Previously, it was thought that any benefit provided directly or indirectly to members or related parties of an SMSF from an investment would contravene the sole purpose test. However, a Full Federal Court decision has reframed the sole purpose test which will provide some flexibility to trustees on certain investments. Notwithstanding this decision, investments in SMSFs remain a complex area with many pitfalls and getting it wrong could mean the fund loses concessional tax treatment along with civil and criminal penalties for trustees. To be eligible for superannuation fund tax concessions, SMSFs are required to be maintained for the sole purpose of providing retirement benefits to members, it is what is known as a sole purpose test (s 62 of the SIS Act). Failing the test could expose trustees to civil and criminal penalties in addition to the SMSF losing concessional tax treatment. Therefore, it is important when making SMSF investments that the investment does not provide a benefit directly or indirectly to members or related parties.

Read More

The ATO has expanded the tax avoidance taskforce to include top 500 private groups, high wealth private groups, and medium and emerging private groups. Perhaps the most interesting is the inclusion of medium and emerging private groups which cover around 97% of the total private group population. These consist of Australian resident individuals who, together with their associates, control wealth between $5m and $50m, and businesses with an annual turnover of more than $10m. Business captured will be receive a notification letter of the next steps. The Tax Avoidance Taskforce has recently been expanded by the ATO to private groups and high wealth individuals. Originally conceived in 2016 to ensure that multinational enterprises, large public and private business pay the right amount of tax, this has now been extended to cover more taxpayers.

Read More

If you don’t hold private hospital cover – or are thinking about dropping it – make sure you understand the financial consequences. You could be hit with an extra tax surcharge of up to 1.5% or cost yourself extra premiums in future. Don’t get stung! Read our guide to help you make an informed decision about taking out private health cover.

Levies, surcharges and loadings – the terminology around health insurance and tax can be bewildering! But if you don’t hold private hospital cover, you need to understand how this may affect your tax.

The Medicare levy surcharge (MLS) is a tax penalty you must pay if you earn above a certain amount and don’t take out a sufficient level of private hospital cover for you and all of your dependants. It’s designed to give you a financial incentive to insure privately. The MLS is applied by the ATO at tax time and included in your assessment.

Read More

Unpaid super is a big problem, and the compliance landscape is changing. If you’re an employer, now is the time to take action and protect yourself against penalties. Find out how enforcement activity will pick up under Single Touch Payroll reporting and learn about a new extended amnesty for disclosing past unpaid super.

The government is getting tough on unpaid compulsory super guarantee (SG) contributions, but fortunately for businesses it has recently announced a revised “grace period” to rectify past non-compliance. All businesses should review their super compliance to consider what action they may need to take.

Read More

The building defects saga that’s happening all around Australia has understandably caused public uproar and forced state governments to act. It is unsurprising then that this issue was at the forefront of the Federal government’s attention when it decided to enact an exception to disallowing deductions for holding vacant land. Having the exception available provides peace of mind to investors that if things do go wrong in a major way, they will not lose the ability to negatively gear their property.

As a testament to the far-reaching consequences of recent residential building defects crisis, the government has recently decided to change the legislation on vacant land deductions to exclude structures affected by natural disasters or other exceptional circumstances such as substantial building defects.

Read More

The small business CGT concessions are a great tool for business owners to transfer wealth into super. Here, we break down the two essential requirements you must first meet in order to access any of the concessions. Could your business qualify? It may be time to see your adviser to start planning your business retirement strategy.

Have you considered the powerful tax and superannuation planning opportunities that the small business CGT concessions can offer your business? These concessions allow you to reduce – or in some cases, completely eliminate – the capital gain from the sale of a business asset, whether it’s held directly by your business entity or in another related structure.

Read More

Depending on your personal circumstances, your retirement incomemay come from a variety of sources. For example, investments (inside and/or outside super) and social security entitlements, such as the Age Pension.

These sources of retirement income are important to understand; especially if, for example, you envision yourself enjoying a particular type of lifestyle in retirement.

Read More

The rules around Div 7A deemed dividends are complex and may have become more so with the release of a draft taxation determination from the ATO in relation to debts forgiven. Contrary to previous guidance, the draft determination now indicates only natural persons can forgive debts by reasons of natural love and affection. Therefore, private companies will no longer be able to use this exemption on debts forgiven. If your private company has previously used this exemption, beware as the Tax Office has indicated that it will apply this new view in any litigation matters.

Private companies that pay amounts of money, make loans, or forgives debts of shareholders or associates of shareholders, may be subject to Div 7A rules which are designed to ensure that income is not inappropriately sheltered at the corporate tax rate. Generally, these rules deem certain moneys and/or benefits (eg loans and forgiven debts) obtained from the private company by shareholders or their associates to be dividends.

Read More

Crowdfunding has fast become the go to place for people in need of large amounts of money quickly, but is the money raised considered to be income and therefore taxable? Campaigns on various platforms range from the shameless (lavish weddings/honeymoons) to ground-breaking (new innovative products), and whether each campaign is taxable depends entirely on the circumstances of each case. Generally, if the campaign is related to running/furthering your business or is a profit-making plan, then any money received would be classed as income.

These days it feels like everything is being crowdfunded, you may have heard the ridiculous story of a man who wanted to raise US$10 for a potato salad and ended up with US$55,000 from complete strangers. Or perhaps you’ve heard stories of shameless couples who wanted to people to fund their lavish weddings or honeymoons? Crowdfunding has fast become the go to place for people in need of large amounts of money quickly, but is the money raised taxable?

Read More