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Succession planning and the transfer balance cap

Posted on January 24, 2018 by admin


The superannuation transfer balance caps have been problematic for SMSF members who don’t take careful consideration when succession planning. Failure to understand the impact of these transfer balance cap changes can have on your finances may force you to transfer large amounts of money out of your super. The transfer balance cap of $1.6 million that was introduced as of 1 July 2017 limits the amount of superannuation that can be transferred into an individual’s retirement phase. The cap incorporates all accounts the individual holds balances in. SMSF members ought be weary of the scenario in which a SMSF is paying two pensions, one to each party of a couple where both parties are receiving money under the transfer balance cap. When one of the spouses die, the remaining spouse could be in breach of the transfer balance cap because now they are the sole beneficiary of more than $1.6 million. Luckily, if you take time to plan carefully how to avoid the above limitations, you can have control over where (and to who) your super will go to when you pass. Consider the following: Accumulation vs pension phase The new transfer balance cap rules state that, at any given […]


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FBT issues that raise ATO attention

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With the FBT year-end just around the corner, it is a good time to review your FBT compliance to avoid raising attention from the Australian Tax Office (ATO). The ATO is currently targeting the following rules for FBT: Motor vehicles Situations where an employer-provided motor vehicle is used or available for private travel for staff. This is a fringe benefit and must be declared on the FBT return (if lodgment is required). However, there are some circumstances where this is exempt; be sure to check before lodgement. Employee contributions The ATO focus on employee contributions that have been paid by an employee to an employer and are declared on both the FBT return and employer’s income tax return to ensure they are correctly reported. Employer rebate A taxpayer must be a rebatable employer to claim a FBT rebate, the ATO will check the taxpayer’s eligibility as some employers incorrectly claim for this rebate. Living-away-from-home (LAFHA) allowance Common errors with the LAFHA allowance include claiming reductions for ineligible employees, failing to obtain declarations from employees, claiming a reduction in the taxable value of the LAFHA benefit for exempt accommodation and food in invalid circumstances and failing to substantiate expenses relating to […]


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Secrets to a savvy SMSF

Posted on January 17, 2018 by admin


Opting for a self-managed super fund (SMSF) can be a clever financial decision, but it’s not for everyone. If you aren’t prepared to adhere to the following tips, your SMSF will most likely fail to perform as well as you would of hoped it to. Stay informedYou can’t expect your SMSF balance to be the most profitable for you in your retirement phase if you don’t remain educated on the vastly changing compliance laws. Remaining up-to-date with these changes, and how they impact upon your nest egg is an essential aspect of making your SMSF work for you, your spouse and your children. StrategyThe ultimate long-term goal of your SMSF is to allow you to retire comfortably, maintaining the life you have become accustomed to throughout your working years. To do this, you need to have a strategy; the decisions you make regarding your SMSF should be part of this strategy, not just transfers here and there because your financial advisor told you to. Your strategy should be reviewed at least annually. You need to be aware of how each decision will impact upon and ultimately lead you towards the financial security you work so hard to achieve for your […]


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FBT parking exemptions for small businesses

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It is quite common for small businesses to provide their staff with car parking benefits, however, many business owners may not take into account the effect parking has for fringe benefits tax (FBT) purposes. Fortunately, if you are a small business, car parking benefits are exempt if you meet all of the following conditions: – the parking is not provided in a commercial car park – you are not a government body, a listed public company, or a subsidiary of a listed public company – either your gross total income for the last income year before the relevant fringe benefits tax (FBT) year was less than $10 million, or you were a small business for the last income year before the relevant FBT year. Where an employer reimburses an employee’s car parking fees, i.e., if they park at a commercial car park, this will subject the employer to FBT.


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Super funds boast high returns in 2017

Posted on January 11, 2018 by admin


Superannuation funds in Australia have delivered a return of 10.5 per cent for 2017 – the first double-digit growth since 2013. According to recent findings, there was a 1.3 per cent rise in November 2017 and 0.6 per cent rise in December 2017 alone. The new figures mark the sixth consecutive year of positive returns for super funds. Super fund returns overtook returns in the property market, as property returns weighed in at 9.1 per cent last year. Investors should review their super fund’s performance at the start of the new year and make sure it is delivering value for money outcomes. Although the returns provide a degree of confidence for investors, it is important to remember that markets are volatile and having a long-term investment strategy in place is vital.


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ATO targeting mischaracterised lifestyle assets and private pursuits

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The Australian Tax Office (ATO) is targeting privately owned and wealthy groups that display specific behaviours and characteristics in relation to their tax affairs and lifestyle. A large focus is currently on lifestyle assets and private pursuits that generate deductions or are mischaracterised as business activities. The ATO is also looking at those assets and pursuits which are incorrectly accounted for in terms of Division 7A or Fringe Benefits Tax (FBT). Activities that attract the Tax Office’s attention include: – private aircraft ownership or activities – art ownership and dealings – car or motorbike racing activities – luxury and charter boat activities – enthusiast or luxury motor vehicles – grape growing and other farming pursuits – horse breeding, racing and training activities – holiday homes and luxury accommodation provision – sporting clubs and other activities involving the participation of principals or associates of principals of private groups. The ATO is addressing the following tax risks: Income tax – Entities claiming deductions from ownership lifestyle assets or private pursuits against other income derived by the entity but not carrying on a business. – Individuals disposing of assets and not declaring the revenue or capital gains on those disposals. – Entities incorrectly […]


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Claiming personal super contributions deductions

May 25, 2018

More taxpayers can now claim a personal super contributions deductions this tax time due to the removal of the 10 per cent maximum earnings condition that came into effect from 1 July 2017.

Eligible individuals include those who earn their income from:

Those who wish to claim a deduction need to: