Category Archives: Tax

We have seen a large number of clients enrolling for the $1500 a fortnight JobKeeper payment being offered by the Federal Government. If you have not enrolled or need to revisit your current situation please see our Covid-19 series of articles on our website. The government has extended the time to enrol to 30 May 2020.

As of 4 May 2020 the tax office will be accepting declarations of eligible for employees and business turnover reductions for employers to assess payment of the first two Jobkeeper instalments for the fortnights ended 12 April 2020 and 26 April 2020. Payments will be made to eligible employers nominated bank accounts from the first week in May 2020.

Employers will need to pay eligible employees a minimum of $1500 for each of these fortnights BEFORE 8 May 2020. One payment of $3000 can be made as long as it covers these two fortnights. Note the tax office has extended this date from that previously advised.

Recap of  Jobkeeper steps required to this point

  1. Check if you and your nominated employees meet the eligibility requirements.
  2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
  3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you.
  4. Keep the Employee Nomination Form on file for five years.
  5. Pay the minimum $1,500 to each eligible employee per JobKeeper fortnight. The first fortnight starts on 30 March and ends on 12 April. Alternatively, employers can make one combined payment of $3,000 for the first two fortnights paid by end of 8 May 2020.
  6. Enrol for JobKeeper from 20 April using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.
  7. Subscribe to updates on the ATO website, so the ATO can advise when new information is available.

Steps in preparing eligible employee declaration and reduction in turnover (employer ) declaration

  1. Assess eligibility  of employees jobkeeper-payment/employers/your-eligible-employees
  2. Assess business turnover reduction for employers jobkeeper-payment/employers/eligible-employers
  3. Report information to the tax office

For businesses set up for Single Touch Payroll (STP) enabled software

All of the relevant information will be captured within your STP enabled software. The major software providers have added functionality to assist in calculating eligibility for both employees and for the reduction in business turnover. Whilst this functionally is of great assistance in reporting Jobkeeper information there are several requirements to set up the reporting which you may require our assistance. Should this be the case the Economos team have been fully trained on these systems and are ready to assist where required on a do and charge basis. (We strongly suggest if you do not have STP compliant software that you ask for our advice on setting it up the right software package for you).

For businesses not set up for Single touch Payroll (STP) enabled software

To lodge declarations you will need to do this manually through your business portal using your myGovId or through our professional tax agent portal. Please contact your partner or manager if you require our assistance. (Fees will apply based on the complexity of your situation).

The Commissioner of Taxation has released several different (alternative) tests to assess decline in turnover when applying for JobKeeper payments. Previously the government released what is known as the “basic test” to assess a fall in revenue compared to a previous comparable period e.g March 2020 compared to March 2019.  Where businesses have special circumstances which make this comparison difficult these new  “alternative tests” may be used.

The alternative tests apply in the following cases:

  • commencement of a business;
  • acquisition or disposal of a business;
  • business restructures;
  • substantial increases in turnover during a prior period;
  • drought or natural disasters;
  • irregular turnover periods that are not cyclical;
  • where there is sickness, injury or leave of a sole trader or a partner of a small partnership.

Basically, the taxation commissioner may apply these tests if  “some event or circumstance … outside the usual business setting” makes the relevant comparison of turnover used in the ‘Basic Test” inappropriate. If these new tests are satisfied, businesses may still meet the decline in revenue test which (subject to other criteria)  may make the $1500 a fortnight JobKeeper payment available to all eligible employees.

Further reading can be found at JobKeeper Decline in Turnover tests.

Next Steps
The application of the Alternative Test Rules is very fact specific and requires a number of GST turnover calculations to be made. Due to the wide reaching nature of the alternative tests, clients will likely be able to test using at least one of these alternative methods. Given the deadline for access to the first two JobKeeper payments is drawing near, clients should start looking at these alternative tests now. Please contact your Economos partner or manager for further information or for assistance in applying these measures.

NSW Government Land Tax Assistance
The NSW Government is introducing measures to help commercial and residential landlords manage their rental properties.

At present, the Government have not finalised the specific documents required to apply for the reduction in land tax. However the information supplied would need to show your tenant is in financial distress as a result of COVID-19. These documents may include BAS statements, a letter from an accountant or evidence that the lease was reduced in response to this financial distress, such as copies of old and new tenancy/lease agreements that indicate rent reduction.

We ask that you start to prepare any supporting documents in readiness and we will advise you when the application process is released. Our partners and managers are available should you require assistance.

Basic Elements of the Land Tax Support Package
Includes a reduction of up to 25 per cent of the land tax payable in the 2020 land tax year. It’s available when:

  • your land is used for business or residential purposes
  • you’re leasing property to a residential tenant – or a business tenant with annual revenue of up to $50 million – who can demonstrate financial distress resulting from the COVID-19 outbreak
  • you reduce the rent of the affected tenant by at least as much as the tax reduction
  • the land tax is directly related to the property for which rent has been reduced.

Financial distress is considered to be:

  • for commercial tenants – a 30 per cent drop in revenue
  • for residential tenants – a 25 per cent drop in household income .

Further reading on the package can be found at Land Tax Support Package.

Small Business and Payroll Tax Support
The NSW government is supporting businesses who are experiencing financial distress as a result of COVID-19 with a new support measures. The table below outlines the various packages available depending on your circumstances. For the Small Business Support Grant evidence may be required to support your eligibility including BAS information and a letter from an accountant. For payroll tax the deferral arrangements are still being completed however we will advise you when the details are released. We ask that you prepare supporting document in preparation and as always or partners and managers are ready to assist.

Small Business Support Grant
The NSW small business COVID-19 support grant of up to $10,000 is available to eligible NSW small business owners.

Available Funding – Grant amount is up to $10,000

Eligible Criteria:

  • Must have between 1-19 employees and an annual turnover of more than $75,000
  • Must have total Australian wages below the NSW Government 2019-20 payroll tax threshold of $900,000
  • Must have an Australian Business Number as at 1 March 2020, are based in NSW and employ staff as at 1 March 2020
  • Are highly impacted by the Public Health (Covid-19 Restrictions on Gathering and Movement) (see list on further reading link below) by the NSW Government Shutdown Restrictions defined as a decline in turnover of 75 per cent compared to the equivalent period (of at least two weeks) in 2019; and
  • Have unavoidable business costs not otherwise the subject of other NSW and Commonwealth Government financial assistance measures. Such as utilities, overheads, legal costs and financial advice, more examples can be found in further reading link below.

Assistance Delivery Method – $10,000 Cash Grant

How funding may be used – Grant must only be spent on unavoidable business expenses for which no other government support is available.

Evidence in support of eligibility

  • Must certify to the administrating agency that business meets the Eligibility criteria
  • Must provide a Business Activity Statement (BAS) to demonstrate that the business has an annual turnover of $75,000
  • Must lodge supporting documents as may be required to demonstrate that they meet the eligibility criteria
  • For small businesses that are not on the list of highly impacted industries, a letter from an accountant confirming the decline in turnover will be required

Additional information can be found on the Service NSW website.

Payroll tax relief for businesses with grouped Australian wages of no more than $10 million
Businesses whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on 28 July. For businesses who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required. Businesses will also have the option of deferring these payments for an additional three months. When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.

NSW Payroll Tax Relief

Available Funding – Annual tax liability reduced by 25%

Eligible Criteria

  • Total grouped Australian wages of no more than $10 million
  • Be paying NSW Payroll Tax

Assistance Delivery Method

  • Businesses who lodge and pay monthly, no payment for the months of March, April or May 2020 will be required
  • Businesses will also have the option of deferring these payments for an additional three months
  • When lodging your annual reconciliation, businesses still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20

How funding may be used – To reduce 2019/2020 Payroll tax liability

Evidence in support of eligibility – 2019/2020 Payroll Tax Reconciliation

Additional information can be found on the Revenue NSW website.

Payroll tax deferral arrangements for businesses with total grouped Australian wages over $10 million
Businesses whose total grouped Australian wages for the 2019/20 financial year are over $10 million, will have the option of deferring the payment of payroll tax for up to six months. These businesses will not need to make their payment for the March period, normally due on 7 April 2020.

NSW Payroll Tax Deferral

Available Funding – Option of deferring the payment of payroll tax for up to six months

Eligible Criteria

  • Total grouped Australian wages over $10 million
  • Be paying NSW Payroll Tax

Assistance Delivery Method

  • Businesses have the option of deferring the payment of payroll tax for up to six months
  • Businesses will not need to make their payment for the March period, normally due on 7 April 2020.

How funding may be used – To defer 2019/2020 Payroll tax liability

Evidence in support of eligibility – 2019/2020 Payroll Tax Reconciliation

Further information – Payroll Tax Deferral
More information regarding the deferral arrangement will be released in the upcoming days.

Please review the information provided in the Government links provided above. If you have any questions, please contact your Partner or Manager.

JobKeeper Payment: Enrolment Reminder

From 20 April 2020 you need to enrol for JobKeeper by either using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.

* If you require our assistance please contact the firm to request the enrolment of your business. *

As per previous email correspondence  you should have completed items numbers 1 to 4 below. If not, please do so as a matter of urgency.

  1. Check if you, as an employer, and their nominated employees meet the eligibility requirements.
  2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
  3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you to confirm that they agree to you being nominated as the employer to receive JobKeeper Payments.
  4. Keep the Employee Nomination Notice Form on file for five years.

IMPORTANT NOTE: If you want to undertake the Job Keeper process yourself you need to have access to the business portal via myGovID.

We will be offering our services on a do and charge basis depending on the complexity of your personal situation. More information can be obtained from your partner or manager.

The ATO have released guidance for employers to understand what they need to do to ready themselves for the JobKeeper Payment.

* Please make special note below of the requirement for a business portal with myGovId if you decide to enrol or claim JobKeeper on your own behalf. We ask that you please let us know as soon as possible if you intend to process yourself or require our assistance. The myGovId process can be time consuming and we expect large volumes of business’ trying to access the system on the 20th of April when enrolment opens *

To get ready to claim, employers are advised to:

  1. Check if they, as an employer, and their nominated employees meet the eligibility requirements.
  2. Notify eligible employees that you (their employer) intend to participate in the JobKeeper scheme.
  3. Send eligible employees the JobKeeper Employee Nomination Notice to complete and return to you to confirm that they agree to you being nominated as the employer to receive JobKeeper Payments from.
  4. Keep the Employee Nomination Form on file for five years.
  5. Pay the minimum $1,500 to each eligible employee per JobKeeper fortnight. The first fortnight starts on 30 March and ends on 12 April. Alternatively, employers can make one combined payment of $3,000 for the first two fortnights paid by end of April 2020.
  6. Enrol for JobKeeper from 20 April using the Business Portal and authenticate with myGovID or have enrolment processed by a tax professional through the online tax agent portal.
  7. Subscribe to updates on the ATO website, so the ATO can advise when new information is available.

IMPORTANT NOTE: If you want to undertake the Job Keeper process yourself you need to have access to the business portal via myGovID.

We will be offering our services on a do and charge basis depending on the complexity of your personal situation. More information can be obtained from your partner or manager.

Last week the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and the Rules were passed by parliament.

This Act and the accompanying rules with explanatory memorandum encapsulates the rules for receiving the JobKeeper payment.

Light reading can be found here: https://www.legislation.gov.au/Details/F2020L00419

The JobKeeper payment requires an application to the ATO. The ATO application is almost ready.

The ATO have provided a link to register your interest in the JobKeeper payment (LINK BELOW), so the ATO can contact you when applications are ready.
The ATO have furthermore updated their website to include the most recent developments.

The Link is here: https://www.ato.gov.au/general/JobKeeper-Payment/

What to do next….

If you would like Economos to handle to JobKeeper matter for you:

  • Please let us know ASAP that you want us to assist you with the matter
  • There will be an administrative fee for any applications and ongoing reporting made on your behalf

If you would like to look after the JobKeeper matter yourself:

Due to the matter above being time critical, you may receive numerous, similar emails from our office.

Underneath some quick discussion points from an initial reading of the legislation and explanatory memorandum:

  1. Businesses need to understand Jobkeeper in fortnights. Each of the following is a “JobKeeper fortnight”:
    i) the fortnight beginning on 30 March 2020; and
    ii) each subsequent fortnight, ending with the fortnight ending on 27 September 2020.

Admin process

  1. Businesses need to nominate to participate (with the ATO)
  2. Employees need to respond in writing to employers that they agree to be nominated to participate (this response does not need to be sent to ATO)
  3. Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme. The employer cannot select which eligible employees will participate in the scheme. This ‘one in, all in’ rule is a key feature of the scheme
  4. qualifying employers that decide to participate in the JobKeeper scheme must, as a condition of entitlement, notify all employees in writing that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme (if the employee so agrees).
  5. The nomination requirements in subsection 9(3) of the Rules require an employee to provide a notice in the approved form to their employer agreeing to be nominated by the employer for the purposes of the JobKeeper scheme:  The employee:
    • Agrees to be nominated by the employer as an eligible employee under the JobKeeper scheme as the employer with which the employee will participate in the JobKeeper scheme;
    • that they confirm they have not agreed to be nominated by another employer; and
    • that they do not have permanent employment with another employer if they are employed as a casual employee with this employer.

The required wording and forms are available on ATO.gov.au

Turnover Test

  1. Once an entity satisfies the Turnover test in March or April it does not need to retest its turnover in later months.
  2. The Test periods for the turnover test being compared by can be periods of one month or three months (if three months, then those Quarters reporting periods begin 1 April 2020, and 1 July 2020)
  3. An alternative decline in turnover test applies if there is not an appropriate relevant comparison period in 2019. This might be the case for a new business, started for example in January 2020 or a business that made a major business acquisition in 2020.

Components of the $1500

  1. The component amounts that together must equal or exceed $1,500 are
    i) salary and wages
    ii) PAYG WHT
    iii) super contributions
    iv) Salary sacrifice
  2. The requirement that the component amounts be at least $1,500 applies regardless of whether the employee ordinarily receives more or less than that amount.
  3. If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, then the payment can be allocated between fortnights in a reasonable manner.
  4. There are timing rules.  Where the employer wishes to participate in the scheme and receive the first or second JobKeeper payment (relating to the JobKeeper fortnights commencing on 30 March 2020 and 13 April 2020 respectively the employer has until the end of the second JobKeeper fortnight, that is, 26 April 2020, to provide the Commissioner with its election to participate;

Eligibility

  1. A business owner is entitled to participate even if they are not an “employee”
    i) Sole trader
    ii) Beneficiary of a trust
    iii) Director or shareholder of company
    iv) Partner in a partnership
    The individual must be actively engaged in the business
  2. Under s.16 of the ACT participation in the JK scheme requires monthly reporting
  3. The Jobkeeper scheme effectively ceases after the last Jobkeeper fortnight – after 27 September 2020.

But importantly please register your interest and please explicitly advise if you wish us to register for you and maintain reporting (fees will apply).

Amidst the growing fears around the spread of COVID-19 (coronavirus), we would like to take this opportunity to reassure our clients that Economos are committed to ensuring that the disruptions are kept to a minimum.

As you know this is an unprecedented and constantly evolving situation. The health and safety of our clients and employees are our number one priority and managing the risk of transmission of coronavirus is critically important.

Tax Obligations

The Australian Taxation Office (ATO) together with the Government’s economic response will be assisting taxpayers who experience financial difficulties due to COVID-19.

For more information on the ATO support: https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

At this stage there have been no announcements with regards to any extensions to lodgement due dates. We will monitor and advise you of any developments.

Contact with our team and visiting our office

Based on the information provided by the Australian Government – Department of Health, we will be exercising social distancing. Accordingly, all face-to-face meetings will be held electronically via telephone or web meeting.

Our team have the technology and devices to be able to continue to support you regardless of work location.

For the latest information about coronavirus in Australia, visit the Australian Government’s Department of Health website https://www.health.gov.au or contact the coronavirus health information line: 1800 020 080.

We encourage our clients and the community to remain calm, if we work together to follow protocols within our community, we can help to reduce the risks associated to coronavirus.

We will get through this together.

Understanding Foreign Resident Capital Gains Withholding (FRCGW) Payment

This Article

 

This article is written for sellers (vendors) of Australian real estate (house, unit, factory, farm), who are non-residents of Australia.

 

Legislation:

The foreign resident capital gains withholding (FRCGW) payments regime is enshrined in the Taxation Administration Act 1953 (TAA 1953).The FRCGW payments regime first came into effect on 1 July 2016.

In this regard, Subdivision 14-D of Schedule 1 to the TAA 1953 imposes a non-final withholding obligation on the purchaser of certain Australian real estate where the property is acquired from a foreign resident.

The relevant schedules of the TAA1953 were updated in Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017. Thisupdate received royal assent on 22 June 2017.

The 2017 update:

  • Increased the withholding rate from 10% to 12.5%
  • Decreased the sale Value threshold from AU$2m to AU$750,000

For property transactions on or after 1 July 2017 the new rates apply.

Purpose of the Rules

These rules require Purchasers of Australian property valued in excess of $AU750,000 to withhold 12.5% of the purchase if the seller (vendor) is a non-resident.

Point to note: In Australian legislation the term “non-resident” is used to describe persons not ordinarily resident in Australia. Rarely is the term “Foreign resident” used. When you read this ‘Foreign resident’ means ‘non-resident’ for Australian tax purposes.

Furthermore “seller” means “vendor” and vice versa

Background

Where an Australian property is sold for AU$750,000 or more, the FRCGW rules may apply.

The starting point when selling an Australian property is to ask whether you as a seller are

  • An Australian tax resident, or
  • a non-resident (aka “Foreign Resident”).
  • If you are an Australian tax residentand sell an Australian property for AU$750,000 or more, you will need to apply for, and receive a Capital Gains Withholding Clearance Certificate.

 

For it to be effective in avoiding the withholdingof sale proceeds, the seller must provide it to the purchaser. This must occur before settlement

  • If you are a non-resident seller of Australian property, you will not receive this certificate, and the purchaser (with help from aconveyancer) will be required to withhold 12.5% of the sale price. The purchaser will then provide that withheld amountdirectly to the ATO at the time of settlement.
  • If you are a purchaser, you will use the Foreign resident capital gains withholding purchaser payment notification

Tax for the seller of the property?

The FRCGW is not a FINAL tax. It is simply an “estimate”.

What this means is that an Australian Tax Return is still required for filingin the financial year when the property is sold.

The final tax (as worked out on the tax return) and the estimate (FRCGW) is then reconciled, and the seller of the Australian property:

  • Receives a refund for any overpaidFRCGW; or
  • Is given a bill (Notice of Assessment) for ‘catch up’ tax

CASE STUDY

Consider the following Case Study:

Michelle was originally a resident of Australia.

She purchased anapartment in Sydney in 2003 for $515,000.

She never lived in it, she just rented it out (it was an “investment property”)

In 2010 Michelle moved to the UK to accept a job opportunity and became a non-resident of Australia.

Michelle made a life in the UK and decided never to return to Australia. She continued to collect rental income from the unit.

(In May 2012 the non-resident CGT Concession rules changed denying Michelle the 50% CGT discount from this point onwards)

In May 2012 because of a change in law, her tax agent suggested Michelle get the property appraised. It was valued at AU$850,000

(IN July 2016 the FRCGW Rules were introduced and updated from 1 July 2017)

In August 2019 Michelle sold the property for $1,050,000.

The purchaser withheld $131,250 from the proceeds under the FRCGW regime because

  1. Michelle couldn’t provide a certificate proving she was an Australian resident; and
  2. The property was valued in excess of AU$750,000

Upon settlement Michelle only received $919,750 ($1,050,000 less the FRCGW of $131,250)

Working out the FINAL TAX

Accordingly, and taking all of the above into consideration, Michelle with the help of her tax agent:

  1. Calculated a Gross Gain on sale of $496,858 (after purchase and selling costs like advertising, agent commission and stamping duties were deducted) but;
  2. Calculated a Taxable Capital Gain of $348,292.50 (after taking into consideration the discounts applicable before the non-resident laws changed in May 2012).

Michelle’s FINAL tax worked out to be $138,281.63.

As $131,250 was already withheld under FRCGW, there is an estimated balance $7,031.63 of tax to pay, which is required to be paid via the filing of an Australian tax return.

We note Michelleis required to lodge an Income Tax Return, and we are able to file this on her behalf.

Do I lodge?

 

Overpayment

 

Q: Lets say the FRCGW resulted in an overpayment of the calculated final tax?

A: Of course – Michelle should engage a tax agent to lodge a tax return as soon as possible – and seek a refund of the overpayment.

 

Underpayment

 

Q: We often get asked whether as a non-resident Michelle would bother to lodge if she is now in the UK, unlikely to return to Australia and has $7k to “catch up”. Who’s going to chase her?

A: By law – Michelle must lodge an income tax return. As a non-resident with an Australian sourced property she is required to lodge and pay the “catch up”.

If Michelle ever returned to Australia to live and work the obligation to lodge and pay remains.

And of course the longer she leaves it the worse (penalties and interest) it will be.

If you are a non-resident (or former resident) of Australia and have Australian real estate with a view to sell, please contact us to understand your obligations after the FRCGW regime applies.

There have been so many changes in superannuation in the last few years, it can be hard to keep track with the best ways to maximise your self-managed superannuation fund.

Here are our Top 10 strategies to utilise your Self-Managed Superannuation Fund (SMSF).

1. Maximise Contributions with Personal Superannuation Contributions

If you make a personal contribution into your superannuation fund, you may be able to claim a tax deduction for those contribution. The contribution must be made from your after-tax income i.e. from your bank account directly into your super fund. Before claiming a deduction, you must submit a Notice of Intent to Claim a Deduction for Personal Contribution Form and receive an acknowledgement from your fund. Personal super contributions that are claimed as a tax deduction will count towards your concessional contribution cap (2018-19: $25,000). If you exceed the cap, you will have to pay extra tax and will count to your non-concessional contribution cap.

Suitable for members who are investors externally to their SMSF

2. Direct Property Investment

Buying an SMSF Property or investment property directly through an SMSF is becoming increasingly popular. Direct property investing can provide capital growth and rental income in a very tax advantageous structure. Rental income is taxed at 15% and capital gains at 10% if the property is held for more than 12 months. If you hold your property until you have retired and commenced a pension, both rental income and capital gains could become tax free.

Suitable for people who enjoy property investing

3. Business Real Property

Generally speaking, you cannot buy an SMSF property and live in it, nor can you rent it to a relative, even on commercial terms. However, if you run a business, you can buy a commercial property using your SMSF and lease it to your own business.

Your business would pay rent at market rate to your SMSF, which is a tax-deductible expense for your business. Since rent is not classified as a superannuation contribution, you can still make concessional and non-concessional contributions, subject to your age and contribution caps.

Suitable for members who are investors externally to their SMSF

4. SMSF Property Loans or Limited Recourse Borrowing Arrangements

SMSFs can borrow money to purchase a single acquirable asset such as a property, or a collection of identical assets that have the same market value such as a parcel of shares. This is achieved via a limited recourse borrowing arrangement (LRBA). This arrangement involves the lender’s recourse being limited to the single asset. Borrowing in an SMSF is not without risk although there are several potential benefits including leverage, tax advantages and asset protection.

Suitable for experienced property investors with the ability to service the loan in their SMSF.

5. Recontribution Strategy

A re-contribution strategy is where you withdraw your super and re-contribute it back into super. There a several reasons as to why you may utilise this strategy:
• Estate Planning
• Tax Planning
• To utilise you and your spouse’s Transfer Balance Cap (currently $1.6 million)
• To maximise Centrelink Benefits
• Access government co-contribution and spousal contribution tax offset.

Suitable for members who have retired or over 65 years old, and eligible to make non-concessional contributions

6. Start an Account Based Pension

Once you reach preservation age and have met the relevant retirement conditions, you can allocate up to $1.6 million to start an Account Based Pension. An Account Based Pension converts your accumulation balance into “retirement phase”. In retirement phase, earnings are tax-free.

Suitable for members over 65 years old and members who are retired – aged between preservation age and 64 years old

7. Spousal Contribution Splitting

This strategy involves one member of a couple to split up to 85% of their concessional contributions received within a financial year with their spouse. This opportunity provides an opportunity to equalise their retirement benefits in particular where one spouse is younger, earning a lower income or is not working.

Suitable for couples

8. Separate Investment Strategies/Segregated Assets

Circumstances may warrant separate investment strategies within one fund e.g. Parents with children in one fund. The children have a different investing profile to their parents. Under new legislation if funds have over $1.6 mil in pension phase, they are not entitled to use segregation to determine tax-free earnings. However, there is a difference between segregation for tax and segregation for accounting.

Suitable for funds with both parents and children

9. In Specie Transfers

This involves making a contribution by transferring listed shares or business real property into your SMSF and not receiving cash proceeds. Although this triggers a SMSF capital gains tax event, this will allow future earnings to be made in a concessional tax environment. Subject to contribution caps.

Suitable for investors who hold investments in listed shares and business real property outside super

10. Downsizer Contribution

An older Australian who downsizes can contribute up to $300,000 to super regardless of employment status, Total Superannuation Balance and non-concessional contribution cap. This involves a member 65 years old or older, selling their home and making a contribution within a prescribed period.

Suitable for members over 65 years old

**Bonus Strategy**

11. Carry-forward concessional contributions of unused caps over five years

From 1 July 2018, if your Total Superannuation Balance is less than $500,000 at the end of a financial year, you will have the opportunity to start accumulating the unused portions of your concessional contribution caps from previous years (up to 5 years) in the following financial years. This mechanism will allow you to “catch-up” on concessional caps and make contributions which will count towards your unused concessional contribution caps.
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 the 2019–20 financial year.

Suitable for members with balances less than $500,000 in superannuation

Our SMSF Accountant and Specialist, Leanne Tinyow

Speak to one of experienced SMSF Accountants in Sydney. Leanne Tinyow is Economos’ Head of SMSF Services and is in charge of the compliance and administration of over 400 Self-Managed Super Funds. She is also well versed in helping new clients with SMSF setup and sdministration and can answer several SMSF property related questions.