Merry Christmas from the ATO, with love Mum & Dad

Merry Christmas from the ATO, with love Mum & Dad

How you can easily help your offspring add an extra $500 to their super account from the government. Learn more about the superannuation government co-contribution. 

What is the co-contribution?

Are you or a loved one earning less than $53,564 in the 2019/20 financial year? Pending below eligibility criteria you could boost you/ your offspring’s retirement savings by up to $500 (You’re boosting by $1,500 (Add $1,000 + $500 from the Govt). The contribution is paid at the rate of 50 cents for every eligible dollar to a maximum of $500 as per the below indicative table.

Superannuation Co-contribution Payable
Total Income Personal Contribution
$1,000 $800 $500 $200
Potential Government Contribution
$38,564 or less $500 $400 $250 $100
$39,564 $467 $400 $250 $100
$44,564 $300 $300 $250 $100
$48,564 $167 $167 $167 $100
$51,564 $67 $67 $67 $67
$53,564 $0 $0 $0 $0

So, what’s the eligibility?

If you meet the following criteria you may be eligible for the superannuation co-contribution this financial year!

  • You make personal contributions (after-tax) to a complying superannuation fund
  • Your total income* is less than $53,564 (less than $38,564 to receive the maximum)
  • At least 10% of your total income is from eligible employment, carrying on a business, or a combination of the two
  • You do not hold an eligible temporary resident visa during the financial year
  • You lodge a tax return for the financial year
  • You do not exceed the non-concessional contribution cap for the financial year
  • You are under age 71 at the end of the financial year

And, how much co-contribution is payable? 

If your total income is less than $38,564 the Government may contribute 50 cents for every $1 you contribute, up to a maximum of $500.

FOR EXAMPLE: John & Jane have a 19-year-old son Harrison who works part-time whilst studying and earns around $20,000 per year. John and Jane could give Harrison $1,000 to add to his super fund, and the government will top this up with an additional $500.

I’m eligible, now what do I need to do?

Make your personal contribution, the tax office will do the rest. Assuming you lodge your tax return on time the co-contribution should arrive within several months after that. Further, you will receive a letter from the tax office to confirm the amount of the contribution and to which fund.

Did you enjoy reading this article and want more of this? Ensure you are signed up to our newsletter or contact PrimeAdvisory for more on 02 9415 1511 or email reception@primeadvisory.com.au.

 

* Total income is your assessable income plus reportable fringe benefits plus reportable employer superannuation contributions (essentially salary sacrificed contributions in excess of the superannuation guarantee). 

This strategy is not for everyone and has been provided as general information only and prepared without taking into account your financial position, objectives, and needs. You should consider its appropriateness and seek financial advice before making any financial decisions.

 

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The super guarantee charge (SGC).

The super guarantee charge (SGC).

All you need to know about the super guarantee charge and how to ensure compliance and avoid penalties.

What is the SGC? Super Guarantee Charge

To explain this simply the super guarantee is a compulsory amount that an employer must pay into their employee’s chosen super fund as part of their employment conditions. The employer has 28 days after the end of each quarter to make this payment.   If the employer fails to pay the employee’s super by the due date, then this is when the Super Guarantee Charge is applied.

The SGC is a charge incurred if you don’t pay the minimum amount for your employee into the correct fund by the due date. The charge is non tax-deductible and calculated to include the following;

  • Super guarantee (including any choice liability)
  • Interest on the above amounts (currently 10%)
  • An administration fee of $20 per employee, per quarter

You must report and rectify any missed payment and lodge an SGC statement by the due date and pay the SGC to the Australian Tax Office (ATO).

If you pay your super guarantee late, you may be able to use the late payment rules either to offset the SGC or to carry forward the amount as a pre-payment of a future contribution for the same employee. However, you must still lodge an SGC statement and pay the balance of the SGC to the ATO.

Please note the following dates;

Super Guarantee reporting and payment due dates;

Quarter Period SG Reporting & Payment Date to the Employee’s Super Fund
1 1 July – 30 September 28 October
2 1 October – 31 December 28 January
3 1 January – 31 March 28 April
4 1 April – 30 June 28 July

If you don’t pay the minimum amount by the above reporting and payment dates you will need to adhere to the SGC schedule lodgement and payment due dates as below;

Quarter Period SGC Payment & Lodgement with the ATO by the following dates
1 1 July – 30 September 28 November
2 1 October – 31 December 28 February
3 1 January – 31 March 28 May
4 1 April – 30 June 28 August

With the implementation of data matching, single touch payroll and generally the ATO being more active in this area noncompliance will be easier for the ATO to discover.

For more on the above please click here or get in touch with your PrimeAccountant on 02 9415 1511 or email reception@primeadvisory.com.au

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Don’t get caught out by the ATO.

Don’t get caught out by the ATO.

ATO’s data matching technology shining light on undeclared income. Here’s what you need to know.

The progression of technology has seen many changes, both good and bad. This progression in technology is now assisting the ATO to ensure that people and businesses comply with their tax and super obligations and is also assisting in detecting fraud.

Data is first collected from;

  • Your employers
  • Bank and financial institutions (including overseas banks)
  • Health insurance funds
  • BAS statements
  • Superannuation accounts
  • Property information from the state

Armed with this data, comparisons are made to the information provided in your tax return. The intention of this technology implementation is to identify taxpayers with any omission of income or fraudulent deductions.  The ATO can reassess previous year’s tax returns with the power to issue fines and penalties, even interest in some cases for non-compliance.

The technology is especially advantageous in ensuring all income from secondary jobs such as rent from Airbnb, Uber and Cryptocurrency are declared. As written about last month, the gig economy is taking on the economy.

Further, “Crypto transactions, in particular, will undergo greater scrutiny than ever before, with the ATO estimating that records relating to between 500,000 and 1 million individuals, who have or may be engaged in buying, selling or transferring cryptocurrency, will be analysed by the ATO this tax time.” Mark Chapman explains.

Similarly, tradespeople and sole traders who may have been working ‘off the books’ are now at risk with the ATO checking bank accounts and cross referencing to any ABNs.

Remember that data matching is here to stay and it’s not too late to rectify with the ATO offering “voluntary disclosures”.

For further information call your Prime Accountant today on 9415 1511 or email reception@primeadvisory.com.au.

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Retirement on your mind?

Retirement on your mind?

As you saw in our previous month’s client video with Steve Fairall, he’s been retired for 2 years and it looks pretty good! Steve says, “there was a stage when we had 4 young kids, we wanted to provide them with a good life in Sydney, help them grow and get well educated whilst also setting ourselves up for the future.”

But there’s a lot of work and strategy that goes into a financially effective retirement.

Let me explain,

As you would know if you meet certain requirements you can add up to $25,000 per year into your superannuation fund as a concessional contribution and up to $100,000 can be added as a non-concessional contribution each year. 1

During the accumulation phase of your superannuation, contributing to your fund can ensure that you will have ample funds held tax effectively during your pension phase. Most people think after you are 65 years old and no longer working that you are unable to make voluntary contributions. However, this is where the strategy comes into play.

It is called the “downsizer contribution”, put simply if you are aged 65 or older and you have owned your principal place of residence for at least 10 years you may be eligible. This means you can make a tax-free contribution into your super of $300,000 and as a couple you can contribute $600,000 irrespective of having a total superannuation balance in excess $1.6 million.

Prime Wealth’s Senior Advisor Angus Rodgers says, “Where it applies, this is an awesome strategy to ensure retirement funds are maximised and invested tax-effectively.”

Still confused or want to know more about this strategy, the tax and social security implications talk to our advisors today on (02) 9415 1511 or email us.

1 This contribution will be considered at 30 June of the financial year in which the contribution is made, when the total superannuation balance is recalculated.

This strategy is not for everyone and has been provided as general information only and prepared without taking into account your financial position, objectives, and needs. You should consider its appropriateness and seek financial advice before making any financial decisions.

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How the ‘gig economy’ has changed work and the economy.

How the ‘gig economy’ has changed work and the economy.

Firstly, you’re probably wondering what this whole “gig economy” means.  It’s actually a buzz phrase, first coined at the height of the financial crisis when a number of workers started ‘gigging’ and working many casual jobs to stay afloat financially. Today, it is more recognised with people freelancing who are seeking more flexible and diversified work and working hours especially within the rapidly growing digital platforms.   These platforms allow freelancers to directly connect with potential employers to find employment.  Hence the term ‘gig workers”.  Great examples of these digital platforms are companies such as Uber, Airtasker and Deliveroo who are changing  traditional markets.

With this growing trend legislation also needs to be updated to reflect these abovementioned changes and it has, but it has been slow. Internationally, we have seen disagreement over gig workers classifications as either ‘employees’ or ‘independent contractors’. The most recent ruling by Australia’s Fair Work Ombudsman in June 2019 found Uber drivers to be independent contractors because there is not “an obligation for an employee to perform work when it is demanded by the employer”, as reported by Stuart Ridley.

A survey commissioned by the Victorian government published in June 2019, found 7.1% of Australians reportedly used a digital platform such as Airtasker (34.8%), Uber (22.7%), Freelancer (11.8%), Uber Eats (10.8%), Deliveroo (8.2%) for work. This report further found 64.8% of gig economy workers to access work via one platform opposed to 35.2% who accessed work through more than one platform and 11.4% who are registered on four or more platforms.

This however has forced changed to be made in the definition of work reviewing the definition of ‘casual’ work to ensure legislation applies to capture gig workers under workplace health and safety, improve superannuation rights and ensure protection under Australia’s industrial relations system. Simona Scattagalia Cartago says, “Getting a real measure of this global phenomenon is not easy, especially when some may underestimate its true size by considering only gig work as a primary source of income. In the US, more than 35% of the workforce seems to be participating in the gig economy, and that number is expected to jump to 43% by 2020.”

This however is also causing issues regarding superannuation. The Association of Superannuation Funds of Australia (ASFA) noted almost a quarter of self-employed people to have no super and less likely to meet the $450 per month earning threshold with any one employer as recorded in February 2018. It has been suggested a new ‘dependant contractor’ category to be made, ditching the earning threshold.

Further taxation issues have arisen from this new gig economy with the Australian Tax Office (ATO) updating guidelines for people earning income via digital platforms to also include ride sharing, short-term property or room rentals or skills on demand, as changed in June 2019. The ATO warn they will be matching data earnings from such above-mentioned platforms.

If you want to know more about how to navigate through these gig economy changes, please get in touch with the team via email or phone us 02 9415 1511. Speak soon!

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