Archive by Author
Self-managed super fund (SMSF) trustees who are in pension phase must lodge their SMSF annual returns if they remain active, or choose to wind up the fund.
The ATO is warning SMSF trustees about their regulatory obligations and is paying close attention to those SMSFs that are not meeting their lodgment obligations.
Trustees must lodge a Self-managed superannuation fund annual return 2017 if it was a self-managed super fund on 30 June 2017, or a self-managed super fund that was wound up during 2016-17.
Super funds that are not SMSFs at the end of 2016-17 must use the fund income tax return 2017 and, where required, a separate super member contributions statement.
Even if your fund does not have a tax liability, your SMSF must lodge an SMSF annual return.
Those selling property as part of a business sale may be eligible for the margin scheme.
The margin scheme is a way of working out the GST you must pay on the property that you are selling as part of your business. The scheme is only applicable if the sale of a property is taxable.
The GST on property sales is generally equal to one-eleventh of the sale price. If the margin scheme is used, the GST is calculated on the difference between the sale price and your purchase price of the property (or the property’s value on 1 July 2000 if it was acquired before that date).
To meet the eligibility requirements you need to be registered for GST or required to be registered for GST.
Contact our office to check your eligibility for the margin scheme when selling property as the application of GST to property-related transactions can be quite complex.
The Australian Tax Office (ATO) has released its June 2017 quarterly SMSF statistical report detailing key SMSF figures.
As of June 2017, the number of SMSFs increased to 596,516. The number of SMSF members in Australia is 1,124,453.
The estimated value of total Australian and overseas SMSF assets is $696.7 billion.
The number of annual wind-ups including both those initiated by trustees and those as a result of ATO compliance and cleansing activity was 1,419 as of June 2017. This is a significant decrease from 10,551 in June 2016.
The top five asset types held by SMSFs by value include listed shares (30 per cent or $212,210m), cash and term deposits (23 per cent or $159,686m), non-residential real property (11 per cent or $74,772m), unlisted trusts (10 per cent or $71,455m) and other managed investments (5 per cent or $37,695m).
Australian goods and services tax (GST) will be implemented on sales of low-value goods imported into Australia by consumers as of 1 July 2018.
According to the ATO, business will have to register for GST, change GST on sales of low-value imported goods and lodge returns if they meet the $75,000 AUD registration threshold.
These business includes merchants who sell goods, electronic distribution platform operators or re-delivers. Customs duty and clearance charges will be changed to the importer at the border under existing process should goods be imported in a consignment over the value of $1,000 AUD.
Through the implementation of this new law, businesses will not:
– Charge GST on a sale where GST is to be charged at the border. This occurs when an item is worth over $1,000 AUD or is a tobacco product or alcoholic beverage.
– Need to charge GST where it is clear that multiple goods will be shipped in the one consignment coming to a value of over $1,000 AUD. In these instances, GST will be charged at the border instead.
The ATO will be holding a number of international engagements on the application of Australian GST to low-value, imported goods sales throughout November 2017.
Self-managed super funds (SMSFs) have access to a range of tax deductions for expenses incurred. Whether the expenses are capital in nature or are considered as revenue will affect eligibility for claiming such deductions.
The Tax Office considers an expense that is incurred in establishing or making enduring changes to a super fund’s structure or function as capital and not deductible under the general deduction provision. For example, the costs of establishing an SMSF are capital in nature. An expense incurred in acquiring capital assets is also usually capital in nature.
Trust deed amendment costs incurred in establishing a trust, executing a new deed for an existing fund and amending a deed to enlarge or significantly alter the scope of the trust’s activities are generally not deductible as they are capital in nature.
If trust deed amendments are required to facilitate the ongoing operations of the super fund, they are generally deductible. For example, if a fund amends a trust deed to keep it up to date with changes in super legislation this would be deductible.
Furthermore, expenses incurred in making changes to the internal organisation or day to day running of the fund are not considered to be capital in nature provided such changes do not result in an advantage of a lasting character. If a super fund is carrying on a business, it may be entitled to deduct certain capital expenses under the specific deduction provision, section 40-880 of the ITAA 1997.
Funds that incur expenditure in gaining or producing exempt income or incur expenditure of a capital, private or domestic nature cannot access a deduction under Section 8-1 of the ITAA 1997.
Contact our office if you have any questions about the deductibility of your SMSF’s expenses.
To protect honest, compliant Australian businesses, the Australian Taxation Office has placed a strong emphasis on targeting the cash and hidden economy.
The ATO is visiting businesses that deal predominantly in cash, with a focus on those that:
- Fail to meet super or employer obligations, and that fail to register for GST or lodge activity statements.
- Operate outside regular small business benchmarks specific to their industry.
- Show discrepancies between what they have reported and our collected data relating to electronic payments.
- Operate and advertise as cash only.
- Income does not correlate with the lifestyle of the business owner, i.e. assets and spending habits exceed what is expected of someone with their reported income.
- Are reported to the ATO by members of the community or any third party regarding potential tax evasion.
- Are part of an industry that is known for dealing primarily in cash only.
When out visiting cash-only businesses, the ATO will be working in unison with local authorities and industry associations to asks questions and discuss:
- Why the business operates primarily or only in cash.
- The need to lodge tax returns and activity statements.
- How to be compliant in relation to tax and super obligations.
- Different claims and tax deductions businesses can make.
- The general community preference to have EFTPOS or electronic payment options available to them.
- Benefits of electronic payment and record keeping facilities.
- Relaying tools and services businesses can use if they are struggling to ensure they are compliant with Australian tax laws.
- Any other help they may need.
If the ATO comes across a business that is doing the wrong thing or failing to meet their obligations, they have a duty to take action. This may result in the business facing an audit and possible prosecution.
If you have made a mistake and make a voluntary disclosure detailing your errors, the ATO will work with you to rectify this and create a solution.
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.
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.
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.
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 apply to have your LISC paid directly to you.
Low-income super tax offset
The low-income tax offset (LISTO) was introduced from 1 July 2017. If you earn income up to $37,000, you may be eligible to receive a refund into your super account. This is on the tax paid on your concessional super contributions up to a cap of $500.
This means most low-income earners will pay no tax on their super contributions.
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
– period you use it for this purpose
– whether you’re eligible for the ‘absence’ rule
– whether it was first used to produce income after 20 August 1996.