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October 2017

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No Special Circumstances to allow Excess Super Contributions

Another case confirms that taxpayers making large superannuation contributions need to be diligent.

         

 

The Administrative Appeals Tribunal denied a taxpayers request to ignore excess contributions tax.

The taxpayer claimed that her situation and the complexity of her superannuation arrangements, meant that special circumstances should allow the Commissioner to overlook her excess contributions.

She had contributed what she thought was the maximum in year one and used the bring forward rule to contribute $450,000 in the year two.  She argued that part of the complexity was an industry fund, a defined benefit fund and her SMSF.  Having exceeded the maximum concessional contributions in year one, the bring forward rule was not available in the year two.  

The tribunal considered that her superannuation arrangements were not out of the ordinary and emphasised her failure to seek advice and disregard reports from her superannuation fund, in favour of spreadsheets prepared by her husband.

The decision is quite predictable, again emphasising great care when endeavouring to take maximum advantage of tax concessions.

 

 

AcctWeb

Super for housing measures enter Senate

The bills for the First Home Super Saver Scheme and the downsizing measures for Australians over the age of 65 have now passed the House of Representatives.

         

 

The bills for the First Home Super Saver Scheme and the downsizing measures for Australians over the age of 65 have now passed the House of Representatives.

The First Home Super Saver Tax Bill 2017 and Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 were introduced into Parliament last month, and are now before the Senate.

The First Home Super Saver Tax Scheme, first announced in the federal budget in May this year, will enable prospective first home buyers to save for a deposit inside their superannuation account, if passed.

Individuals will be able to contribute up to a total of $30,000 or up to $15,000 annually to superannuation, and later withdraw these contributions from 1 July 2018, said Treasurer Scott Morrison.

“These contributions, along with deemed earnings, can be withdrawn for a deposit with withdrawals taxed at a marginal tax rate less a 30 per cent offset,” he said.

Dixon Advisory managing director — head of advice Nerida Cole previously urged both sides of governments to pass the legislation so that first home buyers have certainty that the proposal will be available for use in 2017.

“The proposed First Home Super Saver Scheme offers tax concessions for first home buyers, to help them get to their savings target more quickly,” said Ms Cole.

The downsizing measures will enable older Australians to contribute proceeds from the sale of their family home into their superannuation accounts.

“From 1 July 2018, people aged over 65 will be able to make an additional non-concessional contribution of up to $300,000 into superannuation when they sell their home which they’ve held for at least 10 years,” said Mr Morrison.

“Both members of a couple can take advantage of this measure, meaning up to $600,000 of contributions may be made by a couple from the proceeds of selling their home.”

 

 
By: Staff Reporter
19 OCTOBER 2017
smsfadviser.com

 

Former director liable for company’s unpaid tax liabilities

A reminder that directors can very easily become responsible for unpaid taxation liabilities.

         

 

In the New South Wales District Court, a former non-executive director was held liable in full for unpaid PAYG withholding liabilities.

A director must take all reasonable steps to ensure that the company taxation obligations have been satisfied.  Whilst in this case the director had relied upon assurances from the company officers that the debts would be paid and that arrangements were being entered into, ultimately the company did not pay any instalments.  The director assisted in negotiations after he received a Director Penalty Notice from the Australian Taxation Office, but then resigned as a director.  Still, the company did not pay.

The ATO chose to recover (successfully) against one of the two directors.

Whilst there might be many justifications for non-payment, and advisers and lawyers will argue on your behalf, ultimately the ATO will win almost every time they issue a Director Penalty Notice.

 

AcctWeb

Paperwork bungles lead to $38k in payments

An example of the need to keep good records for everything you do.  Good bookkeeping = good records.

       

 

Back office and paperwork bungles have seen several workers given $38,000 in unpaid wages and entitlements, as the regulator sounds alarm bells on its monitoring of “the intricacies of our workplace laws.”
The workers were based in the Newcastle and Hunter region of NSW, and were victims of poor compliance practices and checks of their employers.

In one matter, a young labourer in Lake Macquarie was back-paid $25,220 after he was underpaid as a result of being incorrectly classified as an apprentice.

Essentially, it was agreed the labourer would commence an apprenticeship, but the employer failed to properly complete the paperwork and registration process required to enter into a formal training arrangement.

Consequently, the labourer was paid lower rates than he was entitled to, and the employer had not taken the appropriate steps to ensure compliance.

“Employers must be aware that we are prepared to take enforcement action in response to reckless, deliberate or repeated breaches of pay and record keeping laws,” said Fair Work Ombudsman Natalie James.

“We conduct follow-up audits of businesses previously found to be non-compliant to make sure they have changed their ways. Repeat offenders can expect to be subject to serious enforcement action including potential litigation.

“In our experience many businesses are overconfident when it comes to the intricacies of our workplace laws, however we will be taking an increasingly hard line with employers who have significant compliance issues and cannot demonstrate that they made a diligent effort to understand what award or industrial instrument applies to their workplace, what the correct classification for their employees is, and what minimum pay rates apply.”

By: Staff Reporter
04 OCTOBER 2017
accountantsdaily.com.au

Capital Gains and Renounceable Rights

In a small win, the taxation of renounceable rights offers (in some cases) will be concessionally treated following a recent Australian Taxation Office ruling.

         

 

The taxation of rights and premiums paid to retail shareholders has improved where those shares are held on capital account.

If the shareholder is an Australian resident then there is no assessable income on the timing of the grant of the entitlement and any retail premium received, can be treated us the realisation of a CGT asset.  Most years a large public company structure an equity deal to provide this opportunity to its shareholders – in 2016 it included Origin, in 2017 it included Boral, JB Hi-Fi, and Vows Communications.

The right to be issued shares is a CGT asset, which if no action is taken and the resultant is sale by the company and subsequent premium is paid to the shareholder, capital gain will result.  What is more significant is that the shareholder is considered to have required the rights when it acquired the original shares.  There is a discount capital gain (i.e. 50%) if the shares were held for twelve months or longer.

 

AcctWeb

 

‘A bad thing times 10’: ATO set for new SMSF blitz

The status of tens of thousands of SMSFs currently hangs in the balance, with the post-reform environment prompting the ATO to threaten axing funds which are not meeting their reporting obligations.

       

 

The status of tens of thousands of SMSFs currently hangs in the balance, with the post-reform environment prompting the ATO to threaten axing funds which are not meeting their reporting obligations.

The advent of changes such as the transfer balance cap requires the tax office to have significantly more up to date data on a fund’s assets and activity, pushing on-time lodgment further up the ATO’s compliance hit list.

About 40,000 funds which have not met their lodgement obligations are now at risk of being made non-complying, the ATO’s outgoing superannuation director Howard Dickinson said.

“I assume that all of you know non-complying outcomes, but I shall re-state it for the purpose of being very obvious: 50 per cent of the fund goes to the government, good bye,” Mr Dickinson told delegates at the SMSF Summit in Adelaide last week.

“We don’t want to make these people non-complying and we don’t want to disqualify them. But we cannot allow a significant number – about 40,000 funds with over $600,000 – of the population to continue to think they are operating as a fund,” he said.

“Non-reporting by SMSFs is a significant issue. It’s been a bad thing. With the advent of the retirement phase reporting in relation to the transfer balance cap… it’s become a bad thing times 10,” he said. 

Professionals with clients who are struggling to meet those reporting obligations should engage with the ATO early. Though the ATO may not always be able to assist, Mr Dickinson said voluntary and early engagement boosts a client’s best chance at a favourable outcome.

The ATO has a voluntary disclosure service for clients, which you can access here. This service was launched in May 2016, after being first announced by sister publication SMSF Adviser in November 2015.

Clients who are not suited to managing their own superannuation should also be removed from the system before ATO intervention, Mr Dickinson said.

“You are the circuit breaker. We see it, but we often see it too late. Like a year [or] a year and a half later,” he said.

“It’s you that can help an SMSF trustee with that great piece of knowledge they’ve learnt at the pub, we don’t see it, they don’t tell us,” he said.

 

By: Katarina Taurian
​25 OCTOBER 2017
accountantsdaily.com.au

 

300,000 SMEs utilising $20K write-off, says ATO

The average amount claimed through the instant asset write-off more than doubled in the 2015-16 financial year, according to the ATO’s latest data.

         

 

The average amount claimed through the instant asset write-off more than doubled in the 2015-16 financial year, according to the ATO’s latest data.

Minister for Small Business Michael McCormack said that up to 300,000 small businesses took advantage of the $20,000 instant asset write-off in 2015-16, helping to improve cash flow for business owners.

“In 2015-16, the number of claims increased by 50,550 and the average amount claimed increased by $4,065 to $9,000,” Mr McCormack said.

“This means more money in the pockets of small businesses so they can grow their businesses, employ workers and pay them more.

“The instant asset write-off is directly helping small business' bottom lines and improving cash flow for small business which means more investment in local communities, higher wages and more local job opportunities.”

The instant asset write-off threshold was increased to $20,000 in 2015, and was extended to 30 June 2018 earlier this year.

Small businesses with an annual turnover of less than $10 million can access the concession, up from $2 million in previous years.

“Small business is a major contributor to our economy and employs almost half of our workforce. Creating the right conditions for the sector to thrive will create local jobs, build communities and continue to grow the economy,” said Mr McCormack.

“Cash flow is so important for small business operators and the instant asset write-off means that tradies can invest in better tools, cafes and restaurants can upgrade their equipment and all small businesses can reinvest to grow their business.

“These great results are set to continue with tens of thousands more small businesses able to access the instant asset write-off thanks to the government’s increase in the small business turnover threshold to $10 million per year.”

Mr McCormack has yet to indicate if the instant asset write-off will be further extended despite calls from small business owners to make the concession permanent.

MYOB chief executive Tim Reed said their latest Business Monitor Survey of over 1,000 SME owners found that keeping the instant asset tax write-off was top of mind for them.

“SMEs have consistently called for the government’s $20,000 instant asset tax write-off to be made permanent, and support for this measure continues to grow in our latest survey,” Mr Reed said.

“As such a vital contributor to our economy, it’s important that the government listens to the concerns of small businesses owners and provides policies which enable them to be successful.”

 

By: Jotham Lian
16 OCTOBER 2017
accountantsdaily.com.au