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SMSF contribution paid this year, but you want to allocate to it next year

The ATO has in place a ruling that can allow a superannuation contribution to an accumulation account made in one financial year to be deemed to “take effect” (that is, allocated to a particular year’s contribution total) in the financial year that follows.

Importantly, the ATO requires a form to be lodged, which serves to notify it that a member of a self-managed superannuation fund (SMSF) has made a concessional contribution in one financial year (year 1) but the SMSF did not allocate this to the member until the next financial year (year 2).

Most SMSFs use provisions in their trust deeds concerning contribution reserves to enable this strategy, commonly referred to as a “contribution reserving strategy”. Typically, SMSF members will have made these arrangements to allow contributions to be recognised for income tax deductibility and other purposes in year 1 while not being counted towards their concessional contributions cap until year 2. […]

If you think the ATO got it wrong, here’s what you can do

You are allowed to take issue with the ATO if it disagrees with your self-assessment of your tax position.

If you believe the ATO’s assessment is incorrect, the first step is straight forward and fairly informal. You contact us and we start making inquiries. If it still seems the assessment is wrong, or if you can provide us with extra information that may change it, we can lodge an amendment with the ATO.

But if the ATO disagrees, we can lodge an objection on your behalf (in other words, we can disagree with the disagreement). We can also object if the ATO amends an assessment and has taken a different stance to us on particular things (for example, we thought you were eligible to claim a deduction but were allowed only part of it). […]

Federal Budget 2019

The Treasurer Josh Frydenberg’s first budget has lots of goodies with few “baddies”. This was to be expected with the next federal election only weeks away and the Coalition Government trying to make up ground in the polls.

The Treasurer’s “wow” factor was a return to a budget surplus of $7.1 billion for the 2019-20 fiscal year.

Without increasing taxes, the Coalition Government, if re-elected, promises to deliver on a mix of benefits for a majority of taxpayers in Australia.  These include:

Personal income tax cuts through adjusting upwards the thresholds at which the current tax rates apply (from 1 July 2022 to 30 June 2024) and then, finally, in the income year ending 30 June 2025, having only three rates of tax, with the highest marginal rate (45%) commencing at $200,000.
Increasing the Low and middle income tax offset to a maximum offset of $1,080 for the years ending 30 June 2019, 2020, 2021 and 2022.
Increasing the instant asset write-off threshold from $25,000 to $30,000 and extending this so that businesses with a turnover of between $50 million and $10 million can also access the concession.  This will apply from Budget night until 30 June 2020.

Apart from the above, the budget was quite “light” on tax and superannuation changes.  The government, no doubt, is trying to make itself a small target in relation to the coming election.

Also note that proposed changes to Division 7A will be deferred from 1 July 2019 to 1 July 2020, and that there are some useful changes to superannuation that will benefit older pre-retirees.

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Regulatory Roundup – June 2018

Small business concessions under the spotlight
The CGT concessions for small business are important for qualifying businesses in that they can defer, reduce or remove liability to CGT.

The government announced last year that it intended to tighten the eligibility factors for the CGT concessions that are generally available to small businesses, and it has just initiated the formal review of the concessions.

Chaired by Dr Mark Pizzacalla from the Board of Taxation, the review is being conducted independently and is “self-initiated”. Dubbed a “consultation guide”, the Board of Taxation says it will draw on previous work it has undertaken into small business tax, other similar work undertaken by Treasury, as well as international experiences. (Get a copy of the guide here.)

In addition, a reference group of small business, professional and academic stakeholders have also generously volunteered their time and expertise to assist Dr Pizzacalla with his review. The results of the consultation process should be available by the end of October this year. […]

Regulatory Roundup – May 2018

Taxing digital products and low value goods to change
When the GST Act and Regulations were drafted in 1999, e-commerce was in its infancy – it was not fully envisaged that people would prefer to shop from the comfort of their computer, and now even their mobile devices, rather than visiting a bricks and mortar shop. Over the years however, Australian internet sales have grown rapidly and are now in excess of $20 billion a year.

This has caused dismay from Australian businesses that have increasingly complained about an unequal playing field, since Australian consumers are often able to avoid incurring GST on their internet purchases from non-resident businesses. Online video-on-demand provider Netflix is a prime example where a subscription to its services is not subject to GST under existing laws.

In response to these concerns, the government has introduced amendments that extend GST to supplies of digital products, certain services and low value goods imported by consumers.

As a result of these amendments, Australian consumers will soon find themselves paying 10% more for many online purchases. In addition, many overseas suppliers will be required to register and pay GST, though in some cases the GST liability may be shifted to an electronic distribution platform or goods forwarder. To ease the administrative burden, the ATO will permit some foreign businesses affected by the amendments to hold a limited GST registration. […]

Regulatory Roundup – April 2018

 

 

Require specific ATO advice on your SMSF? There’s a form for that

The ATO says it can provide tailored technical assistance for SMSF trustees in some circumstances, orally or in writing, depending on the nature and complexity of their query.

For example, you may need to seek tailored technical assistance if:

you are not able to find the ATO’s view of how the law applies to a particular technical issue
you’re not certain how the ATO view of the law applies to your circumstances
you are seeking greater certainty (protection) than the ATO’s published products provide.

If the contentious issue at hand is about how the Superannuation Industry (Supervision) Act 1993 and Superannuation Industry (Supervision) Regulations 1994 apply to a specific transaction or arrangement for an existing SMSF, you can apply to the ATO for advice to deal with that specific issue. […]

Regulatory Roundup – September 2017

Deduction for association subscriptions — eligibility can endure into retirement
Many professional, business or trades people are members of an association, and during their working life subscribe to an appropriate organisation. Deduction for association subscriptions

In most cases the membership of a trade union for example, or professional association relevant to workers in a particular occupation, would qualify for deduction under the general deduction provisions of the tax laws. See taxation ruling TR 2000/7 for details.

What is the test for deductibility?
Broadly, the test for deductibility under the rules is whether the payment is an outgoing that is relevant and incidental to the derivation of assessable income. In most cases, where the taxpayer is in receipt of a salary or contractor fees, the membership of a relevant association would qualify under this section of the regulations and the entire amount of the subscription can be claimed as a deduction.

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Regulatory Roundup

 

Federal Court rules that ride-sourcing is taxi travel
The Federal Court has handed down a decision in a case that deems ride-sourcing is taxi travel within the meaning of the GST law. If the applicant in this particular case appeals this decision, the ATO has announced that it will continue to administer the law according to […]