csjp logo
Phone: 08 9339 1077 |

Header Please

Older Entries

Finding your lost super

Many Australians have superannuation that they have lost track of over the years. The ATO estimates that the total amount of lost super in Australia adds up to billions of dollars.

If you have ever changed your name or address it is possible that you have chunks of super that you’ve completely forgotten about. The same is true for super accumulated in a part-time or casual job, particularly if it was a long time ago.

If you think that you might have some lost super, you should track it down as soon as possible. By splitting your super between funds, you are most likely paying unnecessarily high fees.

Finding your lost super is easy with the ATO’s online SuperSeeker tool. You can also use the ATO app to do a quick search to determine whether or not you do have lost super. To do this, you will need to provide your name, date of birth and tax file number (TFN).

Posted on 18 August '14, under super. No Comments.

New law enacted to prevent dividend washing

A new law that prevents taxpayers from benefiting from dividend washing has been enacted. The new integrity rule is intended to help taxpayers understand their tax responsibilities and comply with the legislation.

Dividend washing occurs when a shareholder seeks to claim two set of franking credits. This is done by selling shares after a dividend payout has been announced ex-dividend, meaning that both the dividend and the franking credit remain with the investor. The investor then repurchases shares in the same company that have both the dividend and the franking credit attached. Thus, they have come to be in possession of two sets of franking credits for one set of shares.

Investors who have entered into dividend washing in the past few years should have received written correspondence from the ATO requesting that they amend their tax returns for the relevant income years. If amendment requests are received by the ATO before the date specified in the letter no penalties will be applied. Individuals who have engaged in dividend washing but have not received correspondence from the ATO will be offered the same penalty remission if amendments are made by 22September 2014.

Posted on 18 August '14, under tax. No Comments.

Things to consider before starting a SMSF

There are a lot of advantages to having a self-managed superannuation fund (SMSF). Increased flexibility and control over your savings are the most obvious benefits, with many SMSF trustees and members appreciating the ability to make their own investment decisions. Other advantages include the possibility of investing in a property, the ability to manage administrative costs, and, in some cases, tax breaks.

However, there are also a lot of responsibilities associated with running a SMSF, and it is not necessarily an advisable choice for everyone. Here are some things to consider if you are interested in starting an SMSF:

-To justify the costs associated with running a SMSF, you should have a relatively sizeable amount, or be anticipating a rapid accumulation of funds. The ATO suggests having a minimum of $200 000, however this is often debated amongst industry representatives.

-If you want to manage your own super, you should have a relatively robust understanding of finance and the confidence to make your own investment decisions.

-Managing your own super fund is generally a time-consuming endeavour. There are a lot of compliance issues you need to be aware of, and you also need to ensure that you remain abreast of any current changes to legislation.

Posted on 30 July '14, under super. No Comments.

Changes to fuel tax credits

Backdating to July 1 2014, the carbon charge will be removed from all fuels. The ATO has indicated that this will result in some changes to fuel tax credits. There will be an increase in fuel tax credits available for a range of off road activities, while credits will no longer be available to specified non-transport activities in agriculture, fishing and forestry. Businesses that are registered for GST are also now able to claim more for gaseous fuels used for transport purposes.

If you are unsure as to how the changes may impact you the ATO has provided a range of online calculators and tools that you can access when completing your business activity statement, ensuring that your claim is accurate.

It has also been proposed, under the Fuel Indexation (Road Funding) Special Account Bill 2014, that there will be a reintroduction of bi-annual indexation of excise and excise equivalent customs duty on all fuels. The indexation would be aligned to the consumer price index (CPI) and aviation fuels would be exempt. The additional revenue would be directed into improving roads and infrastructure, with the aim of improving national productivity.

Posted on 30 July '14, under tax. No Comments.

Renovating a property owned by your SMSF

While an SMSF may borrow money to purchase a property using a limited recourse borrowing agreement (LRBA), there are strict regulations surrounding the use of borrowed funds to renovate and improve properties. While you may be able to purchase an older property and renovate it using borrowed money, you are restricted from ‘improving’ the property, for example by building an additional storey or adding a swimming pool. If you are unsure as to whether the changes you have planned would be considered an ‘improvement’, it is advisable to seek the advice of the ATO.

You are, however, permitted to improve a property using funds from other sources, typically the accumulated contributions to the fund. For this reason, if making improvements to the property is central to your investment strategy, you need to ensure that your fund has sufficient cash flow to see these changes through.

Here are some other tips for renovating a property owned by your SMSF:

-All of the materials must be purchased in the SMSF name, even if you are carrying out the renovations yourself

-You may not be paid for any work you complete unless you are a professional tradesman who offers the same services to the public

-you may not live in the property at any stage, even if you are renovating it yourself

Posted on 25 July '14, under super. No Comments.

Carbon tax repealed

The Abbott government has delivered on its long-standing election promise to repeal the carbon tax, effective from July 1, 2014. A condition of the repeal receiving crucial crossbench support from the Palmer United Party (PUP) was that savings be directly passed on to consumers and small businesses. As a result, the ACCC (Australian Competition and Consumer Commission) has been given extended powers to fine parties failing to do so.

Initially this stipulation created anxiety amongst the business community, as the government failed to clarify whether or not all businesses would be required to provide proof of passing on savings. However, it has now been established that the ACCC is only required to ensure that electricity, natural gas and refrigerant gas companies pass on their carbon tax savings.

The repeal has been largely welcomed by the business community, with predictions indicating that electricity prices will fall by approximately 9%, and gas prices by 7%. However, energy providers have indicated that there may be other factors that are contributing to rising prices, including increased electricity infrastructure spending and new legislation allowing the international sale of Australian gas. This means that the energy savings from the carbon tax repeal may not be as significant as originally thought.

Businesses operating in other industries have indicated that their capacity to pass savings on to consumers will be largely dependent upon the savings that they incur from their suppliers. Some small business owners, in particular providers of luxury goods, have expressed the hope that they will experience a boost in business as consumers experience an increase in their disposable incomes. Whether or not this eventuates will depend largely on whether or not there is, in fact, a significant decrease in energy costs, as well as the fate of the tax breaks and cash handouts implemented by the Gillard government to counteract the costs of the carbon tax for households.

Posted on 24 July '14, under tax. No Comments.

Australians paying too much in superannuation fees

It has been revealed that Australian superannuation fees are amongst the highest in the world. Many leading economists, including Treasury director David Gruen, are making a call for fees to be reduced, in line with national interests and an aging population.

Cumulatively, superannuation fees cost Australians approximately $20 million per annum. This represents about 1% of GDP and equates to an average of $726 per person each year. Our superannuation fees are three times higher than their British equivalents.

Recent research, conducted by the Grattan Institute, estimates that by halving super fees, funds would be, on average, 15% bigger by the time they reach pension phase.

According to the Grattan Institute, an indication that the Australian superannuation industry is insufficiently competitive lies in the fact that there has been no reduction in fees as superannuation savings have soared. Theoretically, it should not cost significantly more to run a fund managing $1 billion than it should to run a fund managing $100 million.

Posted on 8 July '14, under super. No Comments.

Using myTax

The ATO has introduced a new streamlined online tax return process for individuals with very straightforward tax affairs. MyTax is made up of just ten screens and is intended for people whose only income derived from wages, salary, dividends, bank interest, allowances,  and/or other Australian government payments.

To use myTax your only tax deductions need to be from work-related expenses, expenses related to income from interest or dividends, gifts/donations, and the costs associated with handling your own tax affairs. The only tax offsets that can be used in myTax are the senior Australians and pensioners’ tax offset, the zone and overseas forces tax offset, and/or the private health insurance rebate.

If you wait until early August to file your tax return with myTax, the ATO will be able to pre-fill all of your relevant tax information from the past financial year. This means that all you will have to do is provide your identification details, review the information and then submit.

In order to use myTax, you will need to have an existing myGov account. Both myGov and myTax are available on smart phones and tablet devices.

If you are unsure whether myTax is appropriate for you then the ATO has provided a full set of questions that you can use to determine whether or not you meet the criteria. Individuals who have tax affairs that are too complex for myTax should use the existing eTax system.

Posted on 8 July '14, under tax. No Comments.

Warning issued over tax avoidance schemes

The ATO has recently advised taxpayers to seek a second opinion on before entering into any tax avoidance schemes.

According to the ATO tax avoidance schemes are designed to appear legitimate, even to savvy investors. In particular taxpayers should be wary of complex financing schemes that rely heavily upon round robin financing schemes and non-recourse loans. Essentially, if the scheme involves reducing you’re your taxable income by declaring deductions that you are not entitled to, it is likely to be illegal.

If a provider tries to dissuade you from telling people about the scheme, or discourages you from seeking a second opinion, you should take this as a warning sign. Claims of ‘risk free’ or ‘zero risk’ tax avoidance schemes should also be treated with suspicion.

Entering into an illegal tax avoidance scheme, even if you were unaware that it was illegal, can result in a hefty tax burden.

Posted on 30 June '14, under tax. No Comments.

Claiming a computer as a tax deduction

If you use a piece of equipment, such as a computer, for work related activities then you may be able to claim it as a tax deduction. If the item is valued at over $300 then you cannot claim the entire cost in the year of purchase. Instead, you will need to calculate the depreciation in value each year.

When equipment is used for both professional and personal use, as computers so often are, then you can only claim a tax deduction for the equivalent portion that is used for professional purposes. For example, if you use the computer half for work and half for leisure then you may only claim half of the value of the depreciation of the computer as a tax deduction.

The ATO has indicated that it will be focusing on tech related expenses this year, with a particular focus on ensuring that individuals accurately report the work/personal breakdown of use. It is advisable to retain all documentation, including diary entries if necessary, relating to the use of a computer you are claiming as a tax deduction.

There are also other costs associated with a computer used for work purposes that can be used as tax deductions, such as the interest paid on a loan for a computer or the cost of repairs. Upgrades cannot be claimed as repairs and, if they cost over $300, should be included as a separate depreciating expense.

Posted on 25 June '14, under tax. No Comments.

« Older Entries