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Things to consider before starting a SMSF

Posted on July 30, 2014 by admin


There are a lot of advantages to having a self-managed superannuation fund (SMSF). Increased flexibility and control over your savings are the most obvious benefits, with many SMSF trustees and members appreciating the ability to make their own investment decisions. Other advantages include the possibility of investing in a property, the ability to manage administrative costs, and, in some cases, tax breaks. However, there are also a lot of responsibilities associated with running a SMSF, and it is not necessarily an advisable choice for everyone. Here are some things to consider if you are interested in starting an SMSF: -To justify the costs associated with running a SMSF, you should have a relatively sizeable amount, or be anticipating a rapid accumulation of funds. The ATO suggests having a minimum of $200 000, however this is often debated amongst industry representatives. -If you want to manage your own super, you should have a relatively robust understanding of finance and the confidence to make your own investment decisions. -Managing your own super fund is generally a time-consuming endeavour. There are a lot of compliance issues you need to be aware of, and you also need to ensure that you remain abreast of […]


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Changes to fuel tax credits

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Backdating to July 1 2014, the carbon charge will be removed from all fuels. The ATO has indicated that this will result in some changes to fuel tax credits. There will be an increase in fuel tax credits available for a range of off road activities, while credits will no longer be available to specified non-transport activities in agriculture, fishing and forestry. Businesses that are registered for GST are also now able to claim more for gaseous fuels used for transport purposes. If you are unsure as to how the changes may impact you the ATO has provided a range of online calculators and tools that you can access when completing your business activity statement, ensuring that your claim is accurate. It has also been proposed, under the Fuel Indexation (Road Funding) Special Account Bill 2014, that there will be a reintroduction of bi-annual indexation of excise and excise equivalent customs duty on all fuels. The indexation would be aligned to the consumer price index (CPI) and aviation fuels would be exempt. The additional revenue would be directed into improving roads and infrastructure, with the aim of improving national productivity.


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Renovating a property owned by your SMSF

Posted on July 25, 2014 by admin


While an SMSF may borrow money to purchase a property using a limited recourse borrowing agreement (LRBA), there are strict regulations surrounding the use of borrowed funds to renovate and improve properties. While you may be able to purchase an older property and renovate it using borrowed money, you are restricted from ‘improving’ the property, for example by building an additional storey or adding a swimming pool. If you are unsure as to whether the changes you have planned would be considered an ‘improvement’, it is advisable to seek the advice of the ATO. You are, however, permitted to improve a property using funds from other sources, typically the accumulated contributions to the fund. For this reason, if making improvements to the property is central to your investment strategy, you need to ensure that your fund has sufficient cash flow to see these changes through. Here are some other tips for renovating a property owned by your SMSF: -All of the materials must be purchased in the SMSF name, even if you are carrying out the renovations yourself -You may not be paid for any work you complete unless you are a professional tradesman who offers the same services to […]


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Carbon tax repealed

Posted on July 24, 2014 by admin


The Abbott government has delivered on its long-standing election promise to repeal the carbon tax, effective from July 1, 2014. A condition of the repeal receiving crucial crossbench support from the Palmer United Party (PUP) was that savings be directly passed on to consumers and small businesses. As a result, the ACCC (Australian Competition and Consumer Commission) has been given extended powers to fine parties failing to do so. Initially this stipulation created anxiety amongst the business community, as the government failed to clarify whether or not all businesses would be required to provide proof of passing on savings. However, it has now been established that the ACCC is only required to ensure that electricity, natural gas and refrigerant gas companies pass on their carbon tax savings. The repeal has been largely welcomed by the business community, with predictions indicating that electricity prices will fall by approximately 9%, and gas prices by 7%. However, energy providers have indicated that there may be other factors that are contributing to rising prices, including increased electricity infrastructure spending and new legislation allowing the international sale of Australian gas. This means that the energy savings from the carbon tax repeal may not be as […]


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Australians paying too much in superannuation fees

Posted on July 8, 2014 by admin


It has been revealed that Australian superannuation fees are amongst the highest in the world. Many leading economists, including Treasury director David Gruen, are making a call for fees to be reduced, in line with national interests and an aging population. Cumulatively, superannuation fees cost Australians approximately $20 million per annum. This represents about 1% of GDP and equates to an average of $726 per person each year. Our superannuation fees are three times higher than their British equivalents. Recent research, conducted by the Grattan Institute, estimates that by halving super fees, funds would be, on average, 15% bigger by the time they reach pension phase. According to the Grattan Institute, an indication that the Australian superannuation industry is insufficiently competitive lies in the fact that there has been no reduction in fees as superannuation savings have soared. Theoretically, it should not cost significantly more to run a fund managing $1 billion than it should to run a fund managing $100 million.


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Using myTax

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The ATO has introduced a new streamlined online tax return process for individuals with very straightforward tax affairs. MyTax is made up of just ten screens and is intended for people whose only income derived from wages, salary, dividends, bank interest, allowances,  and/or other Australian government payments. To use myTax your only tax deductions need to be from work-related expenses, expenses related to income from interest or dividends, gifts/donations, and the costs associated with handling your own tax affairs. The only tax offsets that can be used in myTax are the senior Australians and pensioners’ tax offset, the zone and overseas forces tax offset, and/or the private health insurance rebate. If you wait until early August to file your tax return with myTax, the ATO will be able to pre-fill all of your relevant tax information from the past financial year. This means that all you will have to do is provide your identification details, review the information and then submit. In order to use myTax, you will need to have an existing myGov account. Both myGov and myTax are available on smart phones and tablet devices. If you are unsure whether myTax is appropriate for you then the ATO […]


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How does the super guarantee charge work?

September 20, 2017

Employers who do not pay the minimum amount of super guarantee for their employee(s) by the due date may have to pay the super guarantee charge (SGC).

The charge is made up of super guarantee shortfall amounts including any choice liability calculated on your employee’s salary or wages, interest on those amounts (currently 10 per cent) and an administration fee ($20 per employee, per quarter).

Employers must report and rectify the missing payment by lodging an SGC statement by the due date and paying the SGC to the ATO. Employers may be able to use a late payment to reduce the amount of SGC, however, they must still lodge an SGC statement and pay the balance of the SGC to the ATO.

The ATO prioritises the collection of unpaid SGC debts. If an employee reports an employer for unpaid super, the ATO will investigate on their behalf.

Employers must lodge their SGC statement and pay the charge by the due date.

Quarter Period Due date
1 1 July – 30 September 28 November
2 1 October – 31 December 28 February
3 1 January – 31 March 28 May
4 1 April – 30 June 28 August

If a due date falls on a weekend or public holiday, the payment can be made the next working day.

Once the statement has been lodged and the SGC is paid, the ATO will transfer the super guarantee shortfall amount and any interest to the employee’s chosen super fund.