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Lower House passes first home super scheme

Posted on October 27, 2017 by admin


While many Australian’s sit firmly on either side of the first home super scheme debate, the Lower House has passed the scheme. The scheme was proposed in the Budget released in May 2017 and was only just passed by the Lower House. The Government has notioned that Australia’s retirement savings system will not come under threat by allowing first-homebuyers to use their superannuation funds to save for a house deposit. The measure was passed with the strong backing of the Coalition, even though it is heavily opposed by Labor and the Greens. The opposition claims the scheme will not make housing more affordable, which is a key issue in the property market today, with record low numbers of young people entering into the property market.


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Assistance for new business owners

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The ATO has established the ‘Business Assistance Program’ to help new business owners understand their tax obligations associated with running a business. Small businesses that have recently registered for an ABN, registered for GST or likely to register for GST in the near future and have a turnover of less than $2 million a year can access this program. The ‘Business Assistance Program’ offers tailored tax support over a 12 month period and can help with: Tax obligations based on your business structure Registering for GST and GST obligations Employer obligations Super obligations Record keeping requirements Understanding business activity statements Using the ATO’s digital services. Within 48 hours of submitting the online registration form for the program, you will receive a welcome email containing tax topics, links to useful information and information about the program.


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Super co-contributions

Posted on October 18, 2017 by admin


Individuals may be eligible for a Government super co-contribution. A Government co-contribution means the Government adds to your super. You may be eligible for the super co-contribution, low-income super contribution (LISC) from the 2012-13 to 2016-17 financial years, or low-income super tax offset (LISTO) from 1 July 2017. Super co-contribution The Government will make a co-contribution of up to $500 if you are a low or middle-income earner and make personal (after-tax) contributions to your fund. The eligibility conditions for a co-contribution from the 2017-18 financial year include: a total superannuation balance less than the general transfer balance cap for that year the contribution you made to your super fund must not exceed your non-concessional contributions cap for that year. Low-income super contribution The low-income super contribution (LISC) is a Government super payment of up to $500 to help low-income earners save for retirement. If you earn $37,000 or less a year, you may be eligible to receive a LISC payment directly into your super fund. The LISC is 15 per cent of before-tax super contributions made you or your employer from the 2012-13 to 2016-17 financial years. If you have reached your ‘preservation age’ and are retired you can […]


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Selling your home and CGT

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When it comes time to sell your home, you may be wondering if you will need to pay capital gains tax (CGT). Generally, if you live in the home you are selling you will not have to pay CGT under the main residence exemption. The ATO considers a dwelling as your main residence if: – you and your family live in it – your personal belongings are in it – it’s the address your mail is delivered to – it’s your address on the electoral roll, and – services such as gas and power are connected. If the home has been used to produce assessable income such as running a business from it, renting it out or flipping it, you may not be entitled to the full main residence exemption from CGT. This means you will have to pay CGT on part of any capital gain made when your sell your home. For those who use their home to produce income, i.e., renting out part or all of it, you can work out the capital gain that is not exempt by taking into account the following factors: – proportion of the floor area that is set aside to produce income […]


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Splitting super

Posted on October 13, 2017 by admin


When partners in an SMSF separate, there are specific legal and tax implications that should be considered. It is possible to split super benefits, i.e., transfer assets, such as property, from one super fund into another and roll money over to another fund; however, trustees need to keep the following in mind: Separating couples need to work out how they will split their super. They can choose to enter into a formal written agreement, seek Consent Orders, or if the separating couple cannot reach an agreement, they can seek a court order. It is important to have necessary documentation in the event of an ATO audit including financial and non-financial records. Due to the tax outcomes of splitting super in an SMSF, it is essential to have documentation, such as the notice for splitting the super, to show a genuine separation. There is the potential for SMSFs with property as a major form of investment to create a liquidity problem; however, this can be addressed with future contributions. Individuals will also need to be aware of the market valuation rules for real estate in SMSFs. If one member establishes a new single-member fund it is advisable to incorporate a special […]


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Protecting honest businesses

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In its effort to facilitate a fair business environment, the ATO has offered continued support for honest businesses. With an estimated $40 billion lost to the hidden economy, the need for strong diligence and continued governance over Australian businesses is essential. The Black Economy Taskforce that was established in May 2017 and various trends have since been better understood regarding strategies dishonest businesses and individuals are using to evade their tax responsibilities. Trends show that problematic areas include: The sharing economy: the money exchanged through services such as Airbnb, Airtasker and Uber are all taxable. Ensure you understand how to be compliant before engaging with these services. Cash transactions: employers paying employees in cash to avoid tax and super responsibilities costs the economy an astronomical amount, as well as contractors accepting cash payments and not accurately documenting these. Incorrect reporting: individuals and businesses failing to report their business dealings correctly are creating huge liabilities in the economy. Small reporting dishonesties by a great portion of taxpayers creates a large balance of unaccountable money; the majority of unaccountable money in relation to tax evasion.


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Transfer balance account report now available

Posted on October 5, 2017 by admin


The new transfer balance account report (TBAR) is available on the ATO’s website. Self-managed super funds can use the TBAR report to report events that affect an individual member’s transfer balance account. The option to report is available from 1 October 2017, however, SMSFs are not required to report anything until 1 July 2018. Events that affect a member’s transfer balance account will need to be reported to minimise the tax consequences of exceeding the transfer balance cap. Funds with straightforward affairs are likely to have only a few events per member to report over the life of the fund. Common events that will require reporting include: the values of any retirement phase income streams to which an SMSF member is entitled, including reversionary income streams the value of any commutation of a retirement phase income stream by an SMSF member structured settlement payments an SMSF member receives and contributes to their fund certain limited recourse borrowing repayments that give rise to a transfer balance credit as a result of recently enacted legislation.


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Reporting SMSF changes

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Self-managed super fund trustees must notify the Australian Tax Office (ATO) if there are changes to their SMSF. Trustees must provide written notice within 28 days if there are changes to: the name of the fund the address of the fund details of the contact person the membership of the fund the trustees of the fund the directors of the fund’s corporate trustees your SMSF’s bank account details and Electronic service address. The above details are used by the ATO to determine if your fund meets the definition of an SMSF. Providing incomplete or inaccurate information may make it impossible for your fund to receive rollovers or contributions. If any of these details change for your SMSF, contact our office to update your details.


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Managing risk in your SMSF

October 12, 2018

SMSFs provide the trustee autonomy and an increased opportunity to maximise your retirement savings. However, an investment strategy must be accompanied by a risk management plan should some of your investments come up short.

Consider the following risk management strategies:

Diversification
Diversification reduces risk by investing in many different assets including property, annuities and equities. By spreading your earnings across several investments you minimise the risks to your retirement nest egg that can occur if one investment suffers a loss or a disappointing return. Organise your target returns according to your asset class and establish the accepted variation range from this target. This allows you to track your investment portfolio and whether it is setting you on the right financial path.

Liquidity
If you tie up your money in assets like property, then you may run short on cash. It is important that you have cash to cover the costs of running your SMSF and in the case of a member’s total and permanent disablement. If you’re also forced to sell an asset to get this cash the market conditions may not be ideal, and you could receive a disappointing return because you need cash in a rush.