Author Archive
NSW payroll tax rate has been reduced
Posted by: | CommentsThe NSW Office of State Revenue has reminded taxpayers that the NSW payroll tax rate has been reduced to 5.45%, effective from1 January 2011.
Newly registered SMSF returns due
Posted by: | CommentsThe ATO has issued a reminder to trustees of newly registered Self Managed Super Funds that their fund’s 2010 tax return must be lodged by 28 February 2011. A Self Managed Super Fund must hold assets and Trustees of SMSFs which do not hold any assets must notify the ATO that the fund has been wound up or it’s registration may need to be cancelled. Only SMSFs which have been wound up can report “zero assets”.
Don’t be caught by these scams
Posted by: | CommentsThere have been a number of scams involving emails or phone calls claiming to be from the ATO. Although the tax office may call you from time to time, you should be wary of unsolicited calls. The tax office will never email or call you requesting credit card details or to notify you of a money transfer. Scams include:
- An email scam advising that money is to be transferred into your account – these emails ask for your personal details
- An email scam advising that the tax office has recalculated your refund – these emails also ask for your personal details including credit card and ATM PIN details
- An email scam providing a link to a website in order for you to claim your refund – the website will ask for your credit card details
- A phone scam where someone claiming to be from the ATO will call you and advise you have an unclaimed refund – the caller will ask you to transfer money in order to receive your refund.
Have you lodged your outstanding income tax returns?
Posted by: | CommentsThe Tax Office has warned that it will be sending default assessments warning letters to some taxpayers with outstanding income tax returns. These letters warn taxpayers to lodge their overdue returns by 13 January 2011, however the tax office has now provided an extension to 17 February 2011 due to the Christmas shutdown period.
NSW Stamp reduction for SMSF Trustee on transfer of property
Posted by: | CommentsAn Amendment to NSW Stamp Duty Laws has extended the $50 nominal duty concession for certain transfers of dutiable property to a trustee of a self managed superannuation fund (SMSF) made as a consequence of the retirement of a trustee or the appointment of a new trustee. Under the amendment, nominal duty of $50 will be charged on such a transfer that is made to a trustee of a SMSF (instead of ad valorem duty), if the Chief Commissioner is satisfied that the transfer is not part of a scheme for conferring an interest on a new trustee or other person to the detriment of the beneficial interest or potential beneficial interest of any person.
Therefore, the amendment should ensure that only nominal duty will apply on transfers of dutiable property to a trustee of a SMSF following the retirement or death of an existing trustee and/or the appointment of a new trustee to a SMSF holding “dutiable property” (eg land, unit in a unit trust scheme etc)
This amendment is deemed to commence on 1 July 2010. However the amendment does not apply in respect of a dutiable transaction for which liability for duty arose before 1 July 2010
Insurance Via A SMSF – Advantages And Points To Note
Posted by: | CommentsUsing a SMSF to put in place life and disability cover can be advantageous financially because you can use super savings rather than current cash to pay the premiums.
On the other hand, using a SMSF for trauma insurance is not recommended because that action is likely to breach the sole purpose test.
(Trauma insurance provides financial help in the event of a life-threatening disease.)
To avoid falling foul of the sole purpose test, any benefits from a trauma insurance policy would need to become part of the assets of the fund until the member can legally access them.
Of course, this could be many years in the future and would largely defeat the purpose of taking out trauma cover.
SMSFs For Employees Now Easier – Super Choice And Portability
Posted by: | CommentsHaving a self managed super fund (“SMSF”) is not just for the self employed. Employees can also take advantage of the benefits of a SMSF and two important rules changes in recent years have made this easier than ever.
- Super choice legislation means that many employees have the option of having their employer’s compulsory 9% super contributions paid into their own SMSF
- Improved portability provisions have made it a lot easier to transfer accumulated super savings held in an employer or equivalent fund to a SMSF
The vast majority of employees can have their employer’s future compulsory super contributions paid to a SMSF (or any other fund of their choice) under the super choice legislation.
The legislation doesn’t cover future salary sacrifice contributions. Employees need to negotiate an arrangement with their employer if they wish to pay those contributions into their SMSF.
To pay the compulsory 9% contributions into a SMSF, an employee needs to obtain from their employer the Standard Choice Form (reference NAT 13080), which has to be provided within 28 days. This is easy to complete. It requires the personal tax file number and the SMSF’s Australian Business Number (ABN).
Also required is:
SMSF Rule Change Extension – Account Based Pensions
Posted by: | CommentsThe concession halving the minimum amount an account-based pension has to pay has been extended to financial year 2010-11.
The annual minimum is set as a percentage of the pension account balance at the start of the financial year.
What this concession means is that those under 65 once again only have to draw out 2% of their pension balance, not the regular 4%.
The other minimums (under the concession) are…
- 2.5% for those age 65-74
- 3% for those age 75-79
- 3.5% for those age 80-84
- 4.5% for those age 85-89
- 5.5% for those age 90-94
- 7% for those aged 95 or over
The extension of the concession is good news for those who have no immediate need for income and prefer to continue to strengthen their financial position.
Cooper Review Of Superannuation – Implications For SMSFs
Posted by: | CommentsThe final report of the Cooper Review into the governance, efficiency, structure and operation of Australia’s superannuation system was released on Monday, 5 July 2010.
The Cooper Review found that the Self Managed Super Fund (SMSF) sector is largely successful and well-functioning and should form an integral part of the choice architecture. However, while not seeing the need for significant changes, the report did make a number of recommendations in relation to service providers and the regulatory framework applying to SMSFs.
Following are the key recommendations:
Regulation
- ATO to have power to issue administrative penalties on a sliding scale to reflect the seriousness of the breach
- ATO to have power to issue enforceable undertakings to require trustees to rectify breaches in reasonable time
- The ATO to have power to enforce mandatory education for trustees who have contravened SIS legislation
- ATO to have power to issue binding rulings on SMSFs
Service providers
- Develop an SMSF specialist component of RG 146
- Legislate to require advisers to hold an AFSL where they provide advice in relation to the establishment of an SMSF. The accountants’ licence exemption should be removed and not be replaced
- Approved auditors should be required to be registered by ASIC, and meet minimum competency, knowledge and independence standards developed by ASIC
Investments
- The Government should review the borrowing rules within SMSFs within two years to ensure borrowing is not becoming a major focus of SMSFs
- SMSFs should be banned from acquiring any in-house assets or collectible or personal use assets. Funds currently holding in-house, collectible or personal use assets should be required to dispose of them within 5 years
- All transactions between an SMSF and a related party to be conducted through an underlying market, or where that does not exist, require that all transactions must be supported by a valuation from a suitably qualified independent valuer
Asset valuation
- SMSFs to value all assets at market value with the ATO to publish valuation guidelines
Improving integrity
- Proof of identity checks should be required for all people joining an SMSF
- SMSF registration process should capture details of relevant service providers
- Similar naming rules applicable to bodies corporate should be applied to SMSFs
- Government to provide information to large APRA funds to enable them to verify the details of SMSF membership before processing rollover requests to SMSFs
- Criminal and civil sanctions to enable the ATO to penalise and discourage illegal early release scheme promoters
- Amounts illegally withdrawn from super taxed at 45%
Other
- Amend the SIS Act to automatically deem anything permitted by the SIS Act or a tax act to be permitted by SMSF trust deeds
- Amend the rules relating to investment strategies so that SMSF trustees are required to consider life and TPD insurance for members as part of their investment strategy
Future posts will consider the recommendations in more detail.
For advice on any matters concerning your superannuation, contact us at Peter H. Hunt & Associates here.
End of Tax Year 2010 – Summary Of Tax Strategies For Business
Posted by: | CommentsFollowing are some suggested strategies for businesses to take PRIOR to the end of the current tax year at midnight on Wednesday 30 June 2010…
- Write off bad debts
- Attend to year end stock take, cash counts, etc
- Review asset register & consider a) scrapping obsolete or badly damaged stock and b) reassessing effective lives of assets on hand
- Consider bringing forward any necessary repairs
- Ensure superannuation guarantee obligations have been met and that contributions have been received by the fund;
- Pay donations, if any
- Where year end bonuses, directors fees etc are to be paid consider making appropriate resolutions committing to pay specific amounts to ensure deductibility in 2009/10, even where payment is made after year end
- Consider the timing of invoices for work in progress
- Consider pre-paying deductible expenses (small business taxpayers only)
- Consider bringing forward purchases of depreciable assets costing $1,000 or less for an outright deduction (small business taxpayers only)
- Consider transferring any unearned revenue from the profit and loss account to the balance sheet to highlight its non-taxable status. The unearned revenue must be refundable if the business does not provide the services paid for
- Ensure any shareholder loan repayments required under loan agreements are made
- In relation to loans by shareholders to companies with turnover of more than $20M, ensure that loan agreements are in place so that the loans are not treated as equity