Super Guarantee Amnesty measure receives royal assent 6 March 2020
- Amnesty has ended 6 September 2020
- Superannuation Guarantee amnesty from 24 May 18 to 6 September 2020 (ATO gave employers until 11.59pm 7 September 2020)
- Employers could self-correct historical underpayments of SG (1 July 92 to 31 March 18) without incurring additional penalties.
- Higher penalties apply if employers don’t self-correct
- Employers had to pay SG directly to ATO under amnesty.
Are-you-ready-for-GST-on-low-value-goods TAX REPORT
Company tax rate cut for small businesses from 1 July 2020 from 27.5% to 26%
Small business company income tax rate remain at 27.5% for 2020 year. From 1 July 2020 company tax rate reduces to 26%.
For the 2019/2020 year the threshold as to what is small business has remained at $50 Million. Note that turnover of connected entities is included in the calculation of company turnover. For 2020/21 the threshold has remained at $50 Million. All other companies will continue to be subject to the current 30% tax rate on all their taxable income
Single touch payroll extends to small employers with closely-held employees from 1 July 2021
Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO. If you are using a solution that offers STP reporting, such as payroll or accounting software, you will send your employees’ tax and super information to us each time you run your payroll and pay your employees. The information is sent to ATO either directly from your software, or through a third party – such as a sending service provider.
There will also be a number of options available for employees who do not use payroll software, such as No-cost and low-cost single Touch Payroll solutions.
Large employers with 20 or more employees and small employers with 19 or less employees should now be reporting through STP.
Employers with 19 or less employees do not need to report closely held payees until 1 July 2021. A closely held payee means the payee is directly related to the entity from which they receive payments, for eg family members of a family-owned business, directors or shareholders of a company, trustees or beneficiaries of a trust. Small employers will have the option to report their closely held information quarterly.
First Home Super Saver Scheme
The FHSS Scheme allows you to save money for a first home inside your superannuation fund. The scheme provides concessional tax treatment within super.
From 1 July 2017 you can following voluntary contributions into your super fund to save for your first home:
- Concessional contributions – including salary sacrifice amounts or contributions for which a tax deduction has been claimed. These are taxed at 15%.
- Non-concessional contributions – these are made after tax or where a tax deduction has not been claimed.
To qualify you must:
- have not previously owned property in Australia (subject to exceptions)
- have not previously released FHSS funds
- either live or intend to live in the premises you are buying as soon as practicable
- intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.
From 1 July 2018 you can then apply to release your contributions, along with associated earnings, to help you purchase your first home. You can start making super contributions from any age. You must be 18 years or over to apply for the release of these amounts.
Once you make a valid release request, you have up to 12 months to sign a contract to purchase or construct a home. If you do not sign a contract to purchase or construct a home within 12 months of the date that you make a valid release request, you can either:
- apply for an extension of time of up to a maximum of a further 12 months
- recontribute the amount into your super fund.
- keep the released amount and be subject to a FHSS tax. This is a flat tax equal to 20% of your assessable FHSS released amounts.
A payment summary will subsequently be sent to you. This will show your assessable FHSS released amounts. You need to include this amount in your tax return for the year you request the release. When you receive the released amounts, ATO will withhold tax that will be calculated at generally your marginal tax rate less a 30% offset.
You must apply for and receive a FHSS determination from ATO before you sign a contract to purchase or construct residential premises.
You can apply for the release of voluntary contributions up to a maximum of $15,000 from any one financial year and $30,000 in total across all years. You can contribute up to your existing superannuation contribution caps.
You must notify ATO if you either sign a contract to purchase or construct a home, or recontribute the amount into your super fund or you will be subject to this tax
Rental Property deduction restrictions Bill receives royal assent
The bill denies depreciation deductions for previously used assets from 1 July 2017.
The changes apply from 1 July 2017 to:
- previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time
- plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.
- Investors who purchase new plant and equipment will continue to be able to claim a deduction over the effective life of the asset.
The changes do not affect deductions that arise in the course of carrying on a business, or for:
- corporate tax entities
- superannuation plans other than self-managed superannuation funds
- public unit trusts
- managed investment trusts
- unit trusts or partnerships whose members are the above listed entities.
Travel expenses for residential rental property disallowed
From 1 July 2017, travel expenses relating to inspecting, maintaining, or collecting rent for a residential rental property cannot be claimed as deductions by investors. The travel expenditure is also not recognised in the cost base of the property for CGT purposes.
You can continue to deduct travel expenditure if:
- the losses or outgoings are necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income; or
- you are an excluded class of entity.
Contributing proceeds of downsizing into superannuation
From 1 July 2018, the Australian Government will introduce the Contributing the proceeds of downsizing into superannuation measure. This measure applies to the sale of your main residence, where the exchange of contracts for the sale occurs on or after 1 July 2018.
If you are 65 years old or over and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home. Your downsizer contribution will not count towards your contributions caps or be affected by the total superannuation balance test in the year you make it. However, it will count towards your total super balance and transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.You can only make downsizing contributions for the sale of one home.
Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.
Other eligibility criteria: –
- Your home was owned by you or your spouse for 10 years or more prior to the sale.
- You have provided your super fund with the downsizer contribution form either before or at the time of making your downsizer contribution.
- You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement.
Company tax rate cut for small businesses from 1 July 2016 from 30% to 27.5%
For the 2016–17 income year, the company tax rate for small businesses decreases to 27.5% for companies with aggregated turnover less than $10 million.
- For companies with turnover less than $25m the rate will reduce to 27.5% in 2017-18
- For Companies with turnover less than $50m the rate will decrease to 27.5% in 2018-19.
Expanded access to small business concessions from 1 July 2016
From 1 July 2016, a range of small business tax concessions became available to all businesses with turnover less than $10 million (the turnover threshold) (increased from $2 million). The turnover threshold stays at $2m for Capital Gains Tax Small Business concessions)
Non-concessional contributions cap reduced from 1 July 2017 from $180,000 to $100,000 per year
Non-concessional (after-tax) contributions include:
- personal contributions for which you do not claim an income tax deduction, and
- spouse contributions.
This reduction will remain available to individuals aged between 65 and 74 years old if they meet the work test.
If you are under 65 years, you may make non-concessional contributions of up to three times the annual non-concessional contributions cap in a single year by bringing forward your non-concessional contributions cap for a two or three year period. If eligible, when you make contributions greater than the annual cap, you automatically gain access to future year caps. This is known as the “bring forward” arrangement.
From 1 July 2017, the non-concessional contributions cap amount that you can bring forward, and whether you have a two or three year bring forward period, will depend on your super balance at the end of 30 June of the previous financial year. For eg if you have a balance of less than $1.4million, you may be entitled to the maximum of 3 years ($300,000 brought forward non-concessional contribution in 2017-18 year).
The remaining cap for years two or three of a bring forward arrangement is reduced to nil for a financial year if your total super balance is greater than or equal to the general transfer cap at the end of 30 June of the previous financial year. For eg if your super balance is $1.6million at 30 June 2017 you are not entitled to brought forward period for 2017-18 year as the non-concessional cap applies.
Change to personal super contributions deductions from 1 July 2017 – $25,000 concessional contribution cap
- These changes are for people who make personal super contributions from their income after tax (this does not include contributions made under a salary sacrifice arrangement and compulsory super paid by your employer), and
- want to claim a deduction for these contributions.
From 1 July 2017, the 10% maximum earnings condition will be removed. This means most people under 75 years old will be able to claim a tax deduction for personal super contributions (including those aged 65 to 74 who meet the work test). To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period.
You can claim a deduction for personal super contributions made on or after 1 July 2017 if:
- you made the contribution to a complying super fund or a retirement savings account that is not a
- Commonwealth public sector superannuation scheme in which you have a defined benefit interest
- CPF or other untaxed fund that would not include your contribution in its assessable income
- Super fund that notified the ATO before the start of the income year that they elected to treat all member contributions to
- the super fund as non-deductible
- the defined benefit interest within the fund as non-deductible.
- you notify your fund in writing of the amount you intend to claim as a deduction
- your fund acknowledges your intent to claim a deduction in writing
- if you are 75 years old or older, you can only claim a deduction for contributions you made on or before the 28th day of the month following the month in which you turned 75.
Concessional contributions cap from 1 July 2017 $25,000 for everyone
Concessional (pre-tax) contributions to your super include:
- employer contributions
- any amount you salary sacrifice into super
- personal contributions you claim as a personal super contribution deduction
As concessional contributions are paid before tax is applied, it means that your super fund pays tax on the contributions at 15%.
From 1 July 2017, the concessional contributions cap is $25,000 for everyone.
The contributions that you claim as a deduction will count towards your concessional contributions cap. If you exceed your cap, you will have to pay extra tax and any excess concessional contributions will count towards your non-concessional contributions.
If you have a year of substantial capital gain or income, you can claim concessional contribution against capital gain which will reduce income.
Carry-forward of unused concessional contributions
From 1 July 2018, you will be able to carry-forward any unused amount of your concessional contributions cap. You will be able to access your unused concessional contributions cap on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire.
The first year in which you can access unused concessional contributions is 2019-20.
You will only be able to carry forward your unused concessional contributions cap if your total super balance at the end of 30 June of the previous financial year is less than $500,000.
Change to Division 293 income threshold from 1 July 2017
Currently, individuals with income and concessional super contributions greater than $250,000 will trigger a Division 293 assessment.
From 1 July 2017, the Division 293 income threshold decreased from $300,000 to $250,000. An individual with income, and concessional super contributions, exceeding the $250,000 threshold will have an additional 15% tax imposed on the lessor of: –
- the excess, or
- the concessional contributions (except excess contributions)
New transfer balance cap for retirement phase accounts from 1 July 2017
A new transfer balance cap applies for people who are retired and have $1.6 million or more in their retirement phase super accounts.
The ‘transfer balance cap’ is a limit on how much of your super you can transfer from your accumulation super account(s) to tax-free retirement phase account(s) to receive your pension income.
The transfer balance cap will start at $1.6million, and will be indexed in line with the consumer price index (CPI), rounded down to the nearest $100,000.