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SUPERANNUATION

From 1 July 2020

EMPLOYERS - SUPERANNUATION GUARANTEE

Employers usually contribute 10% of ordinary time earnings to your superannuation fund and then claim a tax deduction.

Employees must be over 18 years old ((70 year old age limit from 1 July 2013, from 1 July 2016 < 75 years old)) and you pay $450 or more in salary or wages in a month.

Employees under 18 years old must also work at least 30 hours per week. Employers must make these payments on 28th day after each quarter or pay a superannuation guarantee charge which includes the 9.50% superannuation plus interest plus an ATO administration fee.

Ordinary time earnings:

Includes - ordinary hours of work, over-award payments, certain bonuses, commissions, shift-loading and certain

allowances.

Excludes - Unused sick leave, unused annual leave, unused long service leave, overtime payments or lump sum

payments relating to overtime and specific loadings.

These are called concessional contributions.

The governments has announced that a low income superannuation support will be provided via a payment of up to $500 a year, meaning no effective tax is paid on compulsory super contributions for employees earning up to $37,000 per year.

Superannuation Guarantee age limit of 70 years old will be removed.

 

SALARY AND WAGES EMPLOYEES POST TAXED CONCESSIONAL CONTRIBUTIONS

Removal of the < 10% of total assessable income test.

This means that salary and wage employees may contribute up to $27,500 limit in post taxed dollars and receive a tax deduction.

Previously you were only able to salary package extra superannuation concessional contributions or make a non-concessional contribution with post taxed income.


CONCESSIONAL CONTRIBUTIONS ANNUAL CAP

30 June 2022

If you were aged under 50 then concessional contribution cap is $27,500.

Your superannuation fund pays a 15% contributions tax to the ATO for all concessional contributions. If your income is > $250,000 you will pay 30% contributions tax.

 

From 1 July 2022

CONCESSIONAL CONTRIBUTIONS ANNUAL CAP $27,500

Concessional contribution cap is $27,500 for all individuals.

Some individuals with a superannuation balance of < $500,000 may make additional pre-tax contributions where they have not reached their cap in the previous 5 years (from 1 July 2017).

Your superannuation fund pays a 15% contributions tax to the ATO for all concessional contributions. If your income is > $250,000 you will pay 30% contributions tax.

The governments has announced that a low income superannuation support will be provided via a payment of up to $500 a year, meaning no effective tax is paid on compulsory super contributions for workers earning up to $37,000 per year.

 

EXCESS CONCESSIONAL CONTRIBUTIONS

If you exceed the concessional contributions cap, any excess concessional contributions will be included in your assessable income and taxed at your marginal tax rate, rather than the excess concessional contribution tax rate of 31.5%.

To reduce your tax liability, the ATO will apply a 15% tax offset to account for the contributions tax that has already been paid by your super fund provider.

You may elect to withdraw up to 85% of your excess concessional contributions from your superannuation fund to help you pay your income tax assessment.

 

EXCESS CONCESSIONAL CONTRIBUTION CHARGE

This charge is payable on the increase in your tax liability for the year you have excess concessional contributions.

The relevant charge period is calculated from the start of the income year in which the excess concessional contributions were made. It ends the day before the tax is due to be paid under your first income tax assessment for the year that includes the excess concessional contributions.

The ECC charge rates are updated quarterly


NON CONCESSIONAL CONTRIBUTIONS

30 June 2022

These are non tax deductible contributions. There is no contributions tax paid to the ATO.

LIMITS
UNDER 65

$110,000 per year or $330,000 over 3 years.

OVER 65
$110,000 per year and must satisfy work test.

OVER 74

Cannot contribute.

 

From 1 July 2022

Transition to Retirement:

The tax exemption on earnings of assets supporting transition to retirement income streams will be removed.

 

 Non Concessional Contributions Cap (NCC)

• a reduced annual non-concessional contributions cap (NCC).

• eligibility changes referring to a client’s total super balance and general transfer balance cap

• government co-contribution linked to the annual NCC cap and/or total super balance.


Reduced annual NCC cap

The annual NCC cap reduces to $100,000 and the maximum bring forward cap is lowered to $300,000

 
Eligibility changes Individuals must have a total super balance less than the general transfer balance cap on 30 June of

the previous financial year to be eligible to make NCCs in the relevant financial year.

This criterion is to be met in addition to the existing age and work test requirements.

 
General Transfer Balance Cap

From 1 July 2017

For the 2017-18 financial year, the general transfer balance cap is $1.6 million.


NCC contribution eligibility:

Clients under 65 are eligible to make NCCs at any time.

Clients who are 65 years of age or over at the time of contribution are eligible to make NCCs if they are not yet 75 and have met the work test.


1 Indexed in $100,000 increments in line with the Consumer Price Index (CPI).

2 Contribution can be made by member and must be received by trustee no later than 28 days after the end of the month that the member turns 75.

3 Gainfully employed for at least 40 hours over 30 consecutive days during the financial year.


 


 

 

YOUR SUPERANNUATION FUND

Your superannuation balance must be < $1.6m on 30 June 2016.

You must not exceed your non-concessional contributions cap in the 30 June 2020 financial year.

Your superannuation co-contribution must appear in your superannuation fund's members statement as personal contributions Label B.

When your superannuation fund actually receives the superannuation co-contribution from the ATO it is recorded in the co-contribution part Label M of your members statement in your superannuation fund's tax return.

 

The ATO currently makes these superannuation co-contribution payments on the 2nd Friday of each month.

 

S

SUPERANNUATION INCOME STREAM AND ALLOCATED PENSIONS

TAX FREE ALLOCATED PENSIONS

Superannuation funds do not pay tax on the portion of its fund that is part of an income stream or allocated pension.

SUPERANNUATION INCOME STREAM AND ALLOCATED PENSION

MINIMUM % TAX FREE PENSION PAYMENTS

The minimum superannuation pension payments for the year ended 30 June 2016:

AGE
55 - 64                4%
65 - 74                5%
75 – 79               6%
80 – 84               7%
85 – 90               9%
90 – 94             11%
> 95                 14%

 

 

 

CONDITIONS OF RELEASE

 

SUPERANNUATION FUND'S TRUST DEED

Conditions of release are governed by the rules set out in the super fund’s trust deed.

RETIREMENT
< 65 Occurs when an arrangement under which they were gainfully employed ceased and the member does not intend to be employed either full or part time in the future. Working < 10 hours per week would be acceptable.

ATTAINING THE AGE OF 65
May cash benefits at any time.

BENEFITS < $200
May cash at any time.

PERMANENT INCAPACITY
May cash at any time

TEMPORARY INCAPACITY
May only cash insurance or voluntary employer benefits.

SEVERE FINANCIAL HARDSHIP
Can not meet reasonable and immediate family living expenses.
Has been receiving government support for 26 weeks.
Restricted to $10,000 in 12 month period.

COMPASSIONATE GROUNDS

 

TEMPORARY RESIDENT VISA

i) You may access your superannuation if your temporary resident visa has expired or has been cancelled and you have left Australia

ii) You are not able to claim a DASP if you are a permanent resident of Australia or a citizen of Australia or New Zealand

TAX RATES

i) Taxable Component  - 38%

ii) Tax-free Component  - 0%

iii) Untaxed Element - 47%

iv) Working Holiday Makers - 65%

 


Maximum $540

A tax offset may apply if contributions are made on behalf of your spouse to a:

Complying super fund

Retirement savings account

You may be able to claim a 18% tax offset on super contributions of up to $3,000 you make on behalf of your non-working spouse or low-income-earning spouse.

 

ELIGIBILITY

You may be entitled to a maximum tax offset of up to $540 each year if:

You did not claim a tax deduction for the contributions.

Both of you were Australian residents when the contributions were made.

The contributions were made to a complying superannuation fund.

Spouse's Assessable Income is the sum of the following amounts:
Taxable income
Adjusted fringe benefits
Net investment losses
Reportable super contributions

Must be < $13,800 this will increase to $40,000 for 30 June 2018.

Maximum rebate is the lesser of:

0 to $10,800 x 18%

$10,801 to $13,799 = ($3,000 - (Spouse's Income - $10,800)) x 18%

 

Disclaimer
The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

We have clients from the following locations:

Brisbane, Gold Coast, Sydney, Newcastle, Cairns, Canberra, Melbourne, Adelaide, Perth, Darwin.

Other:

Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor, Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.

Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba, North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie Island, Elimbah, Kippa-Ring.

We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and sole traders.

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