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2018 Changes / Key Announcements

Below is a summary of the changes to be aware of and announcements that will potentially affect you for the year ending 30th June 2018 or will come into effect as of 1st July 2018.

1. Personal Income Tax Rates

2017/2018 Financial Year

(plus 2% Medicare levy where applicable)


*There is no 2% budget repair levy from 1st July 2017.

2018/2019 Financial Year

(plus 2% Medicare levy where applicable)


*It is proposed from 1st July 2022 that there will be an increase in the tax thresholds to reduce the tax paid by taxpayers.


Note: The low income offset is $445. This offset will reduce by 1.5 cents for every $1 of taxable income over $37,000. It phases out when the taxable income is $66,667



2. Medicare Levy – Low Income Threshold

For the 2017/2018 income year, Medicare Levy will be incurred when the incomes are above:


  • Individuals                 $21,980
  • Families                     $37,089


Plus $3,406 for each dependent child.


The Medicare levy will now stay the same at 2.0% from 1st July 2019.

 

3. Motor Vehicle – Statutory Formula

A) FBT for Business


The Statutory Formula method to calculate the taxable value of the private use (Fringe Benefit) of a vehicle is a flat 20% statutory rate of the cost of the car. It is no longer based on kms travelled per year.

Important Note: Keeping a valid 3 month logbook is extremely important!


B) Cents per KM for Individuals


The Motor Vehicle Statutory Formula claim for the cents per kilometre for individuals will stay at 66 cents per kilometre for 30th June 2018. There is only one single rate for all engine sizes. Individuals will only be able to claim cents per kilometre method or logbook method. You can no longer claim 12% of original value method or one third of actual expenses method from 1st July 2015.

 

4. Superannuation Contributions (concessional)

The maximum amount that taxpayers can contribute into superannuation as concessional contributions are:


Year ending 30th June 2018             Year ending 30th June 2019

Age under 49        $25,000 max            Age under 49            $25,000 max

Age 49 and above    $25,000 max            Age 49 and above      $25,000 max


Important Notes:


  • From 1st July 2017, all individuals under the age of 75 can claim an income tax deduction for personal superannuation contributions. There will be no more 10% test to claim a tax deduction for personal contributions. Therefore, partially self-employed and partially employed (wages) and individuals whose employers do not offer salary sacrifice arrangements will benefit from proposed changes. Once you reach 65 years of age, you must satisfy the work test.
  • From 1st July 2018, individuals with a superannuation balance of less than $500,000 can make additional concessional contributions if they have not used all their cap in the previous 5 years, on a rolling basis on unused amounts accrued from 1st July 2018.
  • From 1st July 2019, an exemption from the work test for voluntary contributions to superannuation for people aged 65-74 with superannuation balances below $300,000 will be introduced.
  • From 1st July 2019, the government will increase the maximum number of allowable members in new and existing SMSF’s from four to six.

 

5. Superannuation Contributions (non-concessional)

The non-concessional contribution cap (contributions for which you do not claim an income tax deduction) is:


2017 – 2018 Income Year                  $100,000

2018 - 2019 Income Year                  $100,000


People aged under 65 years may be able to make lump sum non-concessional contributions of up to three times their non-concessional cap over a 3 year period (lump sum $300,000 in 2017/2018)


Important Notes:


  • From 1st July 2017, non-concessional contributions can only be made if your total superannuation balance is under 1.6million.

 

6. Superannuation Changes


  1. From 1st July 2017, the government has removed the tax exemption on earnings of assets supporting Transition to Retirement income streams, being income streams of individuals over preservation age but not retired. The earnings will be taxed at 15% and the change is proposed to apply irrespective of when the Transition to Retirement commenced.


2. From 1st July 2017, the government has introduced a $1.6million superannuation transfer balance cap on the total amount of accumulated superannuation an individual can transfer into pension phase. Under the proposed changes:


  • Subsequent earnings on this pension balance will not be restricted
  • If an individual accumulates amounts in excess of $1.6million they will be able to maintain this excess amount in accumulation phase account (where earnings will be taxed at the concessional rate of 15%)


Important: fund members in pension phase with balances above $1.6million will be required to reduce this balance to $1.6million by 1st July 2017.


  1. From 1st July 2017, the low income spouse superannuation tax offset income threshold for low income spouses will increase to $37,000 (from $10,800). The offset will phase out when income reaches $40,000. The low income spouse offset provides up to $540 per annum when $3,000 is contributed into your spouse’s superfund.
  2. From 1st July 2017, First home buyers can voluntarily contribute up to $15,000 into Super ($30,000 in total). The contributions must be with existing concessional and non-concessional caps. From 1st July 2018 these contributions can be withdrawn (plus earnings) for a first home deposit.
  3. From 1st July 2018, people aged 65 or over can make non-concessional contributions into superannuation of up to $300,000 from proceeds of selling their home. These non-concessional contributions will be in addition to the caps, age tests and the $1.6million balance test.

 

7. Net Medical Expense Rebate

For 30th June 2018 financial year, you can only claim net medical expenses offset on aged care, disability aids and attendant care expenses. There is no more rebate on other net medical expenses for 2017 or future years.

 

8. Minors (Children under 18 years)

Families distributing money to children from Family Trust’s will need to be aware that they can only distribute $416 tax free for 30th June 2018 year.

 

9. Additional Tax on Superannuation Contributions – High Income Earners

In the 30th June 2018 year, Individuals with income greater than $250,000 will have their super contributions taxed at 30% and not 15% (this has been in place since 1st July 2012).


Note:


  • Income is taxable income plus reportable fringe benefits, reportable superannuation contributions and any total net investment loss
  • Super contributions include super guarantee and salary sacrifice
  • The tax is payable by the individual client not the superfund however you can apply to have the money released from your superfund.

 

10. Superannuation Guarantee

From the 1st July 2018, the SG rate will stay at to 9.5 per cent. This will remain until 2021 and then increases will be by 0.5 per cent each financial year until 12 per cent is reached. The proposed future increases each year are:


Financial Year      Minimum Superannuation Guarantee Rate


2017/18                                 9.50%

2018/19                                  9.50%

2019/20                                  9.50%

2020/21                                  10.00%

2021/22                                  10.50%

2022/23                                  11.00%

2023/24                                  11.50%

2024/25                                  12.00%


For individuals to claim a deduction for personal contributions, you must have a valid written notice (deduction notice) advising you intend to claim a tax deduction and a written acknowledgement from the superfund.

 

11. Changes To Family Trusts And Income Resolutions

Trustees must ensure that trust income is distributed by an income distribution resolution/minute by the 30th June 2018. These resolutions must show what trust income each beneficiary is entitled to, and the streaming of franked dividends and capital gains if applicable.


Trusts with older deeds should have these reviewed to ensure the definition of income complies with current legal definitions in the tax act and that the deed allows for streaming of capital gains and franked dividends. The trust deed must also state all required beneficiaries.

 

12. Changes to Rental Properties

a. From 1st July 2017, travel expenses will be disallowed for inspecting, maintaining or collecting rent for residential rental properties.


b. From 9th May 2017, investors who purchase residential investment properties will only be able to claim depreciation on plant and equipment on new acquisitions of plant and equipment

  • Investors who purchase new plant and equipment can still claim depreciation after 9th May 2017
  • From 9th May 2017, investors cannot claim depreciation on any plant and equipment that was purchased with the property or was used previously for private use
  • Existing property investors, before 9th May 2017, can continue to claim depreciation
  • All investors can continue to claim the depreciation on the building costs from 9th May 2017


c. From 1st July 2019, the government will deny deductions for expenses associated with holding vacant residential or commercial land, including interest on finance for the acquisition of the land. Deductions for expenses associated with holding land will be available once a property has been constructed, it has received approval to be occupied and is available for rent. Denied deductions will not be able to be carried forward for use in later income, however, denied deductions can be included in the cost base of the land.

 

13.  Changes To Private Health Insurance Rebate And Medicare Levy Surcharge


The private health insurance rebate is now income tested and the Medicare levy surcharge will be increased based on your income if there is no appropriate private hospital cover for the year. The following table summarises the changes to the private health insurance (PHI) rebate and the Medicare levy surcharge based on the income levels from the 1st April 2017 (the rebate % has decreased from last year):


(For families with more than one dependent child, the relevant threshold is increased by $1,500 for each child after the first)

14.  Change To Depreciation

Small businesses with aggregate annual turnover of less than $10 million can immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000 (GST excl). This will apply for assets acquired and installed ready for use at 30 June 2018. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool (‘the pool’) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools). It is proposed that this concession is to extend until 30th June 2019.

Note: this is for small business entities, not employees or rental properties

 

15.  Increase Small Business Entity Turnover Threshold

For 30th June 2018 and 30th June 2019, the Small Business Entity (SBE) turnover threshold is $10million. This will allow businesses (with turnover less than $10million) to access:


  • Lower (27.5%) corporate tax rate (businesses with $25million turnover can access this)
  • Simplified depreciation rules (including immediate deduction for an asset purchased costing less than $20,000 until 30th June 2019)
  • Simplified trading stock rules if their stock has changed by less than $5,000
  • Option to account for GST on cash basis


Note: the $2 million turnover threshold will be retained for small business capital gains tax concessions.

 

16.  Higher Education Loan Programme (“HELP”) & Trade Support Loan (TSL) – repayment thresholds

For 2018/2019 the threshold and repayment rate to pay back debt is:

Repayment Income                      Repayment Rate

Below $42,000                         Nil

$42,000 – $44,520                                         1.00%

$44,520 - $47,191                                          1.50%

$47,191 - $50,022                                          2.00%

$50,022 - $53,024                                          2.50%

$53,024 - $56,205                                          3.00%

$56,205 - $59,577                                          3.50%

$59,577 - $63,152                                          4.00%

$63,152 - $66,941                                          4.50%

$66,941 - $70,958                                          5.00%

$70,958- $75,215                                           5.50%

$75,215 - $79,728                                          6.00%

$79,728 - $84,512                                          6.50%

$84,512 - $89,582                                          7.00%

$89,582 - $94,957                                          7.50%

$94,957 - $100,655                                       8.00%

$100,655 - $106,694                                      8.50%

$106,694 - $113,096                                      9.00%

$113,096 - $119,882                                      9.50%

$119,882 and above                                     10.00%


Australians who have a HELP or TSL and are residing overseas, will be required to make repayments against their debt from 1st July 2017 based on their 2016/2017 worldwide income. Overseas debtors are required to update their contact details via MyGov within 7 days of leaving Australia.

 

17.  Small Business Income Tax Offset (SBITO)

For the 30th June 2018 financial year, individuals will receive a 8% tax discount as a non-refundable tax offset on business income. This includes Sole Traders, Partners in Partnership and Trust Distributions where the entity carries on a business. The entity must be a small business entity with a turnover of under $5million. The tax discount will be capped at $1,000 per individual for each income year.

 

18. Reducing the Company Tax Rate

For the 30th June 2018 financial year, the company tax rate for small businesses is 27.5% (reduction of 2.5%) for companies with aggregated annual turnover of less than $25million. Companies with aggregated turnover of $25million or above or who are not carrying on a business will continue paying tax at 30% on all their taxable income.


Note: the current maximum franking credit rate for distribution will be 27.5% for these companies in 2017/2018.

 

19. Zone Offset Change

From 1st July 2015, all FIFO (Fly In, Fly Out) and DIDO (Drive In, Drive Out) workers will not be able to claim the zone rebate for the zone they work in. The zone rebate entitlement will only relate to the zone of their normal place of residence. Taxpayers who actually reside in a zone can continue to claim the zone rebate.

 

20. Supersteam Requirements for Employers and SMSFs

Employers must make Superannuation contributions on behalf of employees by submitting payments and data electronically. Superannuation Funds (including SMSFs) must receive contributions from employers (that are not related parties of the SMSF) electronically. The start date for Superstream was 1st July 2016.


Businesses need to setup the free ATO clearing house or a clearing house with another company to arrange the Superstream compliance. SMSFs need to obtain an electronic service address and this is setup through a messaging provider. If you require help setting this up, please contact us.

 

21. Reducing Claim Period for Family Assistance Lump Sum Claims

Families that choose to wait until the end of the financial year to claim their FTB entitlement or child care benefit will have a grace period of one year. Therefore, all 2017 tax returns must be lodged by 30th June 2018 and all 2018 tax returns must be lodged by 30th June 2019.

 

Reminder of Things to Consider Before 30th June
  • Consider making the $1,000 personal contribution to qualify for the super co-contribution before the 30th June if your taxable income will be below the thresholds.
  • Consider making a spouse contribution into superannuation if you qualify for the rebate.
  • Ensure your 3 month logbooks have been kept on vehicles.
  • Make sure you have receipts for your tax deductions.
  • Review the need to sell capital assets to obtain any capital losses if you have made any capital gains during the year.
  • Obtain/prepare a summary of child support paid during the year if you are paying child support or child support you may have received, if you are receiving.
  • Businesses:


- Make sure you have odometer readings for all work vehicles.

- Super must be paid for staff by the 28th July. However to get the deduction in the 2017/2018 year it must be paid before the 30th June (or received by Superfund if paid by transfer).

- PAYG Summaries must be issued to all staff by the 14th July.

- Trust Resolutions/Minutes for all trusts must be prepared and signed before 30th June 2018.

- Businesses in the building and construction industries must lodge their payment annual reports for payments made to contractors during the year by 28th August 2018. From 1st July 2018 this will also include cleaning and courier industries.


  • Individuals:



- Home office claim – ensure you have a 4 week diary recording hours worked from home for work. Must be kept to claim home office deduction.

- Internet claim – ensure you have kept a 4 week diary recording internet usage (hours used for work/hours used personally) to support your work internet claim. This must be kept to claim home internet as a work deduction.

- Motor Vehicle deduction – ensure you keep a 4 week diary of vehicle kilometres used for work to support the tax deduction.


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Mastering Capital Gains Tax

15 Apr, 2024
As property investment continues to be a lucrative venture for many Australians, understanding the intricacies of Capital Gains Tax (CGT) is crucial. Whether you're a seasoned investor or new to the real estate market, navigating CGT can significantly impact your investment outcomes. An overview of CTG. Calculating your capital gain. Capital gains tax is payable when you sell a property at a profit. The ATO provides three methods to calculate your capital gain, allowing you to select the one that minimises your tax liability. The discount method: Ideal for resident individuals who have held an asset for more than 12 months, this method offers a 50% discount on your capital gain, significantly reducing your taxable amount. The indexation method: This method adjusts the cost base of your asset according to the consumer price index (CPI), effectively accounting for inflation. It's applicable only to assets acquired before 21 September 1999 and held for at least 12 months. The "other" method: When assets are held for less than 12 months, the other method comes into play, calculating the capital gain by simply subtracting the cost base from the capital proceeds. Understanding these options and selecting the most beneficial one can lead to considerable tax savings. Timing is everything. The timing of a CGT event, such as the sale of a property, is critical. It's the date you enter the contract, not the settlement date, that determines the income year in which you must report your capital gain or loss. This timing affects your tax liability and planning. Inherited property (special rules apply). Inheriting property comes with its own set of CGT considerations. The ATO provides guidelines for calculating the cost base of inherited property, which can differ from other assets. Understanding these rules is essential for accurate tax reporting and planning. Apportioning gain or loss. If you co-own an investment property, any capital gain or loss must be divided according to your ownership share. This apportionment ensures that each owner is taxed fairly based on their investment in the property. Navigating CGT as a foreign resident. Foreign residents for tax purposes face specific CGT considerations when selling residential property in Australia. The ATO's rules in this area can significantly impact your tax obligations, so it’s important to familiarise yourself with these regulations. By consulting resources like the ATO's guide on foreign residents and main residence exemptions, you can navigate these complexities with greater confidence and clarity. Exemptions. If your property has been used to earn income and qualifies for a CGT exemption or rollover, remember to make the appropriate election in your tax return. This is crucial for taking advantage of any tax reliefs or exemptions available to you. The main residence exemption. Your primary home is generally exempt from CGT — as long as it truly serves as your main residence. You can extend this exemption for up to six years if you rent out your home, or indefinitely if it's not used to generate income. However, this exemption cannot apply to more than one property at the same time, with certain exceptions during transitional periods, such as moving homes. Income-producing use (partial exemptions & rules). Using part of your main residence to generate income, such as renting out a room, can affect your eligibility for the full main residence exemption. If you acquired the property after 20 September 1985 and meet specific criteria, including the interest deductibility test, you might only qualify for a partial exemption. Moreover, if your property began generating income after 20 August 1996, you need to know its market value at that time to accurately calculate any capital gain. The importance of diligent record-keeping. Effective CGT management hinges on the maintenance of comprehensive records. These include, but are not limited to: Contracts of purchase and sale. Receipts for stamp duty. Records of major renovations. Any other costs associated with acquiring, holding, and disposing of the property. Such records must be kept for at least five years after the sale of the property or the year in which you declare a capital gain. For capital losses, the records should be retained for an additional two years after they have been offset against a capital gain. This disciplined approach not only facilitates accurate CGT calculations but also ensures compliance with ATO requirements. Real-world CGT scenarios. To illustrate how these principles apply in practice, let’s examine three snapshot case studies. 1. Main residence for part of the ownership period. Consider Vrinda, who bought a house for $350,000 and lived in it until she moved and began renting it out. When she sold the property, she used its market value at the time it started generating income as part of her cost base, leading to a capital gain. Opting for the discount method, she was able to halve her taxable gain, showcasing how understanding CGT rules can lead to significant tax savings. 2. Renting Out Part of Your Home Thomas's situation, where he rented out part of his main residence, highlights another aspect of CGT. By calculating the proportion of his home used to generate income, Thomas was able to determine the taxable portion of his capital gain accurately. This example underscores the need to understand partial exemptions and the impact of income-generating use on CGT obligations. 3. Sale of a Rental Property Brett's experience with renovating and selling a rental property illustrates the complexities of determining the cost base and the final capital gain. By carefully accounting for renovations and other costs, Brett was able to accurately calculate his CGT obligation, choosing the discount method for the most favorable outcome. Brett’s scenario emphasises the significance of detailed record-keeping and strategic planning in managing CGT liabilities. Call in the experts. Understanding the intricacies of Capital Gains Tax helps property investors maximise returns and minimise tax liabilities. By choosing the right method, keeping detailed records and applying CGT calculations effectively, investors can navigate the complexities of property investment with greater ease and efficiency. We’re here to help with that as well. Ascent Accounting can provide invaluable personalised advice, assistance, and insights for your situation. To get started, contact us today .

Starting & understanding PAYG instalments

15 Apr, 2024
Managing taxes can be daunting, especially when juggling business and investment income. Today’s guide aims to demystify the PAYG instalment system, helping you navigate through its nuances to ensure a healthy financial stance for your business or investment ventures. Introduction to PAYG instalments. PAYG instalments are a tax system designed for individuals, businesses, and investors to manage their income tax obligations by making regular payments throughout the year. This proactive approach to tax management helps in avoiding large lump sum payments at the end of the financial year, assisting in better cash flow management and financial planning. Almost everyone uses PAYG! A note on entry thresholds & requirements. The ATO determines your requirement to pay PAYG instalments based on the information in your latest tax return, focusing on your gross business and investment income. Various thresholds apply, depending on whether you are an individual, trust, company, or super fund, with specific criteria such as instalment income, tax payable on the latest assessment, and estimated notional tax. How PAYG instalments work in three clear steps. Enter the system: Upon meeting the criteria, the ATO will notify you of your automatic entry into the system through various communication channels, including myGov, online services for business, or traditional mail, based on your registered preferences. Entry into the system can also be upon request (via MyGov for individuals or the ATO for businesses) if you anticipate crossing the income threshold. It’s important that your myGov for the PAYG instalments to pay each quarter. Make instalment payments: Payments are typically made quarterly and are calculated based on your business or investment income, aiding in spreading out your tax liabilities over the year. Payments must be made by July 28, October 28, January 28 and April 28 each year. Be reconciled: The instalments paid are adjusted against your total tax liability when you file your annual tax return at the end of the financial year, potentially leaving you with minimal or no additional tax to pay. The difference between PAYG instalments & PAYG withholding. PAYG instalments and PAYG withholding are different components of Australia's tax system, designed to manage tax obligations in different contexts. However, they’re often confused for one another. Understanding the differences between PAYG instalments and PAYG withholding is crucial for businesses and individuals to ensure compliance and optimal tax management. Application. PAYG instalments apply to taxpayers with business or investment income, whereas PAYG Withholding applies to payments made to employees and certain contractors. Purpose. Instalments help manage expected tax liability on non-withheld income, while withholding ensures tax on wages and similar payments is collected throughout the year. Control. Taxpayers have some control over their PAYG Instalment amounts (e.g., they can vary instalments if their income changes), but they do not control the amount withheld under PAYG Withholding; this is determined by tax tables and legislated rates. Real world examples. Case study 1: Rob — Individual investor with rental income. Rob owns three investment properties and anticipates that the rental income from these properties will amount to $55,000 for the financial year. Besides rental income, he doesn’t have any other sources of income. However, he incurs expenses related to the maintenance of these properties, including repairs, real estate fees, and gardening. These total $5,500 . Managing his tax obligations efficiently, Rob decides to utilise PAYG. He uses the PAYG instalments calculator available for individuals to estimate his tax liability: After entering his total investment income of $55,000 and deducting his allowable expenses, Rob's taxable income comes down to $49,500 . The calculator estimates that Rob's tax for the financial year on his investment income would be $7,544 . As such, Rob voluntarily enters the PAYG instalment system to manage this liability. By dividing the estimated annual tax by four, Rob calculates his quarterly instalments to be $1,886 each. This allows Rob to plan ahead for his tax payments, ensuring that he doesn't face a large tax bill unexpectedly and can manage his cash flow more effectively throughout the year. Case study 2: Danielle — sole trader business income. Danielle operates her business as a sole trader and estimates her business income will be $100,000 for the upcoming financial year. Danielle is also entitled to allowable business tax deductions amounting to $10,000 , which she plans to claim. To prepare for her tax obligations, Danielle uses the PAYG instalments calculator for individuals. She inputs her estimated business income and deductions, resulting in an adjusted taxable income of $90,000 . Based on these figures, the calculator estimates her PAYG instalment amount to be $20,437 for the year. To manage cash flow and ensure she has enough funds to cover her tax obligations, Danielle divides the annual instalment amount by 52 weeks, setting aside $393.02 each week. In doing so, she comfortably accumulates the necessary funds for her quarterly tax instalments. When Danielle receives her quarterly business activity statement (BAS), she’s well-prepared to meet her PAYG instalment payment. Upon lodging her annual tax return, the PAYG instalments she has paid throughout the year significantly reduce her final tax liability, leaving her with little to no additional tax to pay. The key takeaway. Utilising the PAYG system is the easiest way to avoid a huge tax bill at the end of the year. Whether you’re an individual or a business, Ascent Accountants is committed to guiding you through the intricacies of this instalment system so you can navigate your tax obligations confidently.  Remember, accurate planning and regular payments can significantly ease your tax burdens, providing peace of mind and financial stability. To get started with PAYG, contact us !

Understanding compulsory repayments for study & training support loans

15 Apr, 2024
Study and training support loans can be daunting. However, understanding how compulsory repayments work can go a long way in giving you clarity around it all, as well as peace of mind. In this article, we'll explore how and when these repayments are made through the income tax system, providing clarity and guidance for those navigating educational financial commitments. How repayments works. Understanding compulsary repayments. Compulsory repayments for study and training support loans are integrated into the income tax system — that actually makes the process pretty straightforward for you. For example, when you lodge your tax return, you don't need to supply any loan information because it’s already sitting there ready to go. If your repayment income exceeds the minimum threshold, the ATO calculates your compulsory repayment and includes it in your Notice of Assessment. This calculation is based solely on your income (without consideration for your parents' or spouse's earnings). Importantly, the rate of repayment scales with income. This means that, the more you earn, the higher your repayments are. Making voluntary repayments. When in the financial position to do so, some people like to make voluntary repayments. Although study and training loan repayments don’t have interest, it’s indexed each year and increases with inflation. If voluntary repayments are made before June 30 each year, those payments are not subject to indexation. Additionally, voluntary repayments help pay off the debt faster, and this gives a lot of people peace of mind. When you won't have to repay. In certain situations, you may not have to compulsory repayments. For example, if you have a spouse or dependants and your family income is below a certain threshold, making you eligible for a reduction or exemption from the Medicare levy, compulsory repayments may not apply. In these cases, you can inform your employer via a Medicare Levy Variation Declaration Form to prevent additional withholdings from your pay. Regarding your employment. Advising your employer. Whether starting a new job or already employed, you have to inform your employer if you have a study or training support loan. Your employer should provide you with the appropriate paperwork to disclose this. Under the Pay As You Go (PAYG) withholding system, employers withhold additional amounts from your income to cover the compulsory repayment. Once your loan is fully repaid, updating your withholding declaration ensures no further deductions are made. Understanding additional amounts. The additional tax withheld by your employer is remitted to the ATO and applied to your loan account after you've lodged your tax return, and a compulsory repayment has been calculated. This ensures that repayments are accurately aligned with your income, keeping everything fair and affordable. For business or investment income earners. For those earning business or investment income, the PAYG instalments system allows for regular payments towards your expected tax liability, considering any study or training loan debt when calculating your instalment amount and rate. This flexibility accommodates personal circumstances, allowing variations in instalment amounts or rates. The ATO's commitment. The ATO provides accurate, consistent, and clear information to help you understand your rights, entitlements, and obligations. Their commitment extends to taking responsibility for any incorrect or misleading information provided, ensuring you can rely on the guidance provided. We're experts on PAYG and study and training loans. Understanding compulsory repayments for study and training support loans is crucial for managing your educational debts. Through the income tax system, the process is made as straightforward as possible, but a little help from an expert goes a long way. If you’re looking for support in this area — or anything tax-related for that matter — we’ll help you navigate financial responsibilities confidently. Get in touch to get started.

A guide to navigating the sale of property from the deceased

15 Apr, 2024
Inheriting a deceased estate — property and belongings from someone who has passed away — often marks a challenging, emotional, and complex period. The sale of such a property, in particular, comes with many legal intricacies and requires a thorough understanding of the process. The journey to legally transferring ownership and proceeding with the sale involves multiple critical steps as well as legal expertise and guidance. Let's set the scene. Understanding the legal foundations. The process starts by obtaining the necessary legal documents: probate or Letters of Administration, contingent upon whether the deceased left a Will. Probate serves as a legal confirmation of the Will's validity, permitting the executor to proceed with estate management. In the absence of a Will, Letters of Administration are essential for an appointed individual to take charge of the estate. A step-by-step process. Attain probate or Letters of Administration: The initial step requires securing probate from the Supreme Court, if a Will exists. Without a Will, one must apply for Letters of Administration — a task that, while complex, equips the administrator with equivalent authority to that granted by a Will. Transfer title: Following the acquisition of the necessary legal standing, the next move involves updating the property title with the executor or administrator's name. Beneficiary transfers or sale: The final stage encompasses either transferring the property to the beneficiaries or selling the property and distributing the proceeds among them. The challenges of legal proceedings. Obtaining probate can be time-consuming, but the absence of a Will complicates matters further. Nonetheless, once Letters of Administration are secured, the path to selling or transferring the property is the same as the process followed when a Will is present. The critical difference lies in the application for Letters of Administration, which demands the consent of all beneficiaries under the Administration Act 1903. Preparing for sale: consent & considerations. Even with a Will, selling a property from a deceased estate doesn't always proceed seamlessly. Securing the consent of all entitled parties is a prerequisite for any sale or transfer not explicitly outlined in the Will or under the Administration Act 1903. It’s a good idea to prepare a deed of family arrangement, detailing agreed terms concerning the property, which requires the signatures of all beneficiaries. This legal document (best crafted by a Lawyer), aims to mitigate potential disputes and streamline the sale process. The role of professionals. In case it’s not obvious at this point, this process is extremely complicated, and often, emotionally draining. Given the intricate legal landscape surrounding deceased estates, enlisting professional help is highly recommended. Legal professionals, including solicitors and settlement agents, are invaluable resources for navigating the procedural complexities, ensuring all documentation is meticulously prepared and legally sound. Let Ascent Accountants & Ascent Property Co help you during this challenging time. Selling a property from a deceased estate is full of legal challenges and procedural nuances. Each step requires careful consideration and expert guidance, and we have a network of legal experts ready to ease the burdens here. Ascent Property Co can also provide you with estimate values and help sell the property. Contact us and we’ll connect you with the right professional, facilitating a smoother transition during a difficult time.

Five things to consider before starting a SMSF

14 Mar, 2024
Deciding to establish a Self-Managed Superannuation Fund (SMSF) often comes as a reaction to a specific investment opportunity or desire. It could be acquiring commercial property for your business, diving into the cryptocurrency market during a downturn, or investing in that often-discussed unlisted property fund. The motivations are varied, however, setting up an SMSF isn't solely for those nearing retirement or belonging to a particular demographic. An SMSF is a viable option for individuals at various income and investment levels. The question is: is an SMSF right for you? Five essential considerations for those contemplating an SMSF. 1. Age is just a number. Age does not determine the suitability of setting up an SMSF. Whether you're in your 30s, eager to proactively manage your retirement savings, or in your 60s, seeking control over your retirement funds, the appropriateness of an SMSF is determined by your specific needs and circumstances. What's imperative is having a well-thought-out plan tailored to your personal goals. 2. Cost & control. While an SMSF offers greater control over your retirement savings, it also incurs costs, notably the annual audit fee. These costs can significantly impact younger individuals or those with smaller superannuation balances. The Australian Securities and Investments Commission (ASIC) has indicated that an SMSF with less than $500,000 might yield lower returns, after expenses and taxes, compared to a regulated superannuation fund. However, having a strategic reason for choosing an SMSF can justify the costs, regardless of your super balance. 3. It’s a big commitment. Managing an SMSF requires dedication, and for some, it’s too much. Significant time and effort must be invested in researching and making informed investment decisions. For those in their 30s, the idea of taking active control of your super might be appealing, but it's crucial to consider whether you have the time or resources to commit. If not, exploring other avenues for engaging with your retirement planning might be more suitable. 4. Family dynamics. Including family members in your SMSF to share costs, especially audit fees, might seem advantageous. Yet, differing investment goals and retirement planning needs can introduce conflicts that could easily be avoided with a different superfund structure. Once someone is a member of an SMSF, removing them can be complicated, so it's essential to ensure that inclusion decisions align with your overall plan from the beginning. 5. Know your “why”. Establishing an SMSF shouldn't hinge on your age, marital status, or family involvement, but rather on a clear and personal "why". If you have a solid reason for starting an SMSF, it might be the right choice for you. Otherwise, sticking with your current retirement planning approach may be the best path forward. Call in the experts. Making an informed decision on whether an SMSF is the right choice for your retirement planning strategy is best made with a pro on your side. We have a network of trusted individuals we can connect you with so you can ensure a SMSF will set you up for success. To secure your future with an SMSF, contact us today .

Understanding testamentary trusts

14 Mar, 2024
As we approach retirement, the welfare of our loved ones is often a big part of planning ahead. While not everyone considers this a primary concern, for those who do, the potential for their hard-earned legacy to be squandered or misappropriated by beneficiaries is a real worry. This concern is amplified when considering beneficiaries who may be prone to overspending, are in unstable relationships, or are dealing with significant health challenges. The prospect of a family fortune vanishing into the hands of outsiders is a daunting one. Testamentary trusts could be the answer. The solution: testamentary trusts. Fortunately, there is a strategic approach to mitigating these risks, which not only preserves your estate but also offers substantial tax advantages. This strategy centers around the use of a testamentary trust — a legal mechanism that only comes into effect upon your passing, following the granting of probate. A testamentary trust is embedded within your will, with your estate bequeathed to the trust rather than to individuals. This setup provides a layer of protection against potential financial pitfalls such as bankruptcy and legal disputes arising from family law proceedings. The Role of a Lawyer A will that includes a testamentary trust is not a do-it-yourself task. It requires the expertise of a lawyer — one with experience in estate planning. The complexity of establishing a testamentary trust necessitates a detailed trust deed, which outlines the operational rules of the trust, the forms of investment it may engage in, and identifies the key players - including beneficiaries and trustees. Tax Benefits and Protections One of the hallmark advantages of a testamentary trust is its tax efficiency, particularly concerning the distribution of income to minors. Children under 18 who are beneficiaries of a testamentary trust are taxed at adult rates, allowing for a significant income distribution before tax liabilities arise. This can be particularly beneficial for funding education or other expenses tax-free. The key takeaway. In essence, testamentary trusts are a great solution for those concerned about the future stewardship of their estate. By incorporating a testamentary trust into your will, with the guidance of a skilled lawyer, you can provide a safeguard for your assets against unforeseen financial risks. This strategic approach not only protects your legacy but also affords significant tax advantages, ensuring that your descendants can benefit fully from your life's work. If you’d like support in this area, please don't hesitate to contact us today .
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