Are you paying too much tax?

Tax Accountant Brisbane

Over the last year as a tax accountant in Brisbane, we have had many new clients join our practice and I am surprised by how many clients were paying more tax than they needed to. Simple things were being missed and in one case a client in the previous financial year overpaid tax in excess of $50,000. He felt like suing his previous accountant for being slack. We got it back, but the lesson is that it pays to look. If you have a feeling that things are not right you are probably right. You should trust your gut feeling.

It is not how much money you make that is important, it is how much you keep.” – Robert Kiyosaki

The lead up to the end of financial year is a time when you can really start to plan. Now is the time to look at your interim results to ensure the unexpected is not around the corner. If you have a benevolent view on life, and wish to contribute to consolidated revenue then read no further.

However if you want to plan for your own retirement and be in control, it pays to check. If you don’t feel like your current tax accountant is working in your best interests, give us a call if you need help.

Why do the wealthy pay less tax

Why does it seem that the wealthy pay little or no tax? How do they get away with it? Is there a magic formula that I can use?

It is true that wealthy people can manipulate their income and hence their tax payable. They do tend to pay what seems to be less tax than others, however, picture is more complicated. Yes, the wealthy can afford to pay the best tax accountant in Brisbane and legal advisors to minimise their tax, but often it is the simple things that make the difference.

Firstly you need to be in business. If you are an employee then there is not much you can do. By not much, I mean, there are some things but not as many as those with a business. In regard to the wealthy, the reason they pay less tax is that they can spend big sums on their business. This reduces their income tax payable and increases their tax deductibles. I’ll explain this a little better.

A business owner can afford to borrow large sums to buy another entity, buy equipment or employ more marketing and staff. This grows their business base and in most cases, if you are clever, you can get a tax deduction. That is to some extent why the wealthy become wealthier the poor become poorer. Our tax system and our economy promotes this, as this is how we, as a country, increase employment. Sometimes this reason alone can be a catalyst to go into business.

Who helps the rich save tax

Tax accountants are close to their clients and their needs. Generally most businesses engage an accountant to do 2 things:

  1. Maintain their compliance with both ASIC and Income Tax Laws
  2. Assist the business make (and keep) more profit for the owner.

Part of point 2 is tax minimisation. Of course this must be within the law, otherwise a free holiday at His Majesty’s pleasure will follow. But tax accountants who have experience in minimising tax know what can be done in a lawful way. This can include simply structuring the business correctly or it could involve more complex strategies. Taxation for individuals tops out at 47%. For a company the tax rate is 27.5%. So even at the lowest tax rate, it is still a large cost to a business. So it pays, of course, to be mindful of ways to handle this. It pays to engage a professional to help you.

As a tax accountant in Brisbane, Encore Accounting have provided countless businesses with tax minimisation strategies. We were even able to get one of our clients a million dollars back. How much are you giving to the tax office? Give us a call and find out.

july 1

What’s changing on 1 July 2018?

Individuals

Personal tax bracket changes – The top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000*.

Introduction of the Low and Middle Income Tax Offset* providing a tax offset for those with taxable income of up to $125,333.

GST on property developments and residential subdivisions – The way GST is collected on sales of newly constructed residential properties or new

subdivisions will change from 1 July. Purchasers will be required to remit the GST directly to the ATO as part of the settlement process. If you are buying a property, it is essential that you check the details to ensure that these new requirements have been managed (see this issue in Business also).

Business

Single touch payroll – Employers with 20 or more employees at 1 April 2018 must use standard business reporting-enabled software from 1 July 2018 to report payments such as salaries and wages, PAYG withholding and superannuation. Single touch payroll is expected to be compulsory for businesses with 19 or less employees from 1 July 2019.

The $20k instant asset write-off for small business has been extended until 30 June 2019.

GST on low value goods – GST will apply to overseas sales of goods supplied to Australian consumers with a value under $1,000.

GST on property developments and residential subdivisions – The way GST is collected on sales of newly constructed residential properties or new subdivisions will change from 1 July. The vendor will no longer collect and remit GST on the purchase price of the residential premises. Instead, the vendor must notify the purchaser in writing that the GST needs to be paid to the Commissioner and advise the amount that must be paid. In most situations, the amount will be 1/11th of the contract price.

Where the margin scheme is used, it is 7% of the contract price. Where the transaction is between associates, it is 10% of the GST-exclusive market value. Notification rules will also apply to the vendor, even if the transaction does not trigger a GST liability.

R&D changes* – the way the R&D tax incentive is managed will change with caps introduced on cash rebates and for large companies, a refocussing of R&D to high intensity R&D activities.

Changes to the Wine Equalisation Tax – the rebate cap will reduce from $500,000 to $350,000 and the eligibility criteria tightened.

Significant global entity definition change* – Special reporting requirements are in place for significant global entities (SGE) – large global entities with revenues in excess of $1bn or a member of their group. Many smaller companies that are related to or subsidiaries of these large entities are also affected. This definition will be broadened further to include members of large multinational groups headed by private companies, trusts and partnerships; and members of groups headed by investment entities.

Superannuation

Event based reporting for SMSFs – A new reporting regime commences for SMSFs. All SMSFs must report events that affect their members’ transfer balance accounts (for example, when an SMSF member first starts to receive a pension from their fund). Timeframes for reporting are determined by the total superannuation balances of the SMSF’s members. Where all members of the SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information at the same time as the annual return. SMSFs that have any members with a total superannuation balance of $1 million or more must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.

Carry forward concessional contributions – people with super balances below $500,000 will be able to rollover their unused concessional caps for up to 5 years. Unused cap amounts can be carried forward from the 2018-19 financial year; which means the first opportunity to use these new rules will be 2019-20.

Downsizer contributions – if you are over 65, have held your home for 10 years or more and are looking to sell, you might be able to contribute some of the proceeds of the sale of your home to superannuation.

First home saver scheme – First home savers are able to withdraw voluntary, after-tax superannuation contributions they have made to put towards their first home.

Changes to protect employees against inadvertent breaches of concessional caps* – Individuals whose income exceeds $263,157 and have multiple employers will be able to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG).

*Change has been announced but has not become law at the time of writing.

Who gets a tax cut from 1 July?

tax cuts1 July 2018 is the start date for the seven year income tax plan announced in the recent 2018-19 Federal Budget. The seven year plan benefits low and middle income earners in the first few years before expanding out to a broader restructure of the tax rates and brackets for everyone.

From 2018-19, the top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000. Dovetailing into the tax bracket change is the introduction of the Low and Middle Income Tax Offset for those with taxable incomes up to $125,333. The offset is a non-refundable tax offset that you receive when you lodge your income tax return.

If your annual taxable income is $80,000 in 2018-19, then the personal income tax changes provide an annual tax reduction of $530 per year. If your annual taxable income is $120,000, then the changes give you an annual reduction of $215.

The legislation enabling the personal income tax cuts and the new tax offset is not yet law and currently before the Senate.

Assuming the legislation comes into effect, further changes are planned from 1 July 2022 culminating in the removal of the 37% tax bracket from 1 July 2024. The changes will allow you to earn more before facing a higher tax bracket.

Quote of the month

“Don’t pay a cent more tax than absolutely necessary – the government doesn’t spend it very wisely.”

Kerry Packer

SUPER AMNESTY

One-off Super Guarantee Amnesty

Employers that have fallen behind with their superannuation guarantee (SG) obligations will have 12 months to “self-correct” under a new amnesty announced late last month.

The ATO estimates that $2.85 billion is currently owed in late or missing SG payments. Running from 24 May 2018 for 12 months, the amnesty encourages employers to reduce this SG gap by providing relief from the punitive penalties that normally apply to late payments.

Even if you do not believe that your business has an SG underpayment issue, it is worth undertaking a payroll audit to ensure that your payroll calculations are correct, and employees are being paid at a rate that is consistent with their entitlements under workplace laws and awards.

Qualifying for the amnesty

The amnesty applies to employers that have underpaid or not paid SG for any period from 1 July 1992 up to 31 March 2018.

To qualify for the amnesty, employers must disclose the outstanding SG to the Tax Commissioner using the SG Amnesty ATO payment form or the SG Amnesty Fund payment form where the payment has been made directly to the employee’s fund. You either pay the full amount owing, or if the business cannot pay the full amount, enter into a payment plan with the ATO. If you agree to a payment plan and do not meet the payments, the amnesty will no longer apply.

Bear in mind that the amnesty only applies to “voluntary” disclosures. The ATO will continue its compliance activities during the amnesty period so if they discover the underpayment first, full penalties apply. The amnesty also does not apply to amounts that have already been identified as owing or where the employer is subject to an ATO audit.

What do employers pay under the amnesty?

Normally, if an employer fails to meet their quarterly SG payment on time they need to pay the SG charge (SGC) and lodge a Superannuation Guarantee Statement. The SGC applies even if you pay the outstanding SG soon after the deadline.

Employers pay:

  • The SGC comprised of:
    • The outstanding SG entitlements (although this component might be higher than what it would have been had the entitlements been paid on time)
    • Interest of 10% per annum, and
    • An administration fee of $20 for each employee with a shortfall per quarter
  • Penalties of up to 200% of the amount of the underlying SG charge
  • A general interest charge if the SGC or penalties are not paid by the due date

On top of this, the SGC amount is not deductible – even if you pay the outstanding amount. That is, if you pay SG late, you can no longer deduct the SG amount even if you bring the payment up to date.

Under the quarterly superannuation guarantee, the interest component is calculated on an employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the SG charge would be payable (not from the date the SG was overdue).

Under the amnesty, employers pay:

  • The SGC:
    • The outstanding SG entitlements
    • Interest of 10% per annum
    • No administration fees
  • No penalties
  • A general interest charge.

An extra benefit of using the amnesty period to catch up is that the SGC amount is deductible. The ability to deduct SGC and the reduction in penalties could be significant for employers that have fallen behind with their SG obligations.

Special provisions exist within the legislation to automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid SG is paid to the Commissioner and then transferred to the employee’s superannuation fund. Where the employer makes the payment directly into the employee’s fund, the individual would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or allocate them to another financial year.

Where to from here?

Legislation enabling the amnesty is currently before Parliament and will not become law until at least June 2018. Despite this, the clock is ticking.

If your business has fallen behind on its SG obligations and is eligible for the amnesty, you need to start working through the issues now or contact us to work through the issues for you. There are several calculations that need to be completed and these may take some time to complete.

If your business has engaged any contractors during the period covered by the amnesty, then the arrangements will need to be reviewed as it is common for workers to be classified as employees under the SG provisions even if the parties have agreed that the worker should be treated as a contractor. You cannot contract out of SG obligations.

If you have not undertaken a payroll audit or an audit of rates paid to employees, you should do this within the next 12 months.

If a problem is revealed, you can correct it without excessive penalties applying. If you are uncertain about what Award and pay rates apply to employees, the FairWork Ombudsman’s website has a pay calculator or you can contact them online or call them on 13 13 94.

eofy 2019

End of Financial Year

Your essential EOFY checklist

With less than 3 weeks to the end of 2018, it is worthwhile to go over a few tax tips that will reduce the 2018 tax payable.

Business Expenses

If you need to incur repairs, purchase a new vehicle or other deductible costs, consider bringing forward this expenditure to before June 30.

Superannuation – The part that is often missed by business owners is that Superannuation is only deductible if paid. Hence the June super should be paid before 30th June to get a tax deduction in the current year. Make an effort to calculate the June figure before Friday 30th and pay it on Friday. It must come out of your account to be deductible. In respect of earlier months ensure these are also paid.

Prepayments – Under tax law certain prepayments of up to 12 months can be claimed. Of course it catches up to you the following year, but as a deferral it works. To be eligible the prepayment must actually paid before 30th June.

Stock write-offs, Bad Debt Write – obsolete stock needs to be written off to be claimed. The same goes for bad debts. You need to chow that you actually did the journal entry of bad debt write-off before June 30.

Donate – If you are going to donate to charity, now is the time. Any donations you make to deductible gift recipients can be deducted this year. Remember, if you received something in return for the money, like goods purchased at a charity auction, you may not be able to claim a deduction for the full payment. There are special rules dealing with this situation that need to be taken into account.

Work related deductions – you can claim a deduction for business expenses you have incurred that have not been paid by your employer. But be careful, you need to be certain that what you are claiming is a legitimate business expense and able to be claimed. For example, you cannot claim the cost of dry cleaning the clothes you wear to work unless it is protective clothing, a uniform required by the business, or occupation specific clothing (like the checked pants some chef’s wear).

To be legitimate, the expense must be for something you need to do your job. Items like laptop bags have been in the news lately because some handbags can be used to carry laptops. This does not mean that your Gucci bag is suddenly deductible. It is really up to you to justify the deduction that you are claiming, keeping records of the actual usage of the item can help with this.

Home office expenses – if you work from home as part of your employment, you may be able to claim items such as phone expenses, running costs for your home, and equipment. Just bear in mind that expenses need to be in proportion to your use of the home for work purposes. If your home is a place of business and you are entitled to claim a deduction for interest expenses or rent, then this will generally impact on your ability to claim the full main residence exemption from CGT when you sell the home.

Earning extra cash from AirBNB style services – The tax treatment of what you earn by renting all or part of your house through AirBNB and similar services is the same as any other residential rental property arrangement. You must include the rental income in your income tax return, but you can also claim tax deductions for expenses associated to the rental, such as the interest on your home loan, professional cleaning, fees charged by the facilitator, council rates, and insurance. Expense claims need to be in proportion to the rental, that is, how much of the house is used and for how long. Also, beware that this type of activity can restrict your ability to claim the CGT main residence exemption when you sell the property if it is or has been your home.

Uber – If you drive for Uber or a similar service, the income you earn needs to be declared on your income tax return. Plus, you need to be registered for GST. You can claim expenses for your car that relate to transporting passengers (relative to the kilometres travelled with passengers).

Danger zones – Expense claims that are high on the Australian Taxation Office (ATO) hit list include:

  • Travel expenses – Problems arise when people make claims for expenses that they did not actually incur. Typically, this happens when someone receives an allowance for travel but does not spend it (they might stay with family or friends instead). While the ATO publishes some reasonable rates each year for food and accommodation expenses, these only provide limited relief from the full record keeping rules. You cannot claim a deduction for the ATO reasonable rate amount if you spent less than this on food and accommodation.
  • Self-education expenses. Any study you claim as self-education must be connected to the income you are currently earning (either to maintain or improve your specific skills or knowledge) or is likely to result in increased income from existing income earning activities. Merely doing a course while working full time does not make the course deductible. Be careful of excessive claims for travel overseas and luxury courses. You need to prove that these expenses are essential to your current work.

You can no longer claim – If you are a property investor, you can generally no longer claim the cost of travelling to and from your investment property.

Crypto Currencies – be aware there are a number of tax rulings on this. The ATO have also signalled that they will be looking at third party evidence of transactions to identify taxpayers who buy and sell blockchain investments.

R&D incentive

R&D tax incentives and ATO’s target industries audit

The R&D tax incentive is a tax offset benefit provided to companies who invest in eligible research and development activities.

If you are an eligible company you can get a refundable tax offset equal to 43.5% of your first $100m of eligible research and development activities if your turnover is less than $20m.

If your turnover is higher than $20m you may get a non-refundable tax offset equal to 38.5% of your eligible R&D expenditure.

You can apply for the R&D tax offset any time within 10 months of the end of the income year. I stress that you must apply before 30th April of the following year. No extensions are possible.

To find out if you are eligible and how to apply for the offset, review the steps below or give us a call. This is a difficult and often misunderstood area. Also with the right advice often the R & D Claim can resort in a significant financial boost to your business:

Step 1 Do you meet the four eligibility requirements?

1. Are you an eligible R&D entity?

You need to be an incorporated entity, rather than an individual, partnership or trust – call us or check the ATO’s site for full eligibility criteria

2. Have you conducted eligible R&D activities in the respective income year?

3. Have you registered with Ausindustry?

You need to register with Ausindustry before you lodge your claim

4. Do your notional deductions qualify?

Step 2 Are you controlled by an exempt entity? (an entity exempt from income tax)

If you are controlled by an exempt entity you can still claim the 38.5% non-refundable tax offset

Step 3 Calculate your aggregated turnover

Step 4 Work out which tax offset to claim

You can claim 43.5% or 38.5% . You are eligible for the higher rate if your turnover is less than 20m and you are not controlled by an exempt entity.

Step 5 Calculate your tax offset by multiplying your notional deductions by either 43.5% or 38.5%.

The notional deductions are calculated by reviewing all amounts incurred in a year and ascertaining what proportion or what amounts are applicable to R & D. For example you may attribute part of admin wages to R & D, travel costs, or other specific costs that relate to the project you are doing. To qualify expenses need to be incurred in research that has no known outcome. Hence there is an element of risk associated with the expenses that may not yield any future benefit.

Step 6 Lodge your claim

You need to complete a Research and development tax incentive schedule and the relevant labels of the company tax return and lodging them with the ATO

We are happy to assist and do this for you.

 ATO and AusIndustry Audits

The ATO and AusIndustry are the two organisations which administer the R&D tax incentive.

They will undertake undertake compliance activity for the 2016 financial year R&D applications over the coming months.

Four industries have been identified for auditing due to the significant number of claims with issues. These industries are:

  • agriculture
  • building and construction
  • mining
  • software development.

The remaining areas of concern are not industry based and include:

  • ordinary activities vs eligible R&D activities
  • apportionment of overheads
  • payments to associates
  • record keeping
  • R&D consultants’ fraud.

It really pays off to get professional help with your taxes.

Not all tax agents are the same. We all have different levels of knowledge and experience.

I have personally helped many companies save significant amount of money off their tax bill, and in this pharmaceutical company’s case this saving was as high as $732, 000.

Find out more about it here.

Tax scales

Last minute Tax Saving tips

Here is a brief list of things you can do before the end of June to reduce your tax bill this financial year.

As a Business

  1. Maximise your superannuation tax deductions for both your staff and yourself:
    • For the directors and owners pay up to the maximum cap ($30,000 or $35,000 depending on age).
    • For staff pay the June 2017 super before 30th You only get a tax deduction for super when it is paid. Calculate the super in advance and pay it on 28th or 29th June so that you get a tax deduction in the current year.
  2. Hold back invoices to customers for work done or not quite completed – if possible.
  3. Prepay expenses or incur expenses and be invoiced prior to June 30 for items that you know you will need to spend next year.
  4. Take advantage of the $20,000 small business concessions for plant & equipment purchased before June 30.
  5. Write-off obsolete stock or bad debts.
  6. Maximise your own wage up to the tax-free thresholds

As an Individual

  1. Pay any work expenses before June 30. Remember these are deductible on a paid basis only.
  2. Check on whether you can pay extra super before June 30.
  3. If you own a rental property consider prepaying the 2018 interest before June 30. That way you will get a tax deduction in this year.
  4. Consider any other prepayment of expenses that may be possible.
  5. Consider salary sacrificing into super. If you are in pension mode you can then draw it back tax free.

Happy tax saving!

For more specific and in-depth tax saving tips, please register for our webinar: ” How to legally minimise tax in 2017″ here

Tax couple

How to sort out and minimise your tax this year

It is never too late to clean up your tax mess or look at ways to minimise tax this year.

Allan Mason is an expert at helping business owners do exactly that.

Watch the video below to see how he managed to:

  • Wipe out $25,000 in ATO fees
  • Sort out 20 years of un-lodged tax returns
  • Put $17,124.82 tax refund back in the client’s pocket

WATCH THE VIDEO BELOW. 

If you are looking for ways to minimise tax legally this year and put your tax affairs in order, come to Allan’s webinar: “How to legally minimise tax in 2017”

Property Tax

The New Federal Budget and your Tax and Property Investment

Our second update on the new federal budget covers Tax and Property Investment.

These are the main areas of interest:

  1. Increase in Medicare levy
  2. Increase to Medicare levy low-income thresholds
  3. Capital Gains Tax Rules
  4. Reduced residential property deductions
  5. How we can help
  1. Increase in Medicare levy

From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5% of taxable income. The increase ensures the National Disability Insurance Scheme (NDIS) is fully funded.

  1. Increase to Medicare levy low-income thresholds

The 2016-17 financial year Medicare levy low-income threshold will be increased as follows:

Family status 2016-17 2015-16
Single $21,655 $21,335
Single, eligible for seniors and pensioners tax offset (SAPTO) $34,244 $33,738
Couple $36,541 $36,001
Couple, eligible for SAPTO $47,670 $46,966
Additional threshold for each dependent child $3,356 $3,306
  1. Strengthening the integrity of Capital Gains Tax rules for foreign investors

The Government is introducing tougher rules on foreign investment in real estate to ensure foreign investors meet their Capital Gains Tax (CGT) obligations. The main residence CGT exemption for foreign and temporary tax residents that own Australian real estate will be removed. To reduce the avoidance of foreign residents’ CGT in Australia, the Government will bolster the withholding regime.

  1. Reduced residential property deductions

From 1 July 2017, the Government will no longer allow deductions for travel expenses related to inspecting, maintaining or collecting rent for residential rental property. However, investors can continue to deduct those types of expenses incurred by third parties such as real estate agents and property management services.

In addition, from 1 July 2017, depreciation deductions on plant and equipment (for example dishwashers and fans) will be limited to outlays actually incurred on residential properties. For plant and equipment purchased after 9 May 2017, deductions are claimable over the effective life of the asset only by the investor who bought the items.

For investors with existing investments as at Budget night, grandfathering rules will apply, broadly allowing deductions to continue until either the investor no longer owns the asset or the asset reaches the end of its effective life.

  1. How we can help

The end of this financial year is approaching quickly.

If we haven’t reviewed your tax situation recently book a call with Allan Mason here.

Allan will review your tax position, answer your questions and advise on the best action steps you can take to get your tax affairs in top shape.

If you are serious about minimising your tax this year come and hear Allan himself explain how you can do this. You can register for his webinar presentation here

About Allan Mason

Allan is a Chartered Accountant, SMSF Specialist,
SMSF Auditor, Company Auditor, Registered Tax Agent

As the Principal of Encore Accounting Allan is committed to a service of excellence providing valued services to you directly and leading a highly competent and equally dedicated team of accounting and finance professionals.

Allan is delighted to be at your service.

 

Super Brisbane

Federal Budget 2017-18 and Your Superannuation

This is a three-part news update on the new Federal Budget and what it means to you presented by Encore Accounting.

In Part 1 we cover Superannuation and Social Security measures:

  1. Superannuation changes at a glance
  2. Additional Super contributions for downsizers
  3. First Home Super Saver Scheme
  4. Pensioner Concession Card reinstatement
  5. Energy Assistance payment
  6. Revised residency requirements for pensions
  7. Working age payments reforms
  8. Liquid assets waiting period increasing
  9. Family Tax Benefits

Please don’t hesitate to ask our team here any questions specific to your personal situation.

  1. Superannuation (and housing) incentives at a glance
  2. Additional Super Contributions for Downsizers

From 1 July 2018, individuals aged 65 and over will be able to make an after-tax super contribution of up to $300,000 ($600,000 for couples combined) from the proceeds of the sale of their home. This measure will only apply following the sale of a principal home held for a minimum of 10 years.

This new measure will not attract any special Centrelink treatment but it will allow eligible individuals to make contributions above the super caps, without being subject to work or age test requirements.First home super saver scheme

To reduce pressure on housing affordability the Government will allow voluntary superannuation contributions to be withdrawn for a first home deposit.

  • From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year, up to $30,000 in total, to superannuation for the purposes of this measure. Voluntary contributions can be made before or after tax and are subject to the relevant contribution caps.
  • From 1 July 2018 those voluntary contributions (along with deemed earnings) can be withdrawn for a first home deposit.
  • Withdrawals will be taxed up to an individual’s marginal rate, less a 30% offset. Withdrawals of after-tax contributions will not be taxed.
  1. Pensioner Concession Card reinstatement

From 9 October 2017 the Government will reinstate the Pensioner Concession Card (PCC) for former pensioners who lost their Age Pension as a result of the 1 January 2017 Age Pension changes. Those affected will receive the PCC and retain the Commonwealth Seniors Health Card, to ensure they continue to receive the Energy Supplement. Where they received the Low Income Health Care Card, that card will be deactivated.

  1. Energy Assistance Payment

From 26 June 2017, the Government will make a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017, and who reside in Australia. The payment is not taxable and will not be counted as income.

Qualifying payments include:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment Single
  • Veterans’ Service Pension, Veterans’ Income Support Supplement, Veterans’ disability payments
  • War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.
  1. Revised residency requirements for pensions

The Government will revise the residency requirements for claimants of the Age Pension and the Disability Support Pension (DSP) from 1 July 2018. Generally, claimants will now need to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless certain conditions or an exemption applies.

  1. Working age payments reforms

The Government will progressively consolidate seven working age payments and allowances into a new JobSeeker Payment or transition recipients to Age Pension.

The working age payments affected are:

  • Newstart Allowance
  • Sickness Allowance
  • Widow Allowance
  • Partner Allowance
  • Widow B Pension
  • Wife Pension
  • Bereavement Allowance.

If you are receiving one of these payments, speak with your financial adviser to find out how these changes may affect you.

  1. Liquid assets waiting period increasing

From 20 September 2018, the period that a person must wait before being paid an allowance (for example Newstart), if they have ‘liquid’ assets will increase from 13 weeks to 26 weeks.

  1. Family Tax Benefits

The Government will continue to keep the Family Tax Benefit (FTB) payment rate fixed until 1 July 2019. Indexation in line with the Consumer Price Index will resume from that date.

From 1 July 2018, all families with total income over $94,316 will have their Family Tax Benefit (FTB) Part A reduced by 30 cents for every dollar above $94,316.

If you have any questions about any points above please talk to one of our financial advisors – John Hall, Daniel Irvine. Book a call with either of them here.

They can also help review your super balances and the changes made to the legislation, consider what effects they may have on your fund and make the best recommendations accordingly.

Budget Aggregates

BUDGET 2017-18

Treasurer Scott Morrison has delivered his second Budget with the mission to create “better days ahead” for Australia.

As with every budget there are more benefits for some than for others.

We will be publishing a series of articles to highlight those benefits with specific emphasis on Tax, Superannuation, Small Business, Regulation, Housing, Spending, Innovation and Economy.

Here is an overview of what the new Budget intends to achieve:
• Boost the economy and help households, to ensure all Australians can benefit from the nation’s growth story. It seeks to create more opportunities for Australians and businesses, to guarantee essential services and create more and better paying jobs. The growth predictions if achieved will be great for the economy.
• Back small business and investing in future growth with funding for major infrastructure projects. The retaining the tax reduction for companies and the depreciation write-offs are positive measure to help achieve this.
• Guarantee Medicare to ensure Australians can access timely and affordable health care, by establishing the Medicare Guarantee Fund.
• Ensure the National Disability Insurance Scheme is fully funded by increasing the Medicare levy by half a percentage point
• Provide an additional $18.6 billion in funding over a decade for schools.
• Reduce the cost of living by improving Australians’ access to secure and affordable housing across the housing spectrum.
• Deliver further investment in infrastructure across our cities and in our regions to ensure the benefits of Australia’s economic growth are shared broadly across the country
• Protect Australian jobs by abolishing the subclass 457 visa. This visa will be replaced by a new temporary skilled visa restricted to critical skill shortages.
Together these measures aim to increase the economy’s performance that is vital to ensuring that we live within our means and are able to return the Budget to balance in 2020-21

This information is a summary of the budget overview presented on government.gov.au.

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Budget 2017-18 and Tax – with special emphasis on small business, first-home buyers and residential property investors.

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