May 2018

Are you?
– Considering downsizing your home.

At a glance:
– From 1 July, 2018, eligible superannuation members will be able to contribute up to $300,000 from the proceeds of selling their home into their super. This will be a downsizer contribution
– consider whether you should contribute more into your super fund.

You should: 
– Contact us if you require any clarification or advice.

If you are 65 or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

This new measure applies to the sale of your main residence, where the exchange of contracts for the sale occurs on or after 1 July, 2018.

Your downsizer contribution is not a non-concessional contribution and will not affect your contribution caps.

To be eligible to make a downsizer contribution, you will need to meet numerous tests including the following:

• You are 65 or older at the time you make the downsizer contribution;
• Your home was owned by you or your spouse for 10 years or more prior to the sale;
• The proceeds from the sale of the home is either exempt, or partially exempt from capital gains tax (CGT) under the main residence exemption or would be entitled to the exemption if it was not a pre-CGT asset (acquired before 20 September 1985);
• You make the downsizer contribution within 90 days of receiving the proceeds of sale; and
• You have not previously made a downsizer contribution from the sale of another home.

The contribution amount cannot be greater than the total proceeds of the sale of the property.

Downsizer contributions are not tax deductible and will be taken into consideration for determining eligibility for the age pension.

For more information, click here.

Remember:– A member can only make one downsizer contribution into their superannuation.

This article was published on 31/04/2018 and is current as at that date

Are you?
– an individual who is eligible for private health insurance rebate

At a glance:
– If your income for surcharge purpose has increased dramatically during the year, you might have claimed too much private health rebate and this may result in a tax liability when you lodge your tax return.

You should: 
– Beware that you may have an excess private health insurance reduction listed on your notice of assessment.
– Contact us if you require any clarification or advice.

The private health insurance rebate is an amount the government contributes towards the cost of your private hospital health insurance premiums.

This rebate is income tested, your income for surcharge purposes need to be less than the Tier 3 income threshold to claim the rebate.

All private health insurance rebate percentages are adjusted annually on 1 April by a ‘rebate adjustment factor’. Your rebate percentage for premiums paid before 1 April will be different to your rebate percentage on or after 1 April.

If you claim your rebate as a premium reduction, your health insurer will adjust your rebate percentage and rebate amount. If you claim your rebate as a tax offset, the tax office will apply the adjusted rebate percentages to determine your correct private health insurance tax offset.

You will need to lodge a tax return if you think you are eligible to claim the private health insurance rebate and you have not claimed any or all the rebate from your insurer as a premium reduction.

If there was more than one adult on your private health insurance policy when the premiums were paid, you will be tested on your share of the policy.

If you claim too much private health insurance rebate as a premium reduction, the Tax Office recover the amount as a tax liability. This liability will be listed on your notice of assessment as an Excess private health insurance refund or reduction.

For more information, click here.<

Remember:
– Stamp duty laws vary across the states of Australia.

This article was published on 31/04/2018 and is current as at that date

Are you?
– a SMSF trustee?

At a glance:
– Self-managed superannuation fund (SMSF) trustees are required to keep records for a certain amount of time, even if assets have been sold.

You should: 
– understand your record keeping obligations as a SMSF trustee.
– Contact us if you require any clarification or advice.

Reasons for records being kept include:

• records can be provided to the Tax Office if requested; and
• If, as one of the fund’s trustees, you invest the SMSF’s money in an investment that fails, other trustees may not be able to take action against you for failing to be diligent in your duties if recorded meeting minutes signed by the other trustees show that the investment decisions were ratified by all trustees.

Records you need to keep for a minimum of five years, include:

• Accurate and accessible accounting records that explain the transactions and financial position of your SMSF;
• An annual operating statement and an annual statement of your SMSF’s financial position; and
• Copies of all SMSF annual returns lodged.

Records you need to keep for a minimum of ten years, include:

• Minutes of trustee meetings and decisions;
• Records of all changes of trustees; and
• Copies of all reports given to members.

For income tax purposes, generally you must keep written evidence for five years from the date you lodge the SMSF’s tax return or if you:

• Have claimed a deduction for a decline in value – five years from the date of your last claim for decline in value (depreciation);
• Acquire or dispose of an asset – five years after any capital gain event or it is certain that no capital gains tax event will happen; or
• The SMSF is in dispute with the Tax Office – five years after the dispute is finalised.

For more information, click here.

Remember:
– It is the trustees’ obligation to keep proper and accurate tax and super records for their SMSF.

This article was published on 31/04/2018 and is current as at that date

Are you?– selling a property?

At a glance:
– If you make a capital gain on the sale of property, you may need to report that gain in a different income year from the year the proceeds are received.

You should: – be aware of the effect of signing a contract towards the end of an income year.
– Contact us if you require any clarification or advice.

When you sell or otherwise dispose of real estate, the timing of the event, or the time you make a capital gain or loss, is usually when you enter into the contract.

You usually enter into a contract on the contract date not when the contract is settled.

Even if the contract is subject to a condition, such as finance approval, this generally does not affect the contract date.

If there is no contract, the capital gain or loss occurs at the change of ownership, such as when a property passes to a beneficiary.

If the real estate property is compulsory acquired the even date is the earliest of:

• When you  receive compensation from the acquiring entity;
• When the entity became the property’s owner;
• When the entity enters the property under a power of compulsory acquisition or takes position under that power.

Although you report the capital gain or loss in the tax return for the income year in which the contract is entered into, you are not required to do this until settlement occurs.

If settlement occurs after you have lodged your tax return, you will need to request an amendment. You may be liable for a short fall interest charge but the Tax Office may remit this amount if the amendment is lodged within a reasonable time of the settlement.

For more information, click here.

Remember:
– You need to report a capital gain or loss in the year the contract is dated not in the income year the sale is settled.

This article was published on 31/04/2018 and is current as at that date