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Superannuation Guarantee Amnesty

Posted on July 27, 2018 by admin

The Superannuation Guarantee Amnesty was introduced on 24 May 2018 by the Minister for Revenue and Financial Services in a bid to tackle non-payment of employee super. The Amnesty provides a one-off opportunity for employers to self-correct any past super guarantee (SG) non-compliance without incurring a penalty. However, there is a lot of ambiguity around which employees are entitled to compulsory super payments. Small business employers need to pay special attention to these particular areas: Ordinary time earnings An understanding of ordinary time earnings (OTE) is essential as it is used to calculate tan eligible employees minimum SG contributions. OTE is generally what your employees earn for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments. The SG is 9.5 per cent of an eligible employees ordinary time earnings (OTE). If you make super contributions under an award, check that they are enough to satisfy both the award and the SG. Issues can occur where an agreement prevails over an award, no ordinary hours of work are stipulated, where an employee gets reimbursed, there is no award or agreements and where overtime is paid the same as ordinary hours. Contractors So […]

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Income tax gap results

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The ATO has released its latest findings on the tax gap for Australian individuals. The estimated gap in 2014-15 is approximately $8.7 billion or 6.4 per cent. The income gap is an estimate of the difference between the tax the ATO collects and the amount that would have been collected if each taxpayer was fully complaint. Over 93 per cent of income tax received from individuals not in business is paid voluntarily or with little intervention from the ATO. There are around 9.6 million individuals who are not in business and lodge tax returns. These taxpayers earn their income from salary and wages and investments. The tax gap is primarily driven by incorrectly claimed work-related expenses. The ATO says the most common mistakes include: – Claiming deductions where there is no connection to income – Claims for private expenses – No records to show that an expense was incurred. Other areas of concern include high rates of incorrect claims for rental property expenses and non-reporting of cash wages. The ATO is warning taxpayers to take care with that they claim, because all of those little amounts add up. The Tax Office uses data and technology to identify outliers, as well […]

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Reviewing your super

Posted on July 19, 2018 by admin

The ATO is encouraging taxpayers to review their super this tax time. Finding lost super or consolidating any unwanted multiple accounts can make a massive difference to your nest egg. There is over $18 billion in lost and unclaimed super. Those who have changed their name, address, job or lived overseas are at high risk of having lost super. During the last five years, more than $10.7 billion of super has been consolidated from over 2.1 million accounts through ATO online services. The ATO is also reminding taxpayers that the new super deduction is available. Most people under 75 years of age can claim a tax deduction for personal after-tax super contributions. Personal super contributions deductions provide a level of flexibility for young people that change jobs frequently, self-employed contractors, small business employees, freelancers and people whose employers do not offer salary sacrifice arrangements. To claim a deduction for any personal super contributions made in 2017/18, you must lodge a notice of intent to claim a deduction with your fund and receive a confirmation letter from them before lodging your tax return.

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Avoid scams this tax time

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The Australian Tax Office (ATO) is reminding individuals to remain vigilant against any scams that may pop up this year around tax time. With over 37,000 scam attempts reported to the ATO this time, last year, individuals need to be wary of scam artists looking to trick taxpayers into either paying for fake debts or giving away their personal details. Common scams include: – The ‘fake tax debt’ phone scam – ‘Fake refund’ – ‘Refund for a fee’ – Email and SMS contact – i.e., asking to click a link, download a file or open an attachment. Avoid being caught out in a tax-related scam by following these simple measures: Protect your personal details Scammers can use an individual’s personal information (i.e., tax file number, full name, date of birth or passwords) to impersonate them. Protect your personal details by storing them in a safe and secure location. Use correct payment methods To avoid paying a scam artist for a false debt to a non-ATO related account, make sure you are aware of the proper avenues for paying legitimate debts to the Tax Office. Avoid oversharing on social media Scammers may also try to use any personal information you have […]

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SMSFs: beware of illegal early super release

Posted on July 13, 2018 by admin

The Australian Tax Office (ATO) is reminding self-managed super fund (SMSF) trustees to beware of allowing members to access their super early. A self-managed super fund (SMSF) trustee must meet a condition of release before any funds can legally be released. The ATO can issue severe penalties if you or a SMSF member access your super before you are legally entitled to do so. Some consequences of getting caught up in an illegal super scheme include the disqualification of trustees, imposition of administrative penalties, the fund being made non-complying and prosecution. The Tax Office encourages those members who have been involved in an illegal super scheme to contact them immediately. The ATO will review your voluntary disclosure and take your circumstances into account when determining any penalties.

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Penalty relief for taxpayers

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From 1 July 2018, the Tax Office is advising Australians that if they find an error in their tax return or activity statement they will not incur a penalty but will advise of the error and how to get it right next time. Penalty relief will only apply to eligible taxpayers or entities (i.e., turnover of less than $10 million) every three years. These may include: – Small businesses – Co-operatives – Self-managed super funds (SMSFs) – Not-for-profit organisations Eligible individuals will only be given penalty relief on their tax return or activity statement if they make an inadvertent error because they either: – took a position on income tax that is not reasonably arguable, or – failed to take reasonable care The ATO will not provide penalty relief when individuals have (in the past three years): Received penalty relief – Avoided tax payment or committed fraud – Accrued taxation debts with no intention of being able to pay (i.e., phoenix activity) – Previously penalised for reckless or intentional disregard of the law – Participated in the management or control of another entity which has evaded tax. Individuals can not apply for penalty relief. The ATO is reminding individuals that […]

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ASIC’s view on SMSFs as ‘one-stop property shops’

Posted on July 5, 2018 by admin

The Australian Securities Investment Commission (ASIC) has released a new report highlighting its view on the setup of SMSFs for property investments using ‘one-stop shop’ models. ‘One-stop shop models’ tend to promote the purchase of residential property through SMSF borrowing. They are usually arranged by groups of real estate agents, developers, mortgage brokers, financial advisers and so forth. This model creates conflicts of interest that may affect the advice given to set up an SMSF. For example, these businesses take advantage of customers with limited or no knowledge of SMSFs or super and have the potential to cause major financial detriment, including: – Receiving inappropriate or misleading advice to set up an SMSF which may result in members being financially worse off – The obligations of a SMSF trustee are not clearly explained by the advice provider – Members may be encouraged into a property purchase at an inflated value, or unaware of undisclosed high commissions. The Australian Tax Office (ATO) are encouraging individuals to seek independent professional advice from a licensed adviser before establishing an SMSF and undertaking an new investment in an SMSF. SMSF trustees who make a mistake are also encouraged to make a voluntary disclosure to […]

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Avoid these five common Tax Time mistakes

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Tax Time is now upon us, with the ATO Assistant Commissioner announcing the top five mistakes commonly made when Australians complete their annual tax returns. Common mistakes some taxpayers are making include: – Leaving out a portion of their earnings, i.e., forgetting to include a job – income from a temp job, or income earned from the sharing economy. – Claiming personal costs for rental properties, i.e., claiming deductions for periods when they were using the property or claiming interest on loans used to buy personal assets (a car or a boat). – Making claims for expenses unrelated to their employment, i.e., personal phone calls, work to home commute or buying normal clothes. – Claims for things they have not paid for. – Not holding onto receipts or keeping insufficient records of their expenses to validate their claims. To avoid making common errors, the Tax Office is reminding individuals to: – Remain up-to-date with what you can and can not claim. – Keep detailed records. – Ensure you declare all your employment earnings.

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Expanded super for older Australians

April 12, 2019

The 2019-20 Federal Budget has placed a strong focus on the growth of the economy whilst also having the intention to look after older Australians.

Older Australians will benefit from the work test exemption age being extended from age 64 to 66. The work test requires an individual to work at least 40 hours in any 30 day period in the financial year in order to make voluntary personal contributions.

This change in age will now allow individuals aged 65 and 66 who previously didn’t meet the work test to contribute three years of after-tax contributions in a single year, meaning up to $300,000 can be injected into an account with less than $1.6 million in super (tax-free pension threshold). This adjustment aligns with the increase for the Age Pension from 65 to 67.

Spousal contributions can now be made until age 74, up from age 65, without having to meet the work test. Under spousal contribution regulations, an individual can claim an 18% tax offset of contributions up to $3,000 made on behalf of a non-working partner. A further $3,000 can be contributed but with no tax offset.