For the many individuals claiming a superannuation deduction in their upcoming 2017/2018 tax returns, do not forget to provide notice to your superannuation fund!

From 1^stJuly 2017 individuals up to age 75 can claim up-to $25,000 in income tax deduction for personal after-tax superannuation contributions.

AGE

All individuals under the age of 65 are eligible. Those aged 65 to 74 who meet the superannuation ‘word test’ (work for at least 40 hours in a period of not more than 30 consecutive days in the financial year in which you plan to make the contribution). For those aged 75, the contribution must be made no longer than 28 days after the end of the month in which you turn 75.

Older taxpayers are ineligible.

MINORS

If the individual is under 18 at the end of the income year in which the contribution is made, they must derive income in that year from being an employee or carrying on a business.

COMPLYING FUND

The contribution must be made to a complying superannuation fund.

Tax-Free Restructures

Thinking of restricting your business but concerned about the tax consequences of doing so?

Small Business Entities (SBE’s with a turnover of up to $10 million including the turnover of connected entities and affiliates) can now – subject to certain conditions – change their operating structure tax-free.

Having decided to go into business, one of the most important initial decisions is to choose which structure through which you will operate – sole trader, company, trust, partnership, or a combination of these. In making this decision, a number of factors need to be considered including minimising your tax liability, asset protection, access to equity capital, compliance costs, succession planning and more.

The most appropriate structure for a small business may change over time, or a new small business may choose an initial structure that it later finds to be inappropriate. For instance, for reasons of simplicity and minimisation of start-up costs, a number of small businesses commence as sole traders. However, as their business grows, they often wish to change to a more tax-effective structure (such as a trust). Aside from tax minimisation, restructuring into a more appropriate operating structure may help a business to:

• Provide protection from personal liability,
• Continue to develop and grow (e.g. taking on new business partners by changing from a sole trader to a company),
• Minimise compliances costs,
• Enhance business efficiency, or
• Adapt to current conditions.

If at any stage like many business owners you are contemplating restructuring, an optional rollover is available (deferring any CGT liability and any income tax liability until the asset is eventually sold) where an SBE transfers an active asset of the business to another SBE as part of a genuine business restructure, without changing the ultimate economic ownership of the asset (i.e the people who own the business). The intent and effect of the new law is to make the change of structure CGT and income tax neutral for the transfer of CGT assets, trading stock, revenue assets and depreciating assets.

Would you like to know more? Contact us via our online form or get in touch today on 07 3357 3300.

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Tax Planning Tips

1. Cash/Accruals: For best results, always use cash. Accruals give you a higher taxable amount. If possible, defer the accruals to the following year.
2. Remove income you have banked but not earned. It will cut the taxable income down.
3. Interest: attempt to have the investments mature close to 30th June because it is only when you receive the income that you are taxed.

Business Deductions

4. Bad debts should be written off prior to 30th June to reduce accruals/ taxable income. Most small business accountants can help you with this.
5. Scrap all assets in the Balance Sheets and depreciation schedule to zero- increasing the deductions substantially.
6. Stock: slow moving or obsolete stock should reduce in value or zeroed out to nil if need be.
7. Motor Vehicle: services and repairs to vehicles for business purposes – accelerating the deduction for a full 12 months.
8. Superannuation: compulsory 9.5% super payments must be actually paid – otherwise no deduction can be claimed.
9. You can claim for personal deductions for superannuation up to the limit of $25,000 per annum. Previously you could only do this if your salary and wages was less than 10% of your total income.

Capital Gains

10. Your tax position has improved considerately if you meet the small business capital gain concessions tests. Most accounting firms in Brisbane can lower your tax substantially or to nil in some circumstances.
11. CGT discount is non operative for assets held for less than 12 months. If more than 12 months, a 50% discount is available.
12. Small business CGT concessions allow you to roll the gains in superannuation.

Companies

13. Tax losses: check the carry forward tax losses. This will bring down your company taxable income or to Nil in some cases.
14. Loans/ Dividends: companies are allowed to make loan to directors/ shareholders provided they document the loans and have a verifiable loan repayment program. Otherwise, they are treated as unfranked dividends.
15. Trusts: if the level of income from your business, investments is sufficient, it is advisable to use a trust to split the income between other members of the family whose income is lower than yours.

    A word of warning: if income is from one service- personal exertion one cannot split the income up.

16. Contribution Caps: The maximum amount for concessional contributions for all ages is now $25,000 and the non-concessional $100,000 per annum but can bring forward 3 years if need be, but then you wait another 3 years before you can repeat the process.

If you need further assistance with some of the Top Tax Tips for EOFY 2018, please do not hesitate to contact Funder & Associates. 

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Image Credit: Dan Pele AAP Image

The dividend imputation system is devised to stop income being taxed twice. Such refunds come about because the tax rate in superfunds is 15% for the accumulation stage to Zero for the pension stage. This policy is harsh because it is inconsistent with taxpayers who have received a salary or wage and have paid group tax.

If the result is a refund of group tax regardless of the nature of the business structure or the level of income, then why should the taxpayer who has chosen investment income dividends (imputation credits) be discriminated against and be refused a rightful refund?

This tax grabbing discriminatory policy applies to all non-age pensioner SMSF accumulated Superfunds with large balances over 3.2m and pension mode of all sizes.

In summary the company pays the tax on behalf of the residential shareholders.

The shareholders receive the imputations and lodge a return and receive a refund of the imputation credits regardless of whether they are receiving an old age pension or not.

However; under Labour’s policy, people who own shares in a company and receives imputation credits along with SMSF under identical conditions are treated differently.

Why DISCRIMINATE against people with superfunds and structures which owns shares?

For example, persons who earn $20,000 or less but do not have shares to produce income will not pay tax because either the group tax covers the all of the tax liability or they were not due to pay tax anyway.

However, if a retiree produces income from Australian shares, say $20,000, he will receive $14,000 with dividend imputation credit of $6,000.

Currently he would receive a full refund of $6,000 and so he should. It is like getting a group tax refund. The principal is exactly the same. It is grossly unfair on the shareholders.

Most small business accountants or financial planner in Brisbane can tell you more about the dividend imputation system and how it affects you. Speak to your local tax services specialist or get in touch today on 07 3357 3300.

Image Credit: Dan Pele AAP Image

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THE GOOD

Good debt can fuel personal wealth creation. It is when you borrow to buy an appreciating asset such as investment property real estate or shares. Not only is the asset you buy likely to increase in value over time, but the interest you pay on the loan is tax deductible.

So, depending on your income and your tax bracket, you could end up borrowing for your investment virtually tax-free. Your local small business accountant or chartered accountant can identify this for you.
 

THE BAD

Bad debt is borrowing simply to spend, either on day-to-day things like clothes, or on things that lose value from the day you buy them, like cars and washing machines. This is the typical credit card, car or home appliance finance debt, and it is the worst kind of borrowing.

THE IN-BETWEEN

Your own home debt has characteristics of both bad and good debt, so it falls somewhere in the middle. Just like an investment property, the value of your residential home should increase over the long term, so that is good. However, you cannot claim a tax deduction on the interest you pay on your residential home loan, like you can with an investment property.

This is a great pity, because over the lifetime of the mortgage, you will probably pay more than twice the value of the original loan in interest. That is why you should pay your mortgage off as soon as possible. You need to reduce your non-tax deductible total interest bill as much as much as you can on your residential home loan.

Bonus Secret

Identify your debt, categorise them, then prioritise them

There is no doubt that one can argue the difference between Good and Bad debt, as most people certainly can’t always pay cash for every purchase.

The age old saying of ‘Everything in Moderation’ applies in the case (your local small business accountants may disagree!) of debt and when to acquire them, but it certainly helps to be able to identify the types.

Contact one of the many chartered accountants in Brisbane or contact Funder & Associates to help manage your debts.

The post The Three Types of Debt: The Good, The Bad and The In-Between. appeared first on Funder & Associates.

What is bitcoin?

Bitcoin is a type of digital cryptocurrency.

In the market out there, some other non-bitcoin cryptocurrencies such as Ethereum, LiteCoin, Neo, Monero etc are also available.

The distinctive characteristic of cryptocurrencies is their operation without government backing or central authority, but on a peer-to-peer network which is decentralised.

There is no bank’s involvement when you pay a transaction by bitcoin. It only happens on your computer via a peer-to-peer network system.

How does the Bitcoin work?

Bitcoin value is transferred between Bitcoin wallets which have been included in the block chain. A secret private seed or key, which is held in Bitcoin wallets and is used to sign transactions, will produce mathematical evidence that these Bitcoins belong to that wallet’s owner.

Is it legal to buy Bitcoin?

It would depend on your country, the purpose of your transactions and some other factors. At this stage, many tax authorities, law agencies and legal regulators are working on Bitcoin to see how bitcoin activities would fit into the existing frameworks.

Why is bitcoin worth so much?

Currency is used as a store of value, which makes saving, investing and banking easier. Some currencies, like gold, have value because they are useful as a commodity. Government flat currencies, like the U.S dollar, have value because governments grant them legal tender status and only accept taxes through them.

How do I buy Bitcoins for cash?

A quick step-by-step guide on how to buy bitcoins with cash on LocalBitcoins:

1. Find a seller in your area who accepts cash.
2. Select amount of coins and place an order.
3. Receive account number from the seller.
4. Deposit cash into the seller’s account.
5. Upload your receipt to prove you made the deposit/trade.
6. Receive Bitcoins!

Are Bitcoins real money?

Whether Bitcoin works as a currency is still debatable although Bitcoin is called with different terms such as digital cash, virtual currency or digital currency, etc.

Can I sell Bitcoin for money?

Once a buy order is matched, the exchange transaction will be finalised. After that, the money will be put into your account. However, if you want to sell bitcoin in exchange of flat currencies, you have to withdraw those currencies and transfer them to your bank account.

Can I transfer Bitcoin to my bank account?

Unfortunately, you cannot transfer Bitcoins directly to your bank account. However, you can sell Bitcoins to a buyer who then credits the funds into your account or you may sell Bitcoins at an exchange and take money from there. The second way is less risky, but the first one may be faster.

Can you sell your Bitcoins for cash?

With online services such as LocalBitcoins and BitQuick, you can sell your Bitcoins for cash. You need to set up a sell order on one of these platforms. As soon as your offer is accepted/ matched with a buy order, your bank details will be provided and the fund will be transferred to your account.

Contact Us today to find out more!

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Save Tax by adding to your Spouse’s Superannuation

If your spouse earns less than $40,000 p.a. and you make a contribution to their superannuation, you will increase their superannuation and be able to claim a tax benefit, you may be eligible to receive a tax offset of up to $540 (18% of up to a $3,000 contribution).

If your spouse has:

• Not exceeded their non-concessional contribution cap for the year. Non- concessional contributions are those made after tax.
• A total superannuation balance under $1.6 million (the general transfer balance cap).

The maximum offset is available if your spouse’s income does not exceed $37,000 and progressively reduces to zero up to a maximum spousal income of $40,000.

Get the Government to Top up your Superannuation

If you earn less than the prescribed income and at least 10% of your income comes from eligible employment or carrying on a business, the Federal Government will top up funds you contribute to superannuation with an additional contribution. This is known as a government co-contribution.

If you contribute $1,000 to your superannuation fund, the government will boost your contrition by up to $500. To receive the full amount 50 cents for every $1 you contribute, you must earn less than $36,813 p.a and meet the following criteria:

• You must not have exceeded your non-concessional contribution cap for the year
• You must have a total superannuation balance under $1.6 million (the general transfer balance cap).

The government co-contribution progressively reduces to zero when your income reaches the maximum income threshold of $51,813 p.a. Note the assessable income threshold includes reportable employer superannuation contributions and reportable fringe benefits.

To be eligible, you will need to be less than 71 years of age, have made at least one after-tax contribution, be in full or part-time employment or run own business and include all the details of your after-tax contribution on your tax return.

Make Personal Deductible Superannuation Contributions

From 1 July 2017, you are able to claim personal superannuation contributions as a tax deduction, provided you meet the following criteria:

• You contribute to an eligible superannuation fund or a retirement savings account.
• You meet age restrictions (if you are aged between 65 and 74 you need to be still working).
• You send a ‘Notice of intent to claim a tax deduction form’ to your superannuation fund and receive an acknowledgement form them in writing.
• You don’t expect your annual concessional contributions cap.

By contributing to superannuation, you not only increase your superannuation, but also reduce your income tax bill. Your superannuation contribution will be taxed at 15% upon entry to your superannuation fund, but your income tax will be reduced by the amount of the contribution up to prescribed threshold meaning you will benefit from the overall tax savings.

Splitting of superannuation contributions to manage transfer balance caps

Your transfer balance cap is the limit on the total amount of superannuation that you can transfer into a tax-free income stream. From 1 July 2017, the standard transfer balance cap is $1.6 million.

However, you can split your superannuation contribution with your spouse so that you can attempt to balance out your transfer balance caps. Couples can therefore target each of their individuals $1.6 million transfer cap to maximise their combined transfer cap amount of $3.2 million.

This can be achieved by splitting contributions with your spouse. UP to 85% of concessional contributions from a previous year can be transferred to your spouse, provided the receiving spouse is aged under 65.

Contributions can be split after the end of the financial year and only in the subsequent financial year. For instance, contributions made in the 2017/18 year can be split in the 2018/19 year.

Pay 12 months Interest in Advance on an Investment Loan

Paying the interest on an investment loan in advance for the following financial year could enable you to enjoy a larger income tax deduction this financial year.

This is because you are able to claim the interest as a tax deduction this financial year, even if the interest is for servicing the loan in the following financial year.

For example:
Paul earns $70,000 p.a. and is using a gearing strategy to invest as part of his long-term wealth creation strategy. He takes out an investment loan for $100,000 at a rate of 7.5%.
He pays 12 months’ interest in advance and can deduct this from his income tax for the current financial year.

In doing this, his taxable income is reduced from $70,000 to $62,500 for the current financial year.

If you need further assistance on Top Superannuation & Tax Strategies of 2017, please do not hesitate to contact Funder & Associates. 

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Inspired by the works of Roy MacDonald, Funder & Associates share 5 secrets of running a successful small business.

You Must be Passionate About What You are Doing.

Studies of all successful people in the business have shown that they love what they are doing and they are not just doing it for the money.

If you are just doing it for the money, it is almost impossible in the long run to be successful, because the money will never fulfil your real desires and needs.

You Must Have Talent; You Must be an Expert; You Must be Special at what you do.

If you cannot be, then you must get someone who is, and promote them. You must be different and have a way of packaging what you do that makes it (and you) stand out.

You have to have a sense that what you are doing is your destiny.

In other words, you were born to do this. You are ‘on purpose’ in what you are doing.

These three secrets combine to form an absolute success formula. If you study successful people – and, particularly, the really wealthy ones who are consistent – they all have these three elements.

The Reason to be in Business is to Give you More Life – Not to Give Your Life to the Business.

Most people give their life to their business. Most people get trapped in the business – having no time to spend with their family. Being in business should give you more choice, not less.

Acquire Your own Building.

One of the purposes of running a business is for the business to acquire a Real Estate investment. Your business should provide you with the income to acquire your own building to operate from.
It costs generally about the same to rent what you can buy, so why not own it, rather than pay someone else. In this way, you receive the capital gain and the improvements that you add to it are yours. And there is a feeling of confidence about, and commitment to, the future.

Experience shows that, in asset terms, most businesses appear to make more money in the long run from the increasing value of the building they have purchased than the entire business has made from its capital growth.

In other words, the business provides an income flow whereas the building provides a growing asset.

Over the long term (if you are experiencing hard times, or if you have been able to reduce your ultimate debt on the building) you can determine the rent you really want to pay. As a tenant, you don’t have that option.

Bonus Secret

Always Remember, Business Never Fail – People just Give Up.

It’s like relationships, they never fail – people just give up and say they’ve had enough.

This may well be appropriate at the time, or it may be way too soon. There have been people with very little chance of succeeding, yet through the determination and commitment of the people they turned them around.

However you must be able to think constructively under pressure, be able to get on with all types of personalities, an ability to organise and take sensible risks financially and manage monies effectively.

If you need further assistance on the secrets of running a successful business, please do not hesitate to contact Funder & Associates. 

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80% of Australians place home ownerships as their most important priority

Paying off the mortgage is the new Australian dream, according to new research from MLC, the Australia Today report, with almost 80% of Australians placing outright home ownership as their most important priority.

77% of Australians rate this as an important priority

Australians would love to be living off one income. 77% of Australians rate this as an important priority. With reduced pressure for both partners to work, one partner could care for children, manage the home or care for elderly family members.

Living well today is what we’re all about. Interestingly, yesterday’s luxuries, such as having the latest technology, entertainment and eating out at least weekly are considered today’s essentials among a broadening self-selected social group we define as the new ‘average Australian.’

The cost of being comfortable is certainly high. Almost half believe you need a salary of more than $150,000 to live comfortably in Australia. Furthermore, three in five (59%) believed that being worth $1,000,000 doesn’t mean you’re rich in Australia today.

46% of Australians live pay-cheque to pay-cheque
To support our lifestyle, 46% of Australians say they live pay-cheque to pay cheque – including those on high incomes with:

• 22% of households earning $200,000+ AND
• 27% of households earning $150-200,000 also agreeing their cash flow runs pay-cheque to pay-cheque.

An astounding 85% of people agree that people today live beyond their means.
There is a very real disconnect between the dreams of the new ‘average Australian’ and their ability to fund a lifestyle that does not put them one step away from danger. People that find themselves living pay-cheque to pay cheque would likely find great value in partnering with financial professionals who can help complete a greater financial picture.

The post The ‘Great Australian Dream’ appeared first on Funder & Associates.

Two friends Lachlan and Sam, both 25, are interested in investing. They both have the potential to save and invest $10,000 per annum, if they scale back their daily purchased coffees, regular expensive nights out and weekend smashed avocado café breakfast.

Lachlan commits right away to investing $10,000 per year in outstanding investments averaging 10% per annum returns, with some sacrifices on his behalf.

Sam, on the other hand procrastinates and puts it off, figuring he will start in the future when he “earns more and can afford it”.

Now the amazing part.

Lachlan invests $10,000 per annum for 10 years, with total contributions of $100,000. Sam eventually starts five years after Lachlan, and invests $10,000 per annum for 30 years, with total contributions of $300,000. The results…after 35 years, Lachlan has a larger investment balance than Sam, even though he only invested $100,000 versus $300,000 for Sam.

No matter how many times we calculate it, we’re always impressed by the difference starting early can make.

Improving long term returns

Of course, that’s all easy to say, and hard to do right? Not necessarily. Here’s the top ways we think all investors can improve their long- term investment performance and harness the power of compound interest:

• People procrastinate – Just like Sam above, people always assume they will start later when they can afford it. Don’t wait, start now! The benefits of starting just one year earlier are massive.
• Stick with it. Make regular, consistent contributions to take advantage of dollar cost averaging. Initially it appears that not much is happening. It’s boring and it’s easy to think that you’re not making much progress, and your resolve to continue is tested. Later, however, things become downright fascinating! From relatively limited contributions early, the annual growth escalates to something quite amazing.
• Consider retiring later, or continuing to work part-time. In many cases continuing to work part-time, particularly for men, has proven to be a better way to adjust to retirement living.
• Don’t lose money. Ever. Over time, many investors have found out the hard way that highly geared investments, complicated funds and poor quality stocks can go to zero. If you have a large portion of your assets in investments such as these, then the consequences can be devastating in a big market correction.
• Focus on finding great investments and investment managers and diversifying properly. Maintain an excellent quality diversified investment portfolio to help avoid both large drawdowns (negative return periods) and sequencing risk (the risk of a large loss at an inopportune time such as just before or after retirement).
• Focus on long term market cycles, rather than making rash short-term decisions.

Diversifying properly

The hardest step in the process is maintaining an excellent quality diversified portfolio. Our best ideas in constructing an investment portfolio are:

Achieve real diversification. Owning all four big banks is not diversification. Own assets from different asset classes, investment styles, investment strategies and geographies. Your portfolio needs to be able to cope with a wide range of potential outcomes, both positive and negative, and perform reasonably in all markets.

Focus on downside risk and draw downs. Everybody loves the stock/fund that goes up 30% in one year. However, you usually don’t hear much about it when it falls 40% the next year. Investing is about consistency and avoiding large draw downs. Imagine a fund that never tops the performance tables in any one year. But, through good times and bad, it always manages to be in the 60%-80% percentile, with no significant draw downs. Over a full market cycle, you can almost guarantee that fund will be near the very top. You don’t need to be the top performer every year, but you must make sure you are never near the bottom.

Make sure you have the best stock brokers, fund managers and advisors working for you. They should be adding more value than the fees they are charging.

A lot of this is not hard and doesn’t take that long. But it could pay huge dividends (pun intended!)

A small effort, for a huge gain

When all is said and done, the investment decisions you make early on in your investing lifetime, and the returns you and your advisors can generate, will have a huge impact on your retirement standard of living.

A small amount of effort regularly can make a huge difference in the end.

The post The Miracle of Compound Interest appeared first on Funder & Associates.

Personal income tax

Increase in the Medicare levy

The Medicare levy will increase by half a percentage point from 2.0 to 2.5 per cent of taxable income from 1 July 2019. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased. Low-income earners will continue to receive relief from the Medicare levy through the low-income thresholds for singles, families, seniors and pensioners. The current exemptions from the Medicare levy will also remain in place.

The revenue generated by the Medicare levy increase will be used to support the National Disability Insurance Scheme (NDIS) and to guarantee Medicare.

Temporary Budget Repair Levy expiry

There is no announced change to cessation of the Temporary Budget Repair Levy (TBRL) on 30 June 2017. This means that the top marginal tax rate (where taxable income exceeds $180,000), including the Medicare levy, will reduce from 49.0 percent to 47.0 per cent from 1 July 2017, and increase to 47.5 per cent from 1 July 2019.

Medicare levy thresholds for 2016/17

The threshold for singles will be increased to $21,655. The family threshold will be increased to $36,541 plus $3,356 for each dependent child or student. For single seniors and pensioners, the threshold will be increased to $34,244. The family threshold for seniors and pensioners will be increased to $47,670 plus $3,356 for each dependent child or student.

Disallow certain deductions for residential rental property

From 1 July 2017, deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will be disallowed.

Investors will not be prevented from engaging third parties such as real estate agents for property management services. These expenses will remain deductible.

Also from 1 July 2017, plant and equipment depreciation deductions will be limited to outlays actually incurred by investors in residential real estate properties. Plant and equipment items are usually mechanical fixtures or those which can be ‘easily’ removed from a property such as dishwashers and ceiling fans.

This measure addresses concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value. Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent investors.

Expanding tax incentives for investments in affordable housing

From 1 January 2018, the CGT discount will increase from 50 per cent to 60 per cent for resident individuals who elect to invest in qualifying affordable housing.

To qualify for the higher discount, housing must be provided to low to moderate income tenants, with rent charged at a discount below the private rental market rate. The affordable housing must be managed through a registered community housing provider and the investment held for a minimum period of three years

Foreign residents

Lower threshold for withholding tax for residential property disposals

From 1 July 2016, foreign investors were subject to a withholding tax where they sold a residential property for $2 million or more. The obligation to withhold falls on the purchaser of the property.

From 1 July 2017, this threshold will reduce to $750,000. As median house prices in both Sydney and Melbourne exceeded $750,000 in the December 2016 quarter 1, a far greater number of purchasers will need to be conscious of these rules to avoid any penalties for failure to withhold.

This obligation to withhold applies where:

• the purchaser knows or has reasonable grounds to believe the vendor is a foreign resident
• the purchaser doesn’t reasonably believe the vendor is an Australian resident and
  • has a record about the purchase indicating that the vendor has an address outside Australia, or
  • is authorised to provide a financial benefit (eg make a payment) to a place outside Australia (whether to the vendor or to anybody else).

Other rules will be introduced to aggregate indirect property holdings of associates (related entities) in applying the foreign resident CGT regimes.

Business owners

Continuation of small business asset write-offs ($20,000 threshold)

Small businesses with an annual turnover of less than $10 million will be able to continue to immediately deduct purchases of eligible assets costing less than $20,000 first used or installed ready for use by 30 June 2018, with some exclusions including in-house software.

Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. New depreciation pools can also be immediately deducted if the balance is less than $20,000 over this period.

This measure will only be extended for a further 12 months to 30 June 2018, at which time the immediate deductibility threshold and deductible pool balance will revert to $1,000.

Integrity measures limiting access to small business capital gains tax concessions

Measures will be introduced to ensure that taxpayers do not arrange their affairs in a way that means ownership interests in larger businesses do not count towards the small business CGT tests.

This will ensure that the small business concessions are available to the appropriate group of taxpayers.

Superannuation

First home super saver scheme

From 1 July 2017 individuals will be able to make voluntary contributions to superannuation of up to $15,000 per year and $30,000 in total, to be withdrawn for the purpose of purchasing a first home. Both voluntary concessional and non-concessional contributions will qualify.

These contributions (less tax on concessional contributions) along with deemed earnings can be withdrawn for a deposit from 1 July 2018. When withdrawn, the taxable portion will be included in assessable income and will receive a 30 per cent offset.

Features associated with this measure include:

• Contributions will count towards existing concessional and non-concessional contribution cap
• Earnings will be calculated based on the 90 day Bank Bill rate plus three percentage points.
• The ATO will administer this scheme, calculate the amount that can be released and provide release instructions to superannuation funds.
• The amount withdrawn (including the taxable component) will not flow through to income tests used for tax and social security purposes, such as for the calculation of HECS/ HELP repayments, family tax benefit or child care benefit.

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