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Who is a ‘related party’ in an SMSF? Posted on Mar 29, 2017 by editor

Super

Self-managed super funds (SMSFs) have a number of investment restrictions which apply to transactions conducted within the fund. One such restriction applies to transactions involving ‘related parties’ of the fund and ‘relatives of members.’ No one associated with the SMSF should obtain a present-day benefit from the fund’s investments. The fund needs to meet the ‘sole purpose test’ of providing death or retirement benefits to the SMSF members or their dependents. A breach to the investment restrictions may result in significant penalties, such as the disqualification of a trustee and even prosecution. The Tax Office considers a ‘related party’ as: […]

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ATO to report unpaid debts to credit agencies Posted on Mar 29, 2017 by editor

Tax

The Mid-Year Economic and Fiscal Outlook 2016-17 (MYEFO) announced that from 1 July 2017, the ATO will disclose tax debt information of businesses who have not effectively engaged with the ATO to credit reporting bureaus. The new measure is aimed at enhancing the integrity of the tax system and ensuring businesses who are not compliant do not gain an unfair competitive advantage over those businesses who are. The ATO will initially pass on unpaid debts from businesses with an Australian Business Number and with a tax debt of more than $10,000 which is at least 90 days overdue. In addition, […]

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Investing on arm’s length Posted on Mar 23, 2017 by editor

Super

Running a self-managed super fund requires trustees to adhere to complex laws and follow a number of onerous rules. One of the most fundamental investment rules for SMSFs is that the trustees must transact on an arm’s length basis to ensure no conflict of interest arises. An arm’s length transaction requires trustees to conduct on a commercial basis as if there was no relationship between the parties. This means the purchase and sale price of fund assets should always reflect the true market value of the asset, and the income from the assets held by the fund should always reflect […]

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Preparing for the FBT year-end Posted on Mar 23, 2017 by editor

Tax

With the fringe benefits tax (FBT) year ending 31 March 2017, now is the time for business owners to get their FBT affairs sorted. When calculating FBT liability, employers must gross-up the taxable value of benefits provided to reflect the gross salary employees would need to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax. To calculate fringe benefits taxable amounts, employers must use two separate gross-up rates: Type 1: Higher gross-up rate is used where employers (or other benefit providers) are entitled to a GST credit for GST paid on benefits […]

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Transitional CGT relief for SMSFs Posted on Mar 14, 2017 by editor

Super

Self-managed super funds can access Capital Gains Tax (CGT) relief to provide temporary relief from certain capital gains that might arise as a result of individuals complying with the transfer balance cap, and Transition to Retirement Income Stream (TRIS) reforms, commencing on 1 July 2017. The transitional CGT relief is designed to preserve the income tax exemption for certain, accrued capital gains which would have been exempt, if the underlying CGT assets had been disposed of before the changed treatment of TRIS’s and before a member transfers to comply with the transfer balance cap starting. CGT relief is available for […]

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Easier GST reporting for food retailers Posted on Mar 14, 2017 by editor

Tax

Many small food retailers buy and sell products that are both taxable and GST-free. Depending on the point-of-sale equipment used, identifying and recording these sales can be difficult for business owners. The ATO has introduced a series of simplified accounting methods (SAMs) to make it easier to account for GST and work out the amount of GST that is liable at the end of each tax period. There are five SAMs to choose from. The SAM you choose will depend on your business’ turnover, the nature of your business and the nature of your point-of-sale equipment (except for the purchases […]

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Understanding death benefits under the new transfer balance cap Posted on Mar 8, 2017 by editor

Super

The introduction of a $1.6 million transfer balance cap for superannuation will take effect from 1 July 2017 which is likely to impact fund members who collectively with their spouse exceed $1.6 million in super. When an individual with a super account dies, the trustee of the super fund will generally pay the deceased’s remaining super interests (accumulation and retirement phase) as a death benefit lump sum to a beneficiary. Superannuation death benefits can be cashed: – to a beneficiary or beneficiaries as superannuation lump sums that are paid out of the super system, or – to a dependant beneficiary […]

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Preparing for contribution cap changes Posted on Mar 8, 2017 by editor

Tax

From 1 July 2017, many of the 2016 Federal Budget super reforms will take place, including the reduction of both the annual concessional and non-concessional contribution caps. Concessional contributions Concessional contributions include employer contributions and salary sacrifice amounts. Personal contributions claimed as a personal super contribution deduction also count as concessional contributions. The concessional (pre-tax) contributions cap will be lowered to $25,000 for everyone. Previously, those aged 50 years and older could contribute up to $30,000 and $35,000 for everyone else. Individuals who wish to make extra concessional contributions before 1 July will need to check what concessional contributions have […]

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Insurance through super: is it right for you? Posted on Mar 1, 2017 by editor

Super

Taking out insurance through a super fund can be a great option for some members, but it does also come with some pitfalls. Most super funds provide their members with insurance options and an option to increase, decrease or cancel your default insurance cover. There are many benefits of taking out insurance through super, which include: – the ability to purchase policies in bulk – not having to pay for premiums with your take-home income – the convenience of having your policy managed for you – most policies in super tend to be pre-approved, meaning there is no need for […]

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Are your website costs tax deductible? Posted on Mar 1, 2017 by editor

Tax

The ATO has provided business owners with further guidance on the deductibility of website costs in a recent Taxation Ruling. The Tax Office considers a commercial website as a website which is used in the course of a business, irrespective of whether it is used directly to produce income. This does not include software provided on the website for installation on the user’s device. Hardware, the right to use the domain name and content available on or incorporated into a website that has independent value to the business are considered separate from a commercial website. The tax deductibility of a […]

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