Get ready for Single Touch Payroll

Single Touch Payroll (or 'STP') is mandatory for 'substantial employers' (being those with 20 or more employees) from 1 July 2018.

All employers are required to count the number of employees on their payroll on 1 April 2018 to find out if they are a substantial employer (note that this can be done after 1 April, but they need to count the employees who were on their payroll on 1 April). 

They must count each employee (not the full time equivalent), including full-time, part-time and casual employees, as well as those employees based overseas or absent or on leave (paid or unpaid).

Employers that are part of a company group must include the total number of employees employed by all member companies of the wholly-owned group.

However, employers don't have to include the following in the headcount:

• any employees who ceased work before 1 April;

• casual employees who did not work in March;

• independent contractors;

• staff provided by a third-party labour hire organisation;

• company directors or office holders; or

• religious practitioners.

GST withholding measures now law

Legislation has been passed to “clamp down” on GST evasion in the property development sector.

From 1 July 2018, purchasers of new residential premises and new residential subdivisions will generally be required to withhold the GST on the purchase price at settlement and pay it directly to the ATO. 

Property developers will also need to give written notification to purchasers regarding whether or not they need to withhold. 

The new obligations are primarily aimed at ending the practice of some developers collecting GST on new properties before dissolving their business prior to remitting such tax to the ATO. 

2018 Minimum Pension Draw Downs

As we near the end of the tax year, if you have a Self-Managed Super Fund in pension mode make sure you have drawn your minimum pension payments.

Failure to draw your minimum pension results in your pension losing its tax free status and the earnings being taxed at 15%.

After-Tax Super Contributions

Non-concessional contributions to super are contributions an individual may choose to make from their after-tax income or accumulated saving to help boost their super savings pre-retirement. Non-concessional contributions are not taxed when contributed to an individual’s super fund.   There are limits to the amount of non-concessional contributions an individual can make to super each financial year based on their age, their previous non-concessional contributions and their total super balance.

As non-concessional contributions to super are from after-tax money, the benefits from making these contributions can include: 

• No tax on the contributions when made to a super fund,

• Investment returns in super are taxed at a maximum rate of 15%,

• Once eligible, upon accessing their super, any money previously contributed as a non-concessional contribution will be returned tax-free,

• Given the higher contribution limits available for non-concessional contributions, compared to other types of contributions to super, non-concessional contributions can be an effective way to boost super savings leading into retirement.

• The annual non-concessional contribution cap is $100,000. However it’s important to note a number of other factors are used to determine eligibility to make a non-concessional contribution to super.

• Individuals under the age of 65 may be able to make non-concessional contributions up to three times the annual non-concessional cap ($300,000) in a single year. This is known as the ‘bring forward’ provision.

• For the 2017/18 and 2018/19 financial years, transitional provisions may apply to limit the amount someone who has previously triggered but not fully utilised their ‘bring forward’ amount, can contribute to super.

• A non-concessional contribution of up to $100,000 per year is available to individuals between age 65 and 74 if they meet the work test in the financial year of contributions.

• From 1 July 2017, if you have a total super balance equal to or greater than $1.6 million at the end of 30th June of the previous financial year you will not be eligible to make non-concessional contributions to super.

• Individuals with less than, but close to a total super balance of $1.6 million, who may be looking to make ‘bring forward’ non-concessional contributions to super, may have their total bring forward amount limited by their total super balance.

This information is general information only. It does not constitute any recommendation or financial product advice.   It provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.   The information has been prepared without taking into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.   Any tax position described in this publication is a general statement and is for guidance only

Tax Deductible Super Contributions

Claiming a deduction for personal contributions to superannuation can be a tax effective way of saving for retirement.   These are known as ‘personal concessional contributions’.

Personal concessional contributions are made by a person contributing funds to their superannuation, advising their superannuation fund that they intend to claim a tax deduction, then claiming the deduction when they submit their tax return.   If you are employed, generally the more common method of making before tax contributions to superannuation has been to enter into a salary sacrifice arrangement with your employer. However since 1 July 2017, making personal concessional contributions is another allowable option.

Contributions into superannuation, when a tax deduction is claimed, are generally taxed at 15%.   This may be lower than the marginal tax rate which applies to taxable income, including income earned from being self-employed or employed. For the 2017/18 financial year, this potential tax saving applies so long as your total concessional contributions are less than $25,000.

Prior to making a personal concessional contribution to superannuation, you should ensure that:

• You are eligible to make a voluntary contribution to superannuation. Broadly, those aged 18-65 are eligible, and those aged 65-75 are eligible if they meet a work test.

• Within an allowed timeframe, you advise your superannuation fund of your intention to claim a tax deduction, and your tax return reflects this election.

• If you are an employee, you allow for the fact that your total concessional contributions include any compulsory superannuation guarantee and salary sacrifice contributions.

Also consider:

• Individuals won’t be able to access amounts they contribute to superannuation until they meet a condition of release. Generally this occurs upon the earlier of either reaching age 65, or fully retiring after reaching preservation age (currently age 57, however a staggered increase to age 60 will occur over time).

• If your total income is more than $250,000 a year you may also be subject to an additional tax of 15% (known as Division 293 tax) taking the total up to 30%.

• The impact a personal concessional contribution will have on your cash flow, and whether you can afford this reduction.

This information is general information only. It does not constitute any recommendation or financial product advice.   It provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.   The information has been prepared without taking into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.   Any tax position described in this publication is a general statement and is for guidance only