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Archives for K & A News

ATOs Disclosure of Tax Debt Information of Businesses

From 1 July this year, the ATO will be able to pass on to credit agencies the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts.

The criteria to be applied by the ATO is that a business has a tax debt greater than $10,000, the debt is older than 90 days, is not in dispute and the business has no payment plan with the ATO.

The disclosure of the debt is not automatic and will be at the discretion of the ATO. The ATO will notify a business that it intends to refer its tax debt to a credit bureau before it passes on the information.

Should any clients be in a position where they will meet the criteria outlined by the ATO from 1 July, 2017, then please contact our office and we can provide advice on the most appropriate course of action.

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Super Changes May Require Action by 30 June 2017

The Turnbull Government has made some changes to the superannuation system which will commence from 1 July 2017. These changes will impact many of our clients either now or in the future. We will provide a brief overview of the different changes to the super system but it is our recommendation that clients make contact with their accountant prior to June 30 to discuss how the super changes may affect them.

 

  1. Change to the Concessional Contributions Cap – Time to Review Salary Packaging Arrangements
    From 1 July 2017, the annual concessional contribution cap will reduce to $25,000 for all individuals (irrespective of age). Concessional contributions include your employer superannuation guarantee payments and any amounts salary packaged.Therefore, if you salary package superannuation as part of your wage, we recommend reviewing your arrangements prior to 1 July 2017. You may need to advise payroll to reduce your concessional contributions to ensure you are below the $25,000 cap.

 

  1. New Transfer Balance Cap
    Due to the introduction of the new ‘transfer balance cap’ from 1 July 2017, super fund members with pension balances (in ‘retirement phase’) exceeding $1.6 million will need to partially commute one or more of their pensions to avoid the imposition of excess transfer balance tax.In addition, members in receipt of a transition to retirement income stream (‘TRIS’) will lose the pension exemption from 1 July 2017.This means that the future disposal of any assets currently supporting such pensions will potentially generate a higher taxable capital gain (even though the disposal of the asset prior to 1 July 2017 could be fully or partially tax-free, depending on whether the asset is a segregated or unsegregated asset).Fortunately, to avoid funds selling off assets before 1 July 2017, transitional provisions have been introduced to allow super funds to apply CGT relief in certain situations.Although the choice to apply the CGT relief can be made up until the day the super fund is required to lodge its 2017 tax return, in many cases, action must be taken on or before 30 June 2017 for the fund to even be eligible to make that choice. In particular, funds calculating exempt pension income using the segregated assets method will generally need at least a partial commutation of the pension.Please contact our office if you need any information regarding the super reforms, including what needs to be done to obtain CGT relief (if necessary), whether a TRIS should be commuted to accumulation phase or continued into the 2018 year, and how the new contribution rules will affect contributions in both the current and future years.

 

  1. Change to the Non-Concessional Contributions Cap
    The annual non-concessional (after-tax) contributions cap has been lowered from $180,000 to $100,000. This will affect clients who are making non-concessional (after-tax) contributions to their super and clients who are considering how to maximise their savings for retirement.The calculation of the non-concessional contribution cap is dependent upon the total superannuation balance relative to the limit of $1.6 million and any bring-forward arrangements previously triggered.

 

  1. First Home Superannuation Saver Scheme
    The Turnbull Government has also announced an intention to encourage home ownership by allowing first homebuyers to ‘build a deposit’ inside their superannuation fund. Whilst this announcement has not currently been legislated, it is proposed that individuals, from July 1 2018, can apply to withdraw voluntary contributions made to super after 1 July 2017 for the purpose of a first home deposit. These voluntary contributions of up to $15,000 per year, and $30,000 in total can be released for a first home deposit.

 

These changes to the superannuation system are designed to improve the sustainability, flexibility and integrity of Australia’s super system. Please check to see if you are directly affected and how these changes may allow for you to maximise your savings for retirement. Please consider seeking financial advice from our office.

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Personal Income Tax Changes

The Turnbull Government recently announced a change in the tax threshold from July 1, 2016 that impacts on both individual taxpayers and employers.

For Individual Tax Payers

From 1 July, 2016 for individual taxpayers the marginal tax rate of 37 per cent will start at $87,000 rather than the current $80,000. Individual taxpayers with a taxable income of more than $80,000 will benefit from this threshold change.

The adjusted tax rates table for resident taxpayers is included below, with the changes in bold:

Updated tax rates for resident taxpayers:

Taxable IncomeTax on this income
0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,232 plus 45c for each $1 over $180,000

For Employers

The changes made to the tax thresholds means that for employers the tax tables have changed for employees who earn over $80,000. New tax tables and payroll software updates will apply from 1 October 2016.

Although the threshold change is backdated to 1 July 2016, employers do not need to make any other adjustments or refunds as the ATO will refund any over-payment of tax when employees lodge their 2016-17 income tax return.

All employers, if they haven’t already, should contact their software provider for the relevant payroll software updates or download the latest tax table from the ATO website (ato.gov.au/taxtables).   Please contact our office if you need any assistance with this update.

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SuperStream Deadline Extended

With only days to go until the 30 June SuperStream deadline, the ATO noted that, while many small businesses had implemented the required changes, “some small businesses may need extra time and help to become SuperStream compliant”.

The ATO has announced that for small businesses that are not yet SuperStream ready, it will provide a further extension to 28 October 2016.

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New Receptionist

We are pleased to announce that Rhonda Sprigg will be replacing Kirrily full-time in the receptionist role. Some of our clients will already know Rhonda from her previous work at Core Financial Planning. Rhonda has extensive administration experience in the accounting and financial planning sector and we are very fortunate to have secured her services. We welcome Rhonda to Kelly and Associates and we hope she enjoys her work with us.

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