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ATO warns of illegal early super release

Posted on November 29, 2018 by admin

The ATO has issued a warning to the public regarding illegal early release of super schemes, which are subject to severe penalties. There are strict rules around when you can access your super so your current decisions do not jeopardise your quality of life in retirement. The ATO has reminded the public you may only access your super early if you have experienced severe financial hardship or you have reached the preservation age and have stopped working. How these schemes workThe promoters of these schemes: Encourage you to transfer or rollover your super from your existing super fund to an SMSF to access your super before you are legally entitled to Target people under financial pressure or those who do not understand super laws Claim you can access your super and put the money towards anything you want which is not true Charge high fees and commissions, presenting the risk of losing some or all of your super to them May request your identification documents which can result in identity theft Penalties:Penalties apply to promoters and individuals who illegally access their super early. If you illegally obtain your super early, it is included in your assessable income even if you […]

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ATO update: Tax deduction rules on travel to rental properties

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The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses. As a rental property owner you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property in your 2018 return, you will need to request an amendment. The law change came into effect on 1 July 2017 and affects tax returns from 2017-18 onwards. ExclusionsYou may claim these travel expenses on your tax return if you are carrying on a rental property business or are an excluded entity. An excluded entity is a: Corporate tax entity Superannuation plan that is not an SMSF Public unit trust Managed investment trust A unit trust or a partnership, all of the members of which are entities of a type listed above

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Paying super to contractors

Posted on November 26, 2018 by admin

The ATO classifies contractors paid for their labour as employees for superannuation guarantee purposes. This is the case even if the contractor quotes an Australian Business Number (ABN). Eligibility requirementsSuper contributions must be made for these individuals if you pay them: Under a verbal or written contract that is wholly or principally for their labour- that is, more than half the dollar value of the contract is for their labour For their personal labour and skills- which may include physical labour, mental effort or artistic effort and not to achieve a result To perform the contract work personally – they must not delegate. You do not pay super to a person when you make a contract with someone other than the person who will actually provide the labour, like a company, trust or partnership. How much to payThe minimum super amount you have to pay is 9.5 per cent of each worker’s ordinary time earnings. For contractors, employees calculate the minimum super amount on the labour component of the contract. The ATO will accept their market values of the labour if the values of the various parts of the contract are not detailed in the contract.

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ATO updates Taxpayer’s Charter

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The ATO has updated the Taxpayer’s Charter which prioritises a relationship with the public built on mutual trust, courtesy and respect in all interactions. Your rights regarding review of ATO decisions are clearly outlined by the Charter if you feel you have been mistreated. The Charter has also committed the ATO to use easy to understand language, so their information is accessible to the public. Some of the changes include: Simplified information about what to expect if your business goes through a review and audit process More details on the ATO’s digital interactions with small businesses Moving away from complex language to make things easier to understand Including a one-page overview of your rights and obligations Refer to the ATO to review the updated Taxpayer’s Charter for yourself.

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SMSF trustee investment strategy checklist

Posted on November 20, 2018 by admin

SMSF trustees have the freedom to invest as they choose to grow their retirement savings, which is why it is vital that they check in on their investment strategy regularly. Maximising your retirement nest egg depends on how well your investment strategy functions at different phases in your working life. This is why your investment strategy should shift according to your changing financial circumstances. A new job, fluctuating markets, changes in tax laws or your retirement drawing closer may mean it’s time to switch up your investments. Here is a checklist to get you started. Map your risk profiles Consider circumstances including risk, diversity, liquidity and member’s circumstances Take out insurance for members Confirm all fund investments comply with super laws and are allowed under a trust deed Plan to regularly review your investment strategy Document any decision about investment strategy

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ATO provisions for mental health

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Small business owners suffering from mental health issues can seek the ATO’s help in meeting their taxation and super commitments. If you are going through tough times take advantage of ATO services that will help keep your finances in check. Get in contact with the ATOGet in touch with the ATO as soon as you realise your mental health is impacting your ability to keep track of your tax. An ATO official can assess your circumstances, advise you on your options and help come up with a solution. The ATO offers an after-hours web chat and an after-hours call back service to get you the help you need. If you wish to talk over the phone, book in a time by completing the ATO’s online form. You may also have a person speak on your behalf provided you have authorised them as a nominated representative and verified their identity. Support optionsOnce you have contacted the ATO, there are several options you can choose from to make it easier to stay up to date at tax time: Tailored payment plans Lodgement and payment deferral Requesting priority processing of your tax return refund Registering for personalised business assistance

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Trustee reporting obligations checklist

Posted on November 8, 2018 by admin

Trustees must comply with reporting obligations to avoid penalties from the ATO. The following trustee reporting checklist to make sure you are stress-free at tax-time. Trustees must: Value the funds’ assets at their market value at 30 June Pay any minimum annual income stream payments required under super laws Get an actuarial certificate if required Prepare the fund’s end of year financial accounts and statements Appoint and approve a SMSF auditor not more than 45 days before the SMSF annual return is due Lodge your SMSF annual return by the due date Lodge your transfer balance account reports if required Review the fund’s investment strategy and document the review Maintain all the fund’s records as required under super law

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Record keeping for small businesses

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Businesses that fail to keep accurate records may struggle to remain compliant at tax time and incur financial penalties from the ATO. Follow the ATO’s record keeping guidelines to stay organised. Basic organisation tips: Keep records electronically (if possible) Keep evidence of all transactions Take photos of paper receipts to avoid faded records Keep all business records including income, expenses and bank records- you generally need to keep them for five years Keep your business records separate from your personal records Financial tips: Make sure business records include cash, online, EFTPOS, bank statements, credit and debit card transactions Records should be kept of sales and other business income and business expenses which can be claimed as a deduction Keep records showing when you use business purchases for private purposes, which will help you work out the business portion you can claim as a deduction Use the ATO record keeping evaluation tool to review your record-keeping practices from time to time and see if you’re still on the right track

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SMSF rollovers in SuperStream to be deferred

July 15, 2019

The 2019-2020 Federal Budget suggested a deferral of the extension of SuperStream to self-managed superannuation fund (SMSF) rollovers from 30 November 2019 to 31 March 2021. The commencement of this deferral has recently been confirmed by the government.

The deferral will coincide with the $19.3 million that will be provided to the Australian Taxation Office (ATO) over three years from 2020-21, enabling electronic requests to be sent to superannuation funds for the release of money required under a number of superannuation arrangements.

With the combined date for both bringing electronic release authorities into SuperStream and allowing SMSF rollovers, changes needed to update SuperStream will only need to be undertaken once. The deferral aims to reduce administrative costs for funds and allows for a more integrated design of SuperStream.

First introduced in 2015, SuperStream is a government standard for processing superannuation payments electronically in a streamlined manner. Currently, SuperStream can only process rollovers between two APRA funds electronically but with the change will see this process extend to SMSFs.

Regulations for the deferral to put into effect will be made promptly.