Category Archives: SMSF

1 July 2014 Federal Budget Recap

Individuals

Temporary Budget Repair Levy. Adds 2% to the tax rate for every dollar of a taxpayer’s annual taxable income over $180,000
Increase in the Medicare Levy from 1.5% to 2%
Superannuation Guarantee charge increases from 9.25% to 9.5%.
Aged care reforms introduce new assets tests for resident’s accommodation and care fees
Changes to the way the Private Health Insurance (PHI) rebate is calculated requires extra information from individuals for their 2013/14 tax returns, which should be included on their PHI annual statement. There will be two different rebate periods – one from 1 July 2013 to 31 March 2014 and the other from 1 April to 30 June 2014.

Business

New ATO tax tables The ATO is releasing its new 2014/2015 tax rates, updated to reflect the increase inMedicare levy from 1.5 to 2% and the Temporary Budget Repair Levy for employees earning greater than $3,461 per week (i.e. $180,000 per year).
No TFN or ABN. If the employee has not provided a TFN or a supplier business has not provided their ABN, the employer should withhold 49% of any payment made.
Increase in the Superannuation Guarantee rate. The SG rate will increase from 9.25% to 9.5% from 1 July 2014. The government has announced that it would slow the previously announced increases to 12%, (leaving the 9.5% SG rate in place until 30 June 2018) however no legislation regarding this has been introduced.
SuperStream. Employers can opt-in to use SuperStream from 1 July 2014. Large and medium employers must complete their implementation by no later than 30 June 2015. Smaller employers (19 or fewer employees) are not required to start using SuperStream until 1 July 2015, and must complete their implementation by no later than 30 June 2016.
Living away from home allowance (LAFHA) transitional period ended on 30 June 2014. Now, the main condition to be satisfied is that the employee must have a normal place of residence in Australia that is maintained for their “personal use and enjoyment” (i.e. still available to them, not rented out) while they are living and working in another location. In most cases, LAFHAs will also be time limited to 12 months. Employees who qualified for the transitional rules will not be entitled to another 12 month period from 1 July 2014 unless there is a change in the job location. However, if the employee is working on a fly-in- fly-out or drive-in drive-out basis the LAFHA concessions are not subject to the 12 month limit.
Paper activity statements. From 1 July, once an activity statement is lodged electronically, the ATO will no longer issue paper activity statements.
Company loss carry-back repeal. The government has announced that it intends to repeal the carry back tax offset for the 2013/14 and later tax years. Legislation covering this has been reintroduced, but this is not yet law.
Simplified depreciation rules. The government also announced that it would repeal the provision allowing small businesses an accelerated initial deduction for motor vehicles. Legislation covering this has been reintroduced, but this is not yet law.

Self-Managed Super Funds

New SMSF trustee penalties. From 1 July 2014 the ATO has greater powers to enforce the superannuation rules by levying financial penalties directly on trustees.
Concessional contribution cap changes. From 1 July 2014, the concessional (deductible) contribution cap for taxpayers up to the age of 50 is $30,000. And for those 50 and above, the cap is $35,000.
Non-concessional cap changes. The non-concessional contributions cap from 1 July 2014 is $180,000 or $540,000 over 3 years (up from $150,000 per year).
Insurance inside an SMSF. From 1 July 2014, new insurance policies within a SMSF must be consistent with the death, terminal illness, and permanent and temporary incapacity conditions of release in the Superannuation Industry (Supervision) Act.

Tax Planning Starts Now

There’s four key things that all business owners MUST consider RIGHT NOW.

Two of them are brilliant wealth creation ideas.

Please read on!

30 June is only 8 weeks away so we need to make the most of the time we have for tax planning. Too often, we end up suffering because we have procrastinated and not made a positive decision to do something. If we all leave your tax planning until June, quite frankly there may not be enough time to do anything significant to legally reduce your tax.

So for 2014, our invitation to you is to START NOW with your tax planning.

4 Key Tax Planning Strategies

These are:

Establish a Self-Managed Super Fund (SMSF) – How to make it your family’s wealth VAULT and legally pay NIL tax at retirement.
Debt Optimisation – Pay off your home loan sooner, minimise non-deductible interest and maximise your tax deductions for investments.
Trust Distribution Resolutions needed BEFORE 30 June 2014 – or pay up to 46.5% tax on trust profits.
General tax planning strategies – Key items that mean $ in your pocket.

How our Tax Planning Process works

First of all, we request from you details of your expected income and business profits for the 2014 tax year (1 July 2013 to 30 June 2014). This includes all wages (employment income), interest and dividends and rental income received, business profits (or losses), and any capital gains/losses you expect to make.

Based on this information, we estimate your taxable income and your tax payable BEFORE any tax planning strategies. For example, we may calculate (based on your information) that you may have a taxable income of $200,000 for 2014. This would result in $66,547 tax and Medicare levy payable.

Secondly, we discuss all of your tax planning options. Some of these may be things to do in your business, and some of these may be investment or wealth creation options.

Third, we provide you with a report that explains in plain English the tax planning strategies we recommend and exactly how much tax you will save.

And finally, we provide you with an easy-to-follow Action Plan to ensure that both you and we can do everything that needs to be actioned before 30 June.

Contact our office TODAY to start your tax planning for 2014.

Don’t wait until June!

Establish a Self-Managed Super Fund (SMSF) – How to make it your family’s wealth VAULT and legally pay NIL tax

Everyone is talking about self-managed super funds or “SMSF’s” these days. Recent changes to the laws for operating SMSF’s have in our opinion made them an option that every one of our client’s needs to consider.

Very simply, a SMSF is a super fund that you fully control. You make all the investment choices – including shares, managed funds, property, and cash. SMSF’s can now borrow from a bank to purchase investment properties.

Strategy

Choosing the right Strategy for your SMSF is the key.

Here’s a brilliant strategy called the Retirement Home Strategy:

An investor finds a property they’d like to live in during their retirement. They use money in their SMSF as a deposit and borrow into a special super fund borrowing arrangement with the bank to complete the transaction.

Warning: A member (or a relative of a member) of a SMSF by law cannot live in a property owned by a SMSF.

However, while the property is owned by the SMSF it must be rented to unrelated individuals for a market-based rent.

Upon retirement the SMSF members start a pension and sell their current family home. They then use the proceeds from the sale of their home to buy the property from their SMSF at market rates.

The sale of the SMSF-held property is capital gains tax free because the SMSF is in pension phase. When the transaction is complete the super fund has liquid assets to pay their retirement income.

Estate Planning

Another key reason for using a SMSF is that it gives you very exact estate planning options. For example, you can nominate a specific dependent (spouse or child under 18) to receive your super benefit if you die. Unlike a Will, this cannot be contested.

Would you like NO TAX on your Investments?

Once you turn age 60, you can start to pay yourself a pension from your SMSF, and there is NO tax on income of the SMSF and NO tax on any capital gains.

This means you can gradually sell down assets (including property) held in your SMSF and pay NO TAX regardless of any capital gain you make.

We believe this is an absolutely brilliant outcome – and it’s possibly far better than owning an investment property in your individual name or in a Family Trust.

A number of our clients are already using this strategy.

Please contact our office today by PHONE on (02) 9531 0922 or EMAIL and make a time to discuss your family’s financial situation with one of our highly qualified advisors.

Your appointment with us may mean you have hundreds of thousands more in assets when you retire.

What a difference that would make!