Support to get on track after the bushfires

Support to get on track after the bushfires

This 2019-2020 Australian bushfire season has seen over 18 million hectares burnt, destroying over 5,900 buildings including 2,800 homes. Lives and wildlife have been lost and the cost runs into the billions in lost revenue and clean-up costs.

With approximately 3.5 million businesses, individuals, and self-managed superfunds in the bushfire affected areas, the ATO have granted the following special concessions and relief to the affected postcodes;

  • An automatic extension until 28 May 2020 to lodge and pay activity statements, income tax, SMSF and FBT lodgements. The deferral does not apply to: Superannuation guarantee payments or lodgements, Large PAYG withholders (although they will be assessed on a case by case basis if they apply for relief from the ATO)
  • Fast tracking of refunds due
  • Income tax instalments able to be varied to nil without penalty
  • Tax debt recovery on hold until 28 May 2020.
    • Impacted taxpayers need to apply for special consideration. The ATO has stated they will, “consider releasing individuals and businesses from income tax and fringe benefits tax debts if they are experiencing serious hardship.”
    • Interest and penalties accrued by taxpayers in affected areas since the bushfires commenced will be remitted

Support for individuals and families is also provided through the disaster recovery payments, (a tax exempt Federal Government payment), available for those who are seriously injured, have lost an immediate family member or have lost or had significant damage to their home or major assets. Relief includes;

  • $1,000 for each eligible adult, and
  • $400 for each dependent child under the age of 16.
  • An additional $400 to help with education expenses for eligible children. These payments are automatic if you are the primary carer of a child affected by the bushfires after 30 June 2019.

Businesses are also eligible for support if they have suffered direct or indirect economic losses and may be eligible to access;

  • Recovery grants of up to $50,000 (tax free)
  • Concessional loans of up to $500,000 for eligible small businesses (including farmers, fishers and foresters) and non-profit organisations who have suffered significant asset loss or significant loss to revenue. The loan would be for up to 10 years and used for the purposes of restoring or replacing damaged assets and for working capital.
  • A range of State Government grants are also available.

The brave volunteer firefighters in NSW and QLD will also be eligible for payments of up to $300 per day, with a cap of $6,000. The payments will not be means tested and are tax-free, NSW and QLD.

If you have been affected by the fires this bushfire season and would like assistance in claiming and understanding your eligibility, please get in touch with the team today on 9415 1511 or email reception@primeadvisory.com.au.

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‘Lifestyle assets’ – the next ATO target

‘Lifestyle assets’ – the next ATO target

As the ATO cracks down on taxpayers with their recent data matching program rollout,  this will now allow the matching of “lifestyle assets” such as yachts, fine arts and thoroughbred horses by requesting insurance policy information from 30 insurers which will assist to automate compliance activity.  The existence of an insurance policy could alert the ATO of the taxpayer’s wealth and identify where the taxpayer has non disclosure their all their assets.   

The ATO expect 350,000 taxpayers to be impacted by this review as they reveal undisclosed or unreported income from the 2015-16 financial year to today. Deputy Commissioner Deborah Jenkins says, “If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a three million dollar yacht then this is likely to raise some red flags,” Deputy Commissioner Deborah Jenkins said. 

The ATO is looking for: 

  • under-reporting of income and mismatches between lifestyle assets and reported income,  
  • the purchase of assets in a company name but where those assets are used for private purposes (incorrect claims or non-reporting of GST credits, FBT, Division 7A, capital gains tax), and
  • lifestyle assets purchased by self-managed superannuation funds that might breach the sole purpose test. 

Unsure what that may mean for you and need some advice? Get in touch today 02 9415 1511 or email reception@primeadvisory.com.au. 

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Joyce putting a smile on the faces of her community.

Joyce putting a smile on the faces of her community.

Last month we shared the contributions Chathuri is making in her local community. This month we shine a spotlight on Joyce from client services and how she contributes to her community while doing what she loves.

Joyce has been an avid singer her whole life beginning when she sang a duet with her best friend for the Salvation Army church at the age of 5. She always had a flair for music playing the cornet and tenor horn in the band for 6 years before returning to singing after she had kids.

After having some time off singing she has most recently joined  ‘Coastal a Cappella’, an all-female acapella group located on the central coast. Joyce started in the group as a candidate and quickly progressed to become a member after sending her audio for approval by her section leader and musical director. She has also recently auditioned to join the choir, traveling to Hobart in May to perform in the international competition.

Joyce describes the incredible sound created by the group that made her cry when she first listened to everyone singing, ‘This is Australia’. She was inspired and is now composing an arrangement of her own. She loves performing and seeing the enjoyment and reaction of others when listening to their performance with people smiling, stopping and children dancing.

Most recently, the group has performed Christmas carols at Mingara and participated in a Cancer fundraiser performing at Westfield. Joyce loves not only the social aspect and community but loves to give back and be part of her community.

PrimeAdvisory would like to congratulate Joyce on all her vocal achievements.

The next performance is scheduled for friends and family on Sunday, April 5 2020 at Narara Valley High Performance Space at 2pm. Tickets from Trybooking www.trybooking.com, or if you’re lucky, at the door!

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Changes to capital gains tax forcing expats and foreigners to consider listing their homes.

Changes to capital gains tax forcing expats and foreigners to consider listing their homes.

Are you an expat, foreigner or know someone who is? Share this article before it’s too late.

In late 2019, legislative changes were made that will exclude tax non-residents from accessing the capital gains tax (“CGT”) main residence exemption, directly impacting foreigners and expats who may be considering selling their family home / main residence in Australia.

Key takeaways:

  • If you are a tax non-resident of Australia, you are now excluded from accessing the CGT main residence exemption.
  • Limited exemptions will continue to apply for non-residents if certain ‘life events’ occur.
  • If you don’t satisfy the conditions for a ‘life event’, your Australian property sale will be taxed on the full value of the capital gain (utilising the original acquisition price for all post 1985 properties).
  • A limited transitional window applies for properties sold prior to 30 June 2020.

Transitional rules expiring on 30 June 2020

Transitional rules are now in place until 30 June 2020 which will allow non-residents to sell their family home in Australia and still access the main residence exemption.  However, the property must have been acquired before 9 May 2017 and contracts for the property’s sale must be exchanged no later than 30 June 2020.  Therefore, this only provides non-residents with a very limited period of time in which to find an agent, market and then sell their property by 30 June 2020.

‘Life events’

If you would have been able to access the main residence exemption under the prior rules, and have been a non-resident for six years or less, then there is a limited exclusion to the new rules where certain ‘life events’ occur including:

  • Your death or the death of your spouse or child (under 18 years);
  • Terminal illness of you, your spouse or your child; and / or
  • Marriage breakdown and divorce.

Under these limited circumstances, non-residents can continue to access the main residence exemption.  For example, if you or your spouse dies while living overseas and it has been six years or less since you became a non-resident, the property can continue to be treated as your main residence upon its sale.

However, if you have been a non-resident for greater than six years, you will not be entitled to the main resident exemption upon the property’s sale, irrespective of whether a ‘life event’ has occurred.

If you need advice on how to best maintain your financial position with these changes please call the team 02 9415 1511 or email reception@primeadvisory.com.au, we are here to help!

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Agreed value income protection to be a thing of the past…

Agreed value income protection to be a thing of the past…

Are you currently or moving towards self-employment? Do you receive a base salary but have fluctuating income with bonuses and commission? – this is a MUST read.

Recently, APRA has imposed sustainability measures on the life insurance industry with a particular focus on the income protection product due to significant industry wide losses over recent years. As of April 1, 2020, new ‘agreed value’ income protection policies will no longer be available in the market. This has significant ramifications for those who are self-employed or who are likely to become self-employed in the future, as well as those who have significant bonus portions to their income.  Given its pertinence for many in our client base, we wanted to reach out to you to ensure that, at the very least, you understand these implications and ensure that any existing policies are reviewed or that you look to implement cover that will protect you in the long term.

What is the difference between agreed and indemnity? 
To give you some context, there are 2 types of income protection policies – ‘agreed value’ and indemnity – and there is one fundamental difference.

Agreed value contracts are offered by insurers having seen a client’s recent history of earnings at the time of application and they ‘agree’ that they will offer a certain sum insured based on those earnings.  In practice this means that in almost every instance, whatever the client earns in the future is irrelevant as the insurance policy will pay out whatever sum is in place at the time of a claim regardless of their earnings at that time.

An indemnity contract on the other hand does not require financials upfront but whenever a client goes to claim on that policy, they need to produce evidence of their recent earnings to justify the level of cover they have in place and are indeed paying for.

Indemnity contracts may be perfectly reasonable for PAYG employees with steady (and generally increasing) incomes but self-employed clients with potentially fluctuant incomes from year to year typically want the certainty that what they’re paying for is going to be received at claim time when and if they need it.  They do not want to be exposed to the scenario where they have a period (before claiming) where they’re working a little less, have taken some time off or have just had a leaner period of earnings and for that to form the basis for an insurers payout figure.  Moreover, many of our clients have ‘level premium’ policies in place for sustainable premiums and long term savings and the certainty of an agreed value contract over that time is extremely comforting.

What now?
For the reasons cited above, we believe that it’s important that you are made aware of this imminent development and have a chance to make any necessary changes to existing cover or implement new cover if nothing is in place.  Also, be aware that any ‘agreed value’ policies in place before April 1 of this year will remain in place and can be amended in any way moving forward. If would like your cover reviewed, please give us a call 9415 1511 to have one of our insurance experts give you a complimentary review, or email us.

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