February 2017

Are you?
– Paying any insurance and get benefits?

At a glance:
– You may claim cost of premiums you pay for insurance against the loss of your income and pay tax on the benefits you receive.

You should:
– Be aware of non-deductible insurance.
– Contact us if you require any clarification or advice.

Income protection insurance is tax deductible whether taken out by individual or by a superannuation fund.

As an individual, you cannot claim a deduction for a premium or any part of a premium for a policy that compensates you for physical injury, such as:

• life insurance premiums;
• trauma insurance premiums; and
• critical care insurance premiums.

However, if the trauma insurance premiums are held within superannuation, premiums can be funded by tax deductible contributions for the self-employed and pre-tax contributions for employees.

You must include any income protection payment received under such a policy on a tax return regardless of whether the policy is owned by an individual or a super fund.

Non-deductible premiums paid on policies that pay a lump sum in the event of death or disability mean that any benefits paid are tax-free.

For more information, click here.

Remember:
– Individuals cannot claim a deduction for a premium or any part of a premium for a policy that compensates you for physical injury.

This article was published on 30/01/2017 and is current as at that date

Are you?
– A Homeowner?

At a glance:
– You still can treat a dwelling as your main residence after you move out and rent out the property if you satisfy the six year rule.

You should:
– Be aware of how the six years is calculated.
– Contact us if you require any clarification or advice.

Normally the sale of your main residence will not have tax implications.

If you accept a new job interstate or overseas, stay with a sick relative long term or go on an extended holiday and you do not rent out your property, you can claim a CGT exemption for the property for an indefinite period after you move out.

Even if you move out of your property and rent it out, you can still claim an exemption from Capital Gains Tax for up to six years after you move out.

However, if you rent out your home for more than six years, then you may be entitled to a partial exemption as the capital gain will be apportioned.

There is no limit to the number of times you can move in and out of your home, provided you do not nominate another home as your main residence and each absence is less than six years.

For more information, click here.

Remember:
– If you rent out your home for more than six years, then you may be entitled to a partial exemption as the capital gain will be apportioned.

This article was published on 30/01/2017 and is current as at that date

Are you?
– An non-resident for tax purposes?

At a glance:
– Offshore taxpayers must provide the Tax Office with certain proof of identity (POI) when applying for a tax file number (TFN).

You should:
– Ensure that you meet the POI requirement when applying for a TFN.
– Contact us if you require any clarification or advice.

Non-resident individuals must provide two current POI documents when applying for a TFN, one of which must be a primary document.

Primary documents required from non-resident individuals include:

• Foreign birth certificate;
• Foreign passport;
• Australian birth certificate; and
• Australian passport.

Secondary documents required from non-resident individuals include:

• National photo identification card;
• Foreign government identification;
• Marriage certificate; and
• Drivers licence.

A foreign company must provide one of the following documents:

• Australian Registered Body Number (ARBN);
• A certificate of registration or incorporation from the relevant authority; or
• A statement of registration or incorporation, signed by at least 2 company directors.

Directors of a foreign company are also required to provide their own POI when the company applies for a TFN.

For establishing the identity of a foreign partnership, POI documentation for at least one partner is required.

For establishing the identity of a foreign trust, POI documentation for each trustee is required.

Remember:
– TFN application from a non-resident requires two current proof of identity documents.

This article was published on 30/01/2017 and is current as at that date

Are you?
– An employee or employer?

At a glance:
– An employment termination payment (ETP) is a lump sum payment paid to an employee on the cessation of their employment.

You should:
– Be aware of the tax implications of receiving an ETP.
– Contact us if you require any clarification or advice.

An ETP is a lump sum payment the employers make:

• to an employee when their employment is terminated; or
• to an employee’s estate because their employment has been terminated due to death.

The employer must provide the employee with one or more PAYG payment summary – employment termination payment forms within 14 days of making an ETP.

The taxation of an ETP will depend on the type of payment, the employee’s age and length of employment.

ETPs can comprise of two different components: a tax-free component and a taxable component. The employer withholds tax on the taxable component.

This concessional tax treatment may be limited to the smaller of:

• the ETP cap which is $195,000 for the 2016–17 income year and is indexed annually; and
• the whole-of-income cap which is $180,000 for the 2016–17 income year and is not indexed. This cap is reduced by the other taxable payments that the employee receives during the income year.

For more information, click here.

Remember:
– The employer will notify you of the type of ETP paid.

This article was published on 30/01/2017 and is current as at that date