From July 2014 there will be a new range of penalties that will apply to SMSF trustees in breach of superannuation rules. Currently, the only significant financial penalty that has applied to non-compliant SMSF trustees is the penalty tax that allows the ATO to confiscate half of your assets.
However, from July11 2014 the ATO will be able to impose a range of financial, administrative and educational penalties. One feature of the new regulations will prohibit trustees from paying fines from their SMSF assets. As an SMSF trustee, it is your responsibility to make sure that you are aware of all changes to legislation.
Posted on 20 June '14, under super. No Comments.
Non-concessional contributions to superannuation are contributions that are made from your income after tax. In the 2013-14 financial year the cap on non-concessional super contributions was $150 000, with contributions exceeding this being taxed at 46.5%. As non-concessional contributions to super have already been taxed this meant that contributions exceeding the cap were potentially being taxed at 93%.
Many Australians over the age of 60 were making substantial contributions to their super in order to take advantage of the tax breaks and accidentally exceed the cap.
In the 2014-2015 financial year, the cap on non-concessional super contributions will be raised to $180 000. The government has also announced that it will lift the non-concessional contributions tax. Individuals may withdraw their excess contributions, along with any earnings, and have these taxed at their usual marginal tax rate. This will apply to excess contributions made after 1 July 2013.
Further details of the plan have not yet been decided, as the government is consulting with the superannuation industry.
Posted on 6 June '14, under super. No Comments.
If you own a rental property or are considering purchasing an investment property, it is important to be aware of the tax deductions you can claim. Claiming all of the legitimate deductions on your investment property can save you a lot of money. On the other hand accidently claiming illegitimate deductions can cost you a lot of time and energy, potentially even leading to an investigation by the ATO.
There are some immediate deductions that you can make on a rental property, for example, advertising fees, agent costs, repairs and administrative expenses. Legal fees that are directly related to renting a property, for example those associated with debt recovery, may be claimed. However, you may not claim legal costs incurred at other times, for example the solicitor’s fees when you purchased an investment property.
There are also long term costs associated with investment properties that you can claim as deductions. These include borrowing costs, depreciation on equipment and deductions on structural improvements.
Many costs associated with the loan you have taken out on an investment property are legitimate deductions, but interest on the loan is not. Examples of legitimate costs include mortgage registration, stamp duty on mortgage and loan application fees. These deductions are applicable to loans of five years and under (for longer loans the deductible period is limited to five years).
As the value of the equipment with a limited life, for example carpet, depreciates you may claim this as a tax deduction. The ATO website has a list of the depreciation rates on different moveable household items. The entire cost of items under $300 may be included in your depreciation claim.
If you have spent money on an extension, structural improvement or renovation for your rental property then this cost can be claimed as a long-term deduction (usually 2.5% p.a. over 40 years). This does not cover work done immediately after purchase, and you can only claim this for periods that the property has actually been rented out.
Posted on 5 June '14, under tax. No Comments.
Refund fraud occurs where tax returns, activity statements and other documents are deliberately falsified in order to claim a tax refund a taxpayer is not entitled to.
Fraudulent claims can be lodged by individuals on their own account or third parties on behalf of others. Often, this can involve identity crime, where taxpayer identities are used by third parties to make fraudulent claims for personal gain.
Some examples of refund fraud are deliberately over-claiming deductions, offsets, or expenses by providing false or misleading information, understating income and/or providing fictitious payment summary details, providing false information in a business activity statement and making claims through fraudulent registrations or using false or stolen identities.
The ATO have a range of controls and systems in place to detect potential refund fraud, these include:
-analytical models that use behaviour and statistical algorithms to analyse information on income tax returns, business activity statements and other tax forms lodged
-sharing data and intelligence with their partner agencies
-obtaining information about suspected fraud from the community and other government agencies
Posted on 30 May '14, under tax. No Comments.
The Government has introduced a three-year Temporary Budget Repair Levy on individuals who have a taxable income in excess of $180,000.
The levy is payable at a rate of 2 per cent of each dollar of a taxpayer’s annual taxable income over $180,000. No levy is payable where the taxpayer has a taxable income of $180,000 or less.
The levy will apply from 1 July 2014 and apply to the 2014-15, 2015-16 and 2016-17 financial years. It is expected to raise around $3 billion.
The introduction of this levy means that individuals with taxable incomes exceeding $180,000, and who are liable for the Medicare levy surcharge, will be subject to the top marginal rate of 50.5 per cent of income.
Non residents are also expected to bear the burden of the Temporary Budget Repair Levy.
Posted on 30 May '14, under super. No Comments.
Many problems can occur when processing activity statements and tax returns which can lead to a delay in issuing refunds. However often these problems are often caused by small issues and can be easily avoided.
Here is a list of tips to help minimise some of the issues that can prevent a speedy tax refund:
-Keep personal details, such as postal address, bank details and authorised contacts, updated
-Lodge all outstanding activity statements, the ATO are unable to process the refund until they know the extent of the credit
-Keep the statement clean. This involves not writing notes outside the space provided, do not use symbols and do not double up by lodging both online and in person
Posted on 23 May '14, under tax. No Comments.
Self managed super fund (SMSF) trustees should be aware of the changes to the way they receive super contributions.
From 3 November 2014, employers will begin using the new Data and Payment Standard, also known as SuperStream, to make superannuation contributions to their employees. This means that SMSF trustees will be required to receive contributions electronically from their employers.
Employers will have a year to make this change so SMSF trustees should check with their employers about their start date.
To assist their employers, SMSF trustees will need to obtain an electronic service address for the delivery of contribution messages. SMSF will also need to provide their employer with their ABN, bank account details and electronic service address to their employer.
The changes will result in a more timely and reliable flow of contributions and make it easier for employers. Funds do not need to upgrade their reporting software to comply with the changes.
Posted on 23 May '14, under super. No Comments.
The ATO has received additional Government funding to continue their focus on improving the voluntary compliance of wealthy Australians until 30 June 2017.
The ATO began focusing on wealthy Australians in 2009-10 with the ultimate goal of influencing all wealthy Australians to pay their fair share of tax. The ATO hoped to do this by changing attitudes and behaviours associated with tax manipulation, avoidance and schemes.
Wealthy Australians are defined as Australian residents who control net assets of between $5 million and $30 million.
The ATO’s strategy to influence wealthy Australians includes:
-gaining a greater and more detailed understanding of wealthy Australian’s
-treating systematic tax risk
-heightening ATO visibility in the community through education
The ATO has undertaken direct enforcement action, including comprehensive reviews and audits, as well as engaging with individuals through letter and phone campaigns.
The ATO has also recognised that many people who fall into the category of ‘wealthy Australian’ are asset rich but cash poor. This has led the ATO to work on managing disputed, collectable and insolvent debt.
As a result of their compliance activities, the ATO have exceeded liability targets.
Posted on 15 May '14, under tax. No Comments.
Self managed super fund (SMSF) trustees should be aware of the changes to the way they receive super contributions.
From 1 July 2014, employers begin using the new Data and Payment Standard, also known as SuperStream, to make superannuation contributions to their employees. This means that SMSF trustees will be required to receive contributions electronically from their employers.
Employers will have a year to make this change so SMSF trustees should check with their employers about their start date.
To assist their employers, SMSF trustees will need to obtain an electronic service address for the delivery of contribution messages. SMSF will also need to provide their employer with their ABN, bank account details and electronic service address to their employer by 31 May 2014.
The changes will result in a more timely and reliable flow of contributions and make it easier for employers. Funds do not need to upgrade their reporting software to comply with the changes.
Posted on 15 May '14, under super. No Comments.
From 1 April 2014 taxpayers will be required to provide their financial institution account (FIA) details when lodging fringe benefit tax returns.
From 1 July 2014 taxpayers will be doing the same for tax return lodgements, even if the details have been provided before.
These requirements were first put in place for individual tax return lodgements and took effect on 1 July 2013.
Providing FIA details will allow the ATO to issue any resulting refund by electronic funds transfer to the FIA that is nominated.
Electronic funds transfer is the fastest and most secure way for taxpayers to receive their refund. It is convenient for both the ATO and the taxpayer and it ensures the refund is paid directly into a nominated bank, credit union or building society account. Alternatively, taxpayers can speak with their tax agent about using their trust account, if they operate one.
It is important that taxpayers ensure their FIA details are correct when lodging as this will help to prevent delays in receiving their refund, and also ensures that their money does not go into the wrong account.
Posted on 9 May '14, under tax. No Comments.
« Older Entries Recent Entries »