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SMSF rollovers in SuperStream to be deferred

Posted on July 15, 2019 by admin

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.

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Maximising your tax return as a home-based business

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Small business owners may be able to claim deductions for the costs of using your home as a principal place of business when filing your 2019 income tax return. Tax deductions may be claimed for the business portion of expenses that include electricity, cleaning, rent payments or mortgage repayments. However, it can be difficult to ensure you are claiming expenses you are entitled to. How you operate the business out of your home will determine the types of expenses that may be claimed. Your business structure will also affect your entitlements and obligations when claiming deductions on home-based business expenses. Individuals that operate a business as a sole trader or partnership are entitled to claim a deduction for the costs of running their business from home. There are two types of expenses that can be claimed, running expenses or occupancy expenses. Running expenses refer to the increased costs of using your home’s facilities for the running of your business. Occupancy expenses are those that you pay to own or rent your home. Typically, those that are eligible to claim occupancy expenses can also claim running expenses. Records that need to be kept include written evidence, tax invoices and receipts, which […]

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Claiming a tax deduction for personal super contributions

Posted on July 8, 2019 by admin

Members of self-managed super funds (SMSFs) that are eligible can claim an income tax deduction on personal super contributions. Members that intend to do this must notify their fund trustee before lodging their 2019 individual tax return. The eligibility requirements to claim a deduction for personal super contributions include: Contributions that were made before 1 July 2017 were made to a complying super fund or retirement savings account. Contributions that were made on or after 1 July 2017 were made to a fund that was not: A Commonwealth public sector super scheme for which you have a defined benefit interest. A constitutionally protected fund or another untaxed fund that did not include your contribution in its assessable income. A super fund that notified the ATO before the start of the income year that they would treat all member contributions as non-deductible. Members must meet the age restrictions: If you are aged 75 or older, you can claim a deduction for contributions made before the 28th day of the month after you turned 75. If you are aged 65 or older, you must satisfy the work test or meet the work test exemption criteria in order for your fund to accept […]

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Using your tax return wisely

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Getting your tax refund back is exciting, but as tempting as it is to splurge, consider other ways you can put that money to good use. It is easy to get caught treating your return as extra money when you shouldn’t see it any differently than your regular paycheck. Give the money a purpose by thinking about your personal financial situation and determining your needs. Emergency fund: An emergency fund can make all the difference if a difficult financial situation comes up, acting as a backup in the case of an emergency such as losing your job or medical costs. Building an emergency fund with enough money to cover at least three months worth of expenses is a good starting point. Make sure the money is added to a high-interest savings account to utilise compound interest. If you are contributing regularly to this fund, adding money from your tax return can boost it above schedule. Make debt repayments: With a bit more money at your disposal, now is the time to make repayments on debts you may have. Start with the higher interest debts and work down, your interest repayments will drop when you lower your outstanding balance. These debts […]

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Tax bracket changes passed

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In the 2019-20 Federal Budget, the Government announced their plans to change and build on the Personal Income Tax Plan. These changes affect the low and middle-income tax brackets and were passed on 5 July 2019. The Budget proposed that from the 2018-19 income year: There will be an increase to the low and middle-income tax offset from a maximum amount of $530 to $1,080 per annum and an increase in the base amount from $200 to $255 per annum. Taxpayers with a taxable income which does not exceed $37,000 will receive a low and middle-income tax offset of up to $255. Taxpayers with a taxable income which exceeds $37,000 but is not more than $48,000 will receive $255, plus an amount equal to 7.5% to the maximum offset of $1,080. Taxpayers with a taxable income which exceeds $48,000 but is not more than $90,000 will be eligible for the maximum low and middle-income tax offset of $1,080. Taxpayers with a taxable income which exceeds $90,000 but is not more than $126,000 will be eligible for a low and middle-income tax offset of $1,080, less an amount equal to 3% of the excess. Assessments for returns that have already been […]

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PAYG reporting dates approach

Posted on June 27, 2019 by admin

Changes have been made throughout the year regarding SMSFs and their pay-as-you-go (PAYG) withholding. As the end of the financial year and the due date for PAYG reporting approaches, SMSF trustees should be checking whether they are meeting new withholding obligations for capped defined benefit income streams paid to their members. If you have PAYG withholding obligations in 2018–19 you must provide your members with a PAYG payment summary by 14 July 2019 and lodge a PAYG withholding payment summary annual report with the ATO by 14 August 2019. SMSFs have PAYG withholding obligations for super benefits paid to members who are: Under 60 and the benefit is an income stream (pension) or a lump sum. Under 60 and the death benefit is a pension which is a capped defined benefit income stream where the deceased was 60 or over when they died. 60 or over and the benefit is a pension which is a capped defined benefit income stream. Capped defined benefit income streams include life expectancy and market linked pensions which were payable before 1 July 2017 and reversionary income streams paid to beneficiaries. SMSF trustees who are paying a capped defined benefit income stream to a member […]

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End-of-year Single Touch Payroll changes for employers

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Single Touch Payroll (STP) will change how employers report their employee’s end-of-year information to both employees and the ATO. The first year of STP for employers with 20 or more employees will soon come to an end at the completion of this financial year. Employers that are reporting through STP will no longer need to: Provide payment summaries to their employees for amounts reported and finalised through STP, as an income statement will get sent to employees’ through their ATO online services account (accessed through myGov) instead. Lodge a PAYG payment summary annual report to the ATO for information that is reported and finalised through STP, as long as the finalisation declaration is completed by the due date. Employers who started reporting through STP in the 2018-19 financial year will have until 31 July 2019 to make the finalisation declaration through their STP-enabled solution. The declaration states that you have completed your reporting for the financial year. Employers should ensure that all STP information is true and correct before making their finalisation declaration. Employee payment summaries and PAYG payment summary annual reports are still required for all payments that are not reported and finalised through STP, due 14 July 2019 […]

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Penalty interest deductibles

Posted on June 24, 2019 by admin

The ATO has recently replaced the Taxation Ruling (TR) 93/7W on whether penalty interest is deductible to the new TR 2019/2. This new ruling highlights the circumstances in which penalty interest is deductible and the situations where it is not. “Penalty interest” refers to an amount charged by a lender to a borrower under a loan agreement if instalments are not paid. The payable amount is then calculated by reference to a number of months of interest that would have been received. TR 2019/2 says that penalty interest is generally deductible under section 8-1 where: The borrowings are incurred when gaining or producing your assessable income; or It is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. Penalty interest that is incurred to discharge a mortgage is also deductible under section 25-30, to the extent that borrowed funds were used to produce assessable income. The ATO makes a note that unlike the general deduction provisions, there’s no influence from the expense being capital or revenue in nature. You cannot deduct a loss or outgoing under section 8-1(2) to the extent that: It is of capital or capital in nature. It is […]

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Is your SMSF adequately diversified?

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When forming a fund’s investment strategy, diversification is a notable consideration for SMSF trustees. By spreading the investments of a fund across different asset classes and markets that offer varying risks and returns, SMSF members can better position themselves for a secure retirement. Why diversify?The intention of diversification is to spread the investment risk of an SMSF. The idea is that if one asset underperforms, it can be offset by the success of other assets and keep the fund on track to meet its investment objectives. Diversifying investments across uncorrelated assets, such as shares and bonds, may also make it possible for investors to lower the volatility of the portfolio. How to diversify your fund:Accessing certain asset classes can be challenging for SMSFs due to minimum investment requirements or other ownership restrictions. Managed funds and exchange-traded funds (ETFs) are two options that can provide easy access to diversification. Managed funds pool together money from multiple investors which professional managers then invest in a variety of assets, such as global or local shares, offshore property or high-yield investments. ETFs, on the other hand, aim to replicate the performance of a particular index or group of assets, which can give an investor […]

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First Home Super Saver Scheme

Posted on June 18, 2019 by admin

The First Home Super Saver (FHSS) scheme was introduced in the Federal Budget 2017–18 to reduce pressure on housing affordability. The scheme allows people to save money for their first home inside a superannuation fund, helping first home buyers to save faster. Changes introduced to the FHSS scheme in the Treasury Laws Amendment (2019 Measures No. 1) Bill 2019, will come into effect on 1 July 2019. The FHSS can now only be applied to a first home that is bought in Australia, as opposed to previously being in any location. Another change is that individuals must now also apply for and receive an FHSS determination from the ATO before signing a contract for their first home or applying for the release of FHSS amounts. A contract can be signed to purchase or construct a home either: From the date a valid request to release your FHSS amounts is made; Or up to 14 days before a valid request to release your FHSS amounts is made. There is no longer a waiting period between the first FHSS amount being released and signing a contract to purchase or construct the home. Individuals now have 12 months from the date they make […]

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