and 10% on most capital gains, so it is not that bad really. Additionally if your superfund is invested in Australian shares, it will still receive the 30% franking credits which reduce (or possibly eliminate) any tax due.
ACTION POINT
The good news is that the old rules still apply until 30 June 2017, therefore assuming you have not triggered the bring forward caps in the last two years (in which case there are transitional rules), this is a last opportunity for those near or over the $1.6m cap and under age 65 (or over age 65 and passing the work test), to pop an additional $540k into super as a tax free NCC.
If you think this might be relevant please call to discuss your situation in more detail.
Lindsay 02 8090 4112
Super Reforms Passed
The budget super reforms have now passed the senate and only require royal assent to become law, which is thought to be a mere formality.
The major changes are as follows
- Introducing a $1.6 million transfer balance cap which limits the amount that can be transferred to the retirement phase, where earnings are tax-free. This measure will also apply to death benefit income streams.
- Reducing the non-concessional contribution cap to $100,000 pa (or $300,000 under the bring forward provisions), limiting the ability to make NCCs to people who have a total superannuation balance of less than $1.6 million and introducing transitional rules for those who triggered the bring forward rule prior to 1 July 2017.
- Removing tax exempt earnings for transition to retirement income streams.
- Lowering the income threshold for Division 293 tax to $250,000.
- Reducing the concessional contributions cap to $25,000 for all taxpayers.
- Introducing a concessional contributions catch-up regime for those with total super balances of less than $500,000 from 1 July 2018.
- Allowing a deduction for personal contributions without testing the proportion of employment income received (the 10% test).
- Introducing a low income superannuation tax offset to replace the low income superannuation contribution (which will be abolished from 1 July 2017).
- Increasing the annual income threshold from $10,800 to $37,000 for eligibility for the spouse contribution tax offset.
- Abolishing the anti-detriment payment.
Next Steps
We will be in touch with our clients that will be affected by the pension cap and changes to existing transition to retirement pensions soon to discuss available options.
I will post a series of blog updates running through the changes in more detail. However if you have any questions please don’t hesitate to call.
One thing to consider now is if you have the means to contribute $540k as a non-concessional contribution, the 2016/17 year is your last opportunity to this before the caps are lowered (note conditions apply).
Lindsay 0413 952 180
