Welcome to our Blog

 


 

If you are a local or state government employee, you will typically be required to contribute a mandatory percentage of your wage to superannuation (usually about 5-6%) which is matched by an employer contribution.  In previous years, unless you have been salary sacrificing this amount, this has been regarded as a non-concessional contribution meaning you cannot claim a tax deduction for it and the super fund does not pay tax on the contribution.

Due to changes made in 2017, all employees can elect to treat these contributions as concessional, meaning you can claim part or all of the contributions made in 2017-18 as a tax deduction on your personal tax return and the super fund will pay tax at a rate of 15% on the contribution.  If your own marginal tax rate is greater than 15%, there is a clear tax advantage.  If you are already salary sacrificing this contribution from your pre-tax salary, these changes will not benefit you because you are already getting the tax advantage.

To claim a deduction for personal super contributions, you need to make the contribution to a complying super fund or a retirement savings account so you need to check eligibility with your fund.  For example, if your contributions are going towards a defined benefit account, they will probably not be eligible.

Other Conditions apply:

  • The tax-deductible contributions are capped at $25,000 from all sources.  This means that the total of your employer contributions, any salary sacrifice you make and your voluntary contributions cannot be more than $25,000 for the year.
  • There are age limitations on super contributions.  People over 65yo must meet a work test to contribute to superannuation.  People over 75yo are not permitted to make additional personal contributions.
  • You will need to complete a declaration to give to the super fund advising you intend to claim a tax deduction.  You will need the acknowledgement of the notice from the super fund before claiming the tax deduction.  This is a simple form but is important because without it the tax deduction is not valid.

For those government and Council employees not currently part of a salary sacrificing regime, this is a great opportunity to claim a significant tax deduction. 

As always, please seek advice from your accountant, super fund or financial planner before proceeding.

Do you own vacant land?

Do you own vacant land? If so, be aware of the proposed changes to the law which will deny deductions for loan interest, rates and other holding costs from 1 July 2019.

Presently in most but not all circumstances, owners of vacant land can claim interest and rates as an income tax deduction (rare) or more commonly as part of the cost base for capital gains tax purposes when the land is sold. If the proposed changes pass through both houses of parliament and receive Royal Asset, these concessions will be lost. There is no need to panic at this stage because the commencement date is a year away and the proposed changes might not even become law. However it is worth monitoring. Vacant land that was purchased twenty years ago, for example, could easily have accrued costs in excess of $20,000. These costs might not be available to reduce a capital gain if the land is sold after 30 June 2019. If you are considering selling it might be beneficial to do so before 1 July 2019. Remember that it is the date of signing the contract that counts and not the settlement date.

As always, we recommend you seek advice from your trusted professionals before selling or buying investments or assets.  

 

Innocent V Not Guilty

Innocent and not guilty are different beasts when it comes to tax. This has been highlighted recently in the case of Ward v FC of T  in the Administrative Appeals Tribunal (AAT). Mr Ward was levied $209,250 excess contributions tax which virtually obliterated his superannuation savings over his lifetime. Deputy President Gary Humphreys made this closing comment.

The strict application of the law to Mr Ward's situation produces an outcome which is harsh and unfair. Setting out only to protect his and his wife's superannuation nest egg after a lifetime in low paid employment, and acting in good faith with professional advice, Mr Ward has unwittingly forfeited to the Tax Office the entire proceeds of his superannuation savings. Had the original investment in BT Super for Life been made just days earlier than it was, no excess contributions tax would have been payable. As it transpired, he has suffered a penalty of 19,527 percent of any "tax advantage" (his advisers' calculation), an outcome which cannot be regarded as conscionable.

Mr Humphreys could not change the law but he went so far as to urge the Commissioner to reconsider the fairness of enforcing the penalty. He also made a commendation to the Minister for Finance to consider an act of grace payment.

This case demonstrates once again that a taxpayer cannot rely on the fact that he is free of guilt. The full 84 page decision (which is quite interesting) can be found at Ward and Commissioner of Taxation (Taxation) (2018) AATA 1519 (7 June 2018).  

A Super opportunity for tax savings


 

Looking for an opportunity to minimise your tax liability for 2017-18?

Increasing contributions to superannuation is a great opportunity, but you will need to act fast - the clock is ticking.  The government made changes in 2017 which now allow anyone to claim a personal super contribution as a tax deduction, regardless of their employment status.  Prior to 1 July 2017, personal contributions to super were only able to be claimed as a tax deduction for those people predominantly self-employed.  

There are conditions to be aware of:

  • The tax-deductible contributions are capped at $25,000 from all sources.  This means that if your employer is making contributions for you under the superannuation guarantee, the total of the employer contribution and your personal contribution cannot be more than $25,000 for the year.
  • Any contribution to super is preserved until you meet a condition of release.  In most cases (except some very exceptional circumstances), the condition of release is reaching preservation age (55 years or older depending on your date of birth) and being retired from work.
  • Even though you will enjoy a tax deduction on your individual tax return, the contribution will still be taxed at a flat rate of 15% in the super fund.  These means that this strategy may not be effective if your own marginal tax rate works out to be 15% or less.
  • Tax deductible super contributions cannot be used to create a loss, therefore if you are in business, you need to assess your expected net profit before deciding on the contribution amount.
  • The contribution must be received by the super fund by 30 June 2018.  Please note that 30 June is a Saturday, so this date is really 29 June.  You will need to allow for time to process electronic transfers and for the fund to process the claim so don't leave it too close to the end of year.
  •  There are age limitations on super contributions.  People over 65yo must meet a work test to contribute to superannuation.  People over 75yo are not permitted to make additional personal contributions.
  • You will need to complete a declaration to give to the super fund advising you intend to claim a tax deduction.  This is a simple form but is important because without it the tax deduction is not valid.

If you are currently in a salary sacrifice arrangement with your employer, this can continue as it has the same tax effect as making a personal contribution.

As always, we recommend you seek advice from your accountant, financial planner, or super fund before making a contribution.  Just keep in mind the countdown to end of financial year is underway, and contributions after 30 June cannot be treated retrospectively.

Happy End of Financial Year!

 

Super Guarantee 12 month Amnesty

Superannuation guarantee 12 month amnesty

Today there is good news for stressed small business employers who have fallen behind in their superannuation guarantee obligations.

Employers who have not paid their superannuation guarantee (SG) in the past may now have a 12 month amnesty from penalties to make good on their compliance. The previous rules relating to SG charge denied the tax deductibility of late super payments, and applied additional penalties.

The amnesty will apply from 24 May 2018 to 24 May 2019, the date of introduction into parliament. Also, the quarters where a disclosure can be made could theoretically be from 1 July 1992 to 31 March 2018.

The main qualification for the amnesty to apply for the employer is that the ATO must not have previously declared an investigation into the financial quarter in question.

There are conditions, one of which is that the employer must voluntarily make disclosure without any prompting from the Australian Taxation Office. For this reason it would be advisable to make disclosure as soon as possible.

The Bill has not yet passed or received Royal Assent but there is no indication that it will be opposed.

If you would like more details please contact us.


 

 

It's landed!

The Brand new App from WALSH ACCOUNTING 

As a firm we are constantly looking for ways we can improve the service we offer our customers and we are proud to announce the launch of our brand new WALSH ACCOUNTING App.  It's completely free of charge and it's available for iPhones, iPads and Android devices.

So the next time you need to look up a tax rate or work out a GST calculation, our new App can help.  It provides you with up to date, important accountancy data at your fingertips.  Click to download

PLUS: Read more…


Running your own business - Part 1

So you are thinking about setting up your own business? Many people do at some stage in life.  This could be a  new enterprise or buying into an established business.  Before you jump in though, it is important to consider the pros and cons.  Every small business operator expects to succeed, but sadly most do not last more than five years.

The process of setting up a business in Australia can be relatively easy.  Apply online for an ABN and have a bank account and away you go.  But is it that simple?

Being self-employed brings a lot of advantages –

You are the boss - You have control over your work output, your income goals and your working conditions.  You have freedom to choose which services and products you offer and how you will structure the business. You have the potential to gain more control over your life and your destiny.

The prospect of financial rewards  - If all goes well, you have the potential to increase your income significantly as the owner, rather than an employee, of the business.

Personal fulfilment – You have the opportunity to choose a business where you can do the work you really love. You also have potential to grow and expand, and achieve many personal goals. You can choose to have more time for yourself and your family and do the things that are really important to you.

 

All good reasons to move forward…

Read more…

Super..super...where are you...?

Super...super…..where are you....?

Do you want a share of $16 Billion of lost super available in Australia?

As at 30 June 2017 the following regions had unclaimed and lost super to the value of:

• Australians had over 16 Billion Queenslanders had $3,127,500,773 lost super – NSW had the most of any state with over $5 Billion

• 4730 postcode (Longreach) has 653 accounts to the value of $2,431,556

• 4725 postcode (Barcaldine) has 219 account to the value of $1,075,332

• 4472 postcode (Blackall) has 267 accounts to the value of $1,054,004

• 4735 postcode (Winton) has 218 accounts to the value of $528,787

• 4724 postcode (Alpha) has 78 accounts to the value of $458,314

• 4726 postcode (Aramac) has 75 accounts to the value of $274,471

• 4727 postcode (Ilfracombe) has 52 accounts to the value of $272,187

• 4732 postcode (Muttaburra) has 35 accounts to the value of $90,653

• Find out how much lost and unclaimed super is in your postcode            

Read more…



Tax concessions for Small Business Entities & Primary Producers 

There are some very attractive tax concessions for Small Business Entities (SBEs) at present. Some of these concessions will not be available after 30 June 2018 while others will continue after that date. Some are for both primary producers and non-primary producers. Others are for primary producers only. In this blog I will try to set out which concessions are for all SBEs; which are for primary producers only; which are likely to disappear after 30 June 2018 and which will continue at the pleasure of the Australian Taxation Office and the Australian Government.

These concessions are available only to SBEs. In brief, an SBE is a business which has a turnover less than $10 million (for 2016 and prior years the threshold was $2 million).

$20,000 Instant Asset Write-off

All SBEs (primary producers and non-primary producers) are entitled to an immediate deduction for the business use portion of a new or used depreciating asset costing less than $20,000 (excluding GST)  first acquired on or after 7.30 pm on 12 May 2015 and first used or installed ready for use by 30 June 2018. This concession is known as the $20,000 instant asset write-off. Unless extended it will end on 30 June 2018.

There are some conditions. There are always conditions. One of these conditions is that, if you take advantage of the instant asset write-off, you must pool all your other assets (with very few exceptions). Pooling means totaling the written down values of all depreciable assets and claiming depreciation on the total at 30% (15% in the year you acquire the asset). If you want to claim the instant asset write-off you must either be in a pool or you must establish a pool in the year that you first claim the instant asset write-off.

Read more…

How to paint a picture of success



How to paint a picture of success

Huge congratulations to our clients  Noel & Edith Usher and children, Sharlene,  Andrew and Darcy. The family first became clients on 9 November 1980. Their business has won the Inspirations Paint Franchise Group,  State and National Franchise of the Year Award. These Awards have only been  presented 3 times and the Usher Family have won all three. 

Many Barcaldine residents will have fond memories of Noel's father and mother , Eric and Dawn Usher. Eric was a trade painter who worked in our district for many years. Some may remember the Paint and Curtain shop next to the Shakespeare hotel building, which was Edith's Pet Project. 

When Noel & Edith left Barcaldine to live in Nerang, they struggled to buy a small paint shop.  In the early years it was Edith who managed the store full-time. Then she was joined by Andrew when he left school, and then Sharlene their daughter.  Noel and Darcy ran another small successful painting business (Darcy completing his Painting & Decorating Apprenticeship). They later sold this business and were then fully engaged in the paint shop business. A second shop  north of Nerang at Coomera was opened in 2005. 

Since then, Andrew & Darcy have been responsible for the successful running and management of both businesses, now employing 20 people. While understanding paint has been critical to their success, they have also had to develop boardroom skills as their empire grew from a simple partnership to a complex system of companies and trusts, each designed to address new issues at every stage in their growth. 

Read more…

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