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How to catch out an illegal super scheme

Posted on April 18, 2018 by admin


When a super scheme seems too good to be true, it often is. Many illegal super schemes are operating in Australia, so it is crucial to understand the characteristics of such schemes. A popular illegal scheme is one whereby an individual is enticed by being told they can access their super early to pay off a credit card debt, go on a holiday, buy a car and so on. Generally, such schemes are illegal as superannuation can only be accessed early by meeting a condition of release. Those promoting such schemes usually: – Encourage individuals to transfer super from an existing super fund to an SMSF to access super before they are legally entitled to; – Target those under financial pressure or who do not understand the super laws; – Claim you can use your super for anything you want; – Charge high fees and commissions, and risk losing some or all of the individuals super to them. Unfortunately, participating in these schemes subject the affected individual to identity theft from the promoter of the scheme. Identity theft is when someone uses another person’s details to commit fraud or other crimes. Individuals need to be aware that super is usually […]


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Changes to GST payments at settlement

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Buyers of new residential premises or subdivisions of potential residential land will need to pay the GST component of the purchase price to the Australian Tax Office (ATO) as of 1 July 2018. The amount of GST will not change. This change does not affect the sales of existing residential properties or the sales of new or existing commercial properties. Buyers will need to split the amount of GST from the total purchase price, pay the GST component directly to the ATO by a disbursement at settlement and pay the GST exclusive purchase price to the vendor. It is important to note settlements will not be conditional on the payment of GST to the Tax Office. It is the property developer’s responsibility to provide written notice to the buyers when they need to withhold. The liability for GST remains with the property developer.


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Staying ‘super’ compliant

Posted on April 16, 2018 by admin


Employers have a legal responsibility to pay eligible employees superannuation to provide for their retirement. And although most employers do the right thing, some do try to bend the rules which can see them facing hefty penalties. Employees are entitled to superannuation if they are paid $450 or more before tax in a calendar month, this is known as the super guarantee (SG). To remain complaint, employers must pay SG quarterly using SuperStream. Not paying on time or not paying the right amount may mean you need to pay the super guarantee charge (SGC) and you cannot claim a tax deduction for super payments. Additionally, employers must report and rectify missed, late or underpaid SG contributions by lodging an SGC statement by the due date. The ATO reminds employers who are able but unwilling to meet their obligations that they are breaking the law. Firm compliance action is taken for employers who: – Repeatedly fail to pay the correct amount of SG – Attempt to obstruct the ATO’s ability to determine an SGC liability – Repeatedly fail to keep appointments – Repeatedly fail to supply information that is irrelevant, inadequate or misleading – Engage in any culpable behaviour to delay […]


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Fuel tax credit mistakes

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Fuel tax credits are provided to businesses who acquire, manufacture, import or use fuel in part of running a business. These credits can greatly benefit business owners but it is important to get the claim right. The ATO sees common mistakes made when calculating and claiming fuel tax credits, including: Wrong calculationsA common error is to calculate fuel tax credits using the cost of the fuel rather than the quantity of fuel multiplied by the relevant rate. The correct formula is: quantity of eligible fuel x correct fuel tax credit rate = fuel tax credits. Inaccurate recordsYou must keep accurate records of your fuel purchases and how the fuel is used in your business. If you claim less than $10,000 a year in fuel tax credits, you can use a range of documents to support your claims. Using an incorrect rateFuel tax credit rates change every February. Check the rates before you lodge your BAS. The current rates for fuel acquired from 5 February 2018 to 30 June 2018 are as follows: Eligible fuel type Unit Used in heavy vehicles for travelling on public roads All other business uses (including to power auxiliary equipment of a heavy vehicle)1 Liquid fuels, […]


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ATO alerts issued for unclaimed super

Posted on April 6, 2018 by admin


The Australian Tax Office (ATO) will be contacting 80,000 individuals, starting this week, to alert them of unclaimed super. An email campaign will alert members about ATO-held unclaimed super money from 5 April. On 16 April, 20,000 letters and SMS will be sent. The ATO currently holds unclaimed super money for around 5.38 million accounts, totalling $3.75 billion as at 30 June 2017. These alerts will form part of a number of strategies used by the Tax Office to reunite individuals with their unclaimed super. To claim unclaimed super money, individuals must create a myGov account which is linked to ATO online services. If you need assistance with unclaimed super, do not hesitate to contact our office today.


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ATO targeting holiday homes

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The Tax Office has rental property owners in its sights this tax season with a large number of mistakes, errors and false claims made by some using their own property for personal holidays. The ATO is reminding owners they cannot claim deductions for holiday homes that are not actually available for rent or only available to friends and family. Private use is entirely legitimate although it does reduce an owner’s ability to earn income from the property. Properties must be genuinely available for rent to claim deductions. This means you cannot use the property for your personal use or let friends and family stay rent-free and claim a deduction. For those who rent the property to friends or family at “mates rates,” they must only claim deductions for expenses up to the amount of the income received. In addition to rental properties, the ATO is investigating cases where taxpayers claim their property is available for rent but there is no intention of renting it out. Rental rates well above market rates and unreasonable conditions for prospective renters are just a couple of ways owners can be doing this. The ATO will also be scrutinising incorrect rental property claims. Data matching […]


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Non-arm’s length income from trusts and SMSFs

Posted on March 28, 2018 by admin


The ATO is reminding self-managed super funds (SMSFs) of the rules regarding non-arm’s length income from trusts. The non-arm’s length income rules can apply to investments, transactions and other arrangements undertaken by SMSFs when the terms of the relevant investment, transaction or arrangement are uncommercial in nature. If income is distributed from a discretionary to a SMSF beneficiary, it is: – automatically deemed non-arm’s length income of the SMSF (regardless of the nature of the dealings of the relevant parties) – taxable at the highest marginal tax rate. Income received by a SMSF that is a fixed entitlement to trust income is also non-arm’s length income if it is: – income from a scheme where the parties were not dealing with each other at arm’s length – more than the SMSF might have expected to derive if the parties were dealing with each other at arm’s length. If you are unsure whether income from trusts is considered arm’s length income, contact our office.


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Bitcoin tax scammers

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The Australian Tax Office (ATO) is warning taxpayers to be aware of scammers impersonating the Tax Office and demanding cryptocurrency such as Bitcoin as payment for fake tax debts. The ATO became aware of these fraudsters late last year with over $50,000 paid in Bitcoin to scammers claiming fake ATO debts. Once scammers receive payment, it is virtually impossible to recover it as cryptocurrency operates in a digital world. The ATO is also warning taxpayers to be wary of other tax scams such as those demanding direct deposits into third-party bank accounts, demanding payment via iTunes cards or with a prepaid Visa gift card. Over 80,000 scams were reported to the ATO in 2017, accounting for almost $2.4 million lost to scammers impersonating the ATO. Almost one-third of victims were targeted with iTunes gift card scams, resulting in over $900,000 lost to scammers. More than half of all losses (roughly $1.2 million) were from deposits or transfers made directly into third-party bank accounts. Scammers are also targeting taxpayers’ personal information with many reports of scammers asking for an individual’s Tax File Number.


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SMSFs and cryptocurrencies

Posted on March 23, 2018 by admin


Bitcoin and other cryptocurrencies have become increasingly popular over the past few years. As many keen investors jump on board, the ATO is reminding SMSFs to be aware of the tax consequences. Cryptocurrencies are classified as capital gains tax (CGT) assets, therefore, upon their disposal they may be subject to capital gains tax (CGT). It is essential to keep records of cryptocurrency transactions within a SMSF such as acquiring and disposing a cryptocurrency. An investment within a SMSF must: – Be allowed under the trust deed – Be in accordance with the investment strategy of the fund – Comply with SISA and SISR regulatory requirements When an SMSF invests in a cryptocurrency it must follow the same regulatory requirements that apply to investments in other assets. For example, super laws pertaining valuation, ownership and separation of assets, related party transactions, pension or benefit payments, sole-purpose test and voluntary disclosures apply to all cryptocurrency transactions.


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Employers urged to act now for Single Touch Payroll

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The Australian Tax Office (ATO) is urging employers with 20 or more employees to prepare for the introduction of Single Touch Payroll. Single Touch Payroll will be introduced from 1 July 2018, requiring employers to report their employee’s tax and super information to the ATO through Single Touch Payroll approved software. Employers will report each time they pay their employees, i.e., weekly, fortnightly or monthly. The information that will be reported includes withholding amounts, superannuation liability information or ordinary times earnings (OTE) and salary, wages, allowances and deductions. Single Touch Payroll will provide greater transparency and connect businesses to the ATO through their existing software. Employers must prepare by organising the following: A headcount of employees on 1 April 2018 to determine if there is 20 or more. If your numbers drop down to 19 or less, you will still continue to report through Single Touch Payroll unless you apply for and are granted an exemption. Talk to your software provider about how and when your product will be ready. Those without a software provider will need to find a provider that offers Single Touch Payroll. Update your payroll software when it’s ready. Start using Single Touch Payroll. Employers with […]


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How to catch out an illegal super scheme

April 18, 2018

When a super scheme seems too good to be true, it often is. Many illegal super schemes are operating in Australia, so it is crucial to understand the characteristics of such schemes.

A popular illegal scheme is one whereby an individual is enticed by being told they can access their super early to pay off a credit card debt, go on a holiday, buy a car and so on. Generally, such schemes are illegal as superannuation can only be accessed early by meeting a condition of release.

Those promoting such schemes usually:
– Encourage individuals to transfer super from an existing super fund to an SMSF to access super before they are legally entitled to;
– Target those under financial pressure or who do not understand the super laws;
– Claim you can use your super for anything you want;
– Charge high fees and commissions, and risk losing some or all of the individuals super to them.

Unfortunately, participating in these schemes subject the affected individual to identity theft from the promoter of the scheme. Identity theft is when someone uses another person’s details to commit fraud or other crimes.

Individuals need to be aware that super is usually only accessible once the preservation age is reached and they stop working. The preservation age is currently 55 years old for those born before 1 July 1960 and 60 years old for those born after 30 June 1964.

Superannuation can only be accessed early in special circumstances such as severe financial hardship and for specific medical conditions. There are severe penalties for illegally accessing your super early.