Tax Strategies for Individuals

• Income
  • • Delay receiving income until July 2024 given individuals are assessed on a cash basis.
  • • Defer crystallising foreign exchange gains until July 2024.
• Deductions

• Individual taxpayers could consider pre-paying deductible expenses (e.g. investment property mortgage interest, insurance, subscriptions) for up to twelve months.
• Consider bringing forward purchases of employment related depreciable assets costing $300 or less for an outright deduction.

• Capital Gains

• Review opportunities to offset capital gains against capital losses by the realisation of relevant assets (care is required to avoid “wash sale” rules if the intention is to re-purchase the investment shortly thereafter).
• Defer realisation of capital gains to the new financial year.

• Superannuation
• Make self-employed superannuation contributions (see pre-requisites for deductibility) and make after tax contributions from existing resources up to current yearly caps
• If you are under 75 years old during the financial year 2023–24 and onwards, your fund can accept all types of contributions. And you will no longer need to meet either the work test or work test exemption to make or receive non-concessional super contributions and salary sacrificed contributions, however you will need to meet the work test to claim personal super contribution deduction.
• From 1 July 2021 to 30 June 2024 the concessional contribution cap is $27,500 and the non-concessional contribution cap is $110,000 per year or $330,000 over 3 years under the “bring forward rule”.
• From 1 July 2021 the bring forward rule for non-concessional contributions will be limited to $330,000 for individuals who are under the age of 75 at the beginning of the financial year subject to any non-concessional contributions made previously. Individuals with superannuation balances over the transfer balance cap amount will no longer be eligible to make after tax superannuation contributions. This transfer balance cap amount increased from $1.7 million to $1.9 million from 1 July 2023.  Please call and we can discuss your particular circumstances.
• The “Downsizer Contributions” provides greater opportunity for older Australians selling their home to transfer some or all of the sale proceeds into superannuation, without affecting their traditional contribution caps.  Broadly, this measure allows individuals aged 55 or more to make non-deductible contributions of up to $300,000 (or up to $600,000 per couple) from the sale of a dwelling that was used as their main residence, if the individual or their spouse owned the dwelling for at least 10 years.

The downsizer contributions measure can apply to the disposal of an ownership interest in an eligible dwelling where the contract for the sale is entered into on or after 1 July 2018.  From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. There are no changes to the remaining eligibility criteria

For contributions made prior to 1 July 2022, eligible individuals must still be aged 65 years or older at the time of making their contribution.

A downsizer contribution can only be made by an individual where all of the following conditions are satisfied:

• Minimum age requirement of 55
• The contribution cannot exceed the capital proceeds from the disposal of an interest in a qualifying dwelling.
• A ‘dwelling’ is defined for the purposes of the CGT main residence exemption, and also applies for making downsizer contributions.
• Ownership interest in the dwelling must be held by the individual or their spouse

• The deductible (concessional) contributions cap is $27,500 from 1 July 2021. This cap amount will increase to $30,000 from 1 July 2024.
• From 1 July 2018, you are able to ‘carry-forward’ any unused amount of your concessional contributions cap. You will be able to access your unused concessional contributions cap on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire. You will only be able to carry-forward your unused concessional contributions cap if your total superannuation balance at the end of 30 June of the previous financial year is less than $500,000. Therefore, the first year these unused amounts can be used was in the 2019-20 year.
• Utilise the government’s superannuation co-contribution scheme.
• Pension payments – ensure that at least the minimum pension for 2023/24 has been drawn to avoid tax on super fund earnings supporting the income stream.
• Earnings from assets supporting a non-retirement phase Transition to Retirement Income Stream (TRIS) will be taxed at 15% regardless of the date the TRIS commenced.
• From 1 July 2021, a maximum limit of $1.7 million can be kept in retirement phase to pay pensions. (From 1 July 2023, the maximum limit of the transfer balance cap is increased to $1.9 million.) Earnings on investments within pension accounts (retirement phase) will continue to be exempt from tax.
• Superannuation balances above $1.7 million from 1 July 2021 ($1.9 million from 1 July 2023) can remain in super in the accumulation phase. Income is taxed at 15%. Capital Gains are taxed at 10% if the asset is held for longer than 12 months.  These are still concessional rates of tax.
• Split concessional contributions to the older spouse’s account to maximise the amount of member benefits available to commence a pension (and therefore maximising the investments in a tax-free environment) or to the lower balance member to maximise total benefits under the transfer balance cap amount.
• Make superannuation contributions for low income earning spouses to access an 18% tax offset.
• From 1 July 2017, the government lowered the Division 293 income threshold to $250,000 for the 2017-18 and future financial years. An individual with adjusted taxable income which includes concessional super contributions, exceeding the $250,000 threshold will have an additional 15% tax imposed on the lesser of:

1. 1. The excess, or
   2. The concessional Contributions (except excess contribution)

Ensure that concessional contribution caps are not exceeded – if they are, consider withdrawing the excess.

Please advise us of any after-tax (non-concessional) super contributions made during the June 2024 quarter so we can address ATO reporting requirements where relevant.

Individuals can recontribute COVID-19 early release amounts withdrawn from their superannuation funds during the 2019/2020 and 2020/2021 years without counting towards their non-concessional cap between 1 July 2021 and 30 June 2030. Please note that you cannot claim a tax deduction for this re-contributed amount.

Early Access to superannuation benefits

• Under the existing ‘compassionate grounds’ conditions of release, an individual can access their preserved superannuation benefits (as a lump sum), subject to any cashing restrictions, on a number of different (specific) grounds where certain conditions are satisfied. For example, an individual who satisfies certain conditions could access their superannuation entitlements under this condition of release in order to pay for certain medical treatment, or to enable the individual to make a repayment on a home loan in order to prevent the mortgagee selling their home.

Other Matters

Consider bringing forward any necessary repairs to rental properties. It is noted that deductions for travel to inspect rental properties is denied from 1 July 2017.

Capital allowance deductions for residential rental properties are restricted to items where the taxpayer has made an actual outlay for:

• • • New items purchased with an actual cash outlay (e.g., new oven, bath etc)
    • Items included with a new residential property purchased after 9 May 2017
    • It is noted companies are excluded from this change

• Make any planned donations by 30 June. Deductions for larger donations can be spread over up to 5 income years. In all cases you should ensure the charity is endorsed as a tax deductible gift recipient and keep your receipt.
• If your salary package is being re-negotiated for next year you may wish to contact us to discuss the tax benefits of various salary packaging options. Employees of small businesses may be able to take advantage of increased concessions regarding work-related electronic devices available from 1 April 2016.

• From 1 July 2022, taxpayers can claim additional running expenses incurred as a result of working from home, by using either the:
  • actual expenses method only; or
  • the revised fixed-rate (67 cents per hour) method, in conjunction with the actual expenses method (i.e., for running expenses not covered by the fixed-rate method, such as depreciation of office equipment, repairs and maintenance of these assets and cleaning costs for a dedicated work area at home).
  • When evidencing the total number of hours worked during an income year, taxpayers are required to keep a record (e.g., a diary) showing the total number of hours they worked from home during the year. Taxpayers must also keep at least one record for each additional running expense incurred e.g., one receipt for stationery expenses, a quarterly bill for electricity expenses

If you have incurred expenses towards self-education, you can directly claim deduction towards the expense from 1 July 2022 with the removal of $250 non-deductible threshold which required you to keep records of any non-deductible self-education expense.

Personal Income Tax Rates and Threshold

• • Income tax rates and thresholds applying to resident individuals from 2023/24 to 2024/25 (excluding the Medicare levy) are:

  2023/24		2024/25
  Taxable Income ($)	Rate (%)	Taxable Income ($)	Rate (%)
  0 – 18,200	Nil	0 – 18,200	Nil
  18,201 – 45,000	19	18,201 – 45,000	16
  45,001 – 120,000	32.5	45,001 – 135,000	30
  120,001 – 180,000	37	135,001 – 190,000	37
  180,001 +	45	190,001 +	45

  The maximum low income tax offset is $700 and is phased out at the rate of 1.5% for every dollar over $45,000, reducing to nil where taxable income exceeds $66,667.

  • Low Income Tax Offset
  • The amount of the low income tax offset (LITO) you will receive will depend on your taxable income:
  • If your taxable income is:
    • $45,000 or less, you will receive the maximum offset of $700
    • Between $45,001 and $66,667 you will get $325 minus 1.5 cents for every $1 above $45,000
  • No Medicare levy is payable for 2023/24 if family income for a couple is less than $43,846 (add $4,027 for each dependent child) ($57,198 for family seniors and pensioners) or $26,000 for singles ($41,089 for single seniors and pensioners).
  • Health insurance rebates are means tested and Medicare levy surcharge rates for higher income earners without appropriate private health insurance are increased above the standard 2% Medicare Levy rate, as per the following table

  	Adjusted Taxable Income (Rebate for 1 July 2023 to 31 March 2024)
  Singles	0 – $93,000	$93,001 – $108,000	$108,001 – $144,000	$144,001 +
  Couples/Families (add $1,500 for each child after the first)	0 – $186,000	$186,001 – $216,000	$216,001 – $288,000	$288,001 +
  Rebate   0 – 65 years	24.608%	16.405%	8.202%	0%
  Rebate   65 – 69 years	28.710%	20.507%	12.303%	0%
  Rebate   70+ years	32.812%	24.608%	16.405%	0%
  Medicare Levy Surcharge (any age) from 2014-15 to 2023-24	0%	1%	1.25%	1.5%

  	Adjusted Taxable Income (Rebate for 1 April 2024 to 30 June 2024)
  Singles	0 – $93,000	$93,001 – $108,000	$108,001 – $144,000	$144,001 +
  Couples/Families (add $1,500 for each child after the first)	0 – $186,000	$186,001 – $216,000	$216,001 – $288,000	$288,001 +
  Rebate   0 – 65 years	24.608%	16.405%	8.202%	0%
  Rebate   65 – 69 years	28.710%	20.507%	12.303%	0%
  Rebate   70+ years	32.812%	24.608%	16.405%	0%
  Medicare Levy Surcharge (any age)	0%	1%	1.25%	1.5%

  • From 1 July 2019, Private Health Insurance (PHI) providers are not required to send private health insurance statements. The information which was on the annual statements will now be automatically provided to the ATO and available on your prefilling report information. However, if the ATO does not receive this information, we will let you know, and you will need to request an annual statement from your registered health insurer.
  • From 1 July 2020, graduates living overseas and earning income above the minimum Higher Education Loan Programme (HELP) repayment threshold ($51,550 in 2023/24) will be required to make repayments towards their HELP debts and are required to register for this purpose.
  • From 1 July 2018 a 3-year waiting period for benefits including Family Tax Benefit, Paid Parental Leave and Carers Allowance will apply to migrants. (Newly arrived residents who would have otherwise been eligible to receive PPL between 1 July 2018 and 31 December 2018 will be exempt). The current 2-year Assurance of Support requirement applying to family visas will also be increased to 3 years.

Deductions – Prepayment of Expenses

• Individual taxpayers not in business can receive income tax deductions for the prepayment of allowable expenses, subject to a twelve month prepayment limit.
• This most commonly means that 12 months (but not more) prepayment of interest on a loan used to buy (for example) a rental property, a portfolio of dividend paying shares or managed funds which receive income will be deductible if paid before 30 June 2024.   However, this rule will apply equally to the prepayment of other tax deductible expenses such as insurance, subscriptions etc. (except where the payment is to an associate).

Deductions – Car Expenses

The cents per kilometre motor vehicle claim is 85 cents per kilometre from 1 July 2023. Individuals can also use the log book method to support a larger claim for deductible car expenses.

If you own a Zero emissions vehicle (i.e. Electric vehicles), the cents per kilometre claim is 4.20 cents per kilometre from 1 July 2022. You can either claim deduction as per cents per kilometre method or determine the cost of electricity by determining actual price. A choice to use the home charging rate can be made per vehicle and applied for entire income year. The cents per kilometre deduction does not apply to “Plug-in hybrid electric vehicle and it does not apply to employer owned cars.

Capital Gains and Capital Losses

• • Taxpayers with realised capital gains in the 2024 financial year may wish to minimise capital gains tax by realising any capital losses before 30 June 2024.
  • Take care to avoid the application of the “wash sale” rules as described by the Australian Taxation Office (ATO) in tax ruling TR 2008/1.  The ATO view is that where investments are sold with the intention of (a) generating a capital loss and (b) repurchasing the same or substantially the same asset shortly thereafter (and a tax benefit is derived as a result), the anti-avoidance provisions of the Income Tax Assessment Act 1936 can apply to impose significant penalties.
  • Taxpayers with realised capital losses in their portfolio may wish to realise capital gains on other assets sufficient to use up those losses.  The ATO’s views on “wash sales” (mentioned above) should be considered if it is intended to repurchase the asset/s at a later date.  Naturally the costs associated with any purchase and sale must also be considered prior to proceeding.
  • Taxpayers considering the disposal of an asset with the opportunity to delay the disposal until after 30 June 2024 should weigh up the timing advantage of deferring the gain and the tax payable thereon.  Please note that the time of sale is the date of the contract (i.e., exchange), not settlement.
  • Resident individuals can receive a 50% discount on realised capital gains where the asset is held for more than 12 months.  Superannuation funds are entitled to a 33⅓% discount while companies do not receive a discount.  Trusts can distribute their capital gains to entities entitled to a discount.  Non-resident individuals are not entitled to any discount on assets acquired post 8 May 2012.  For assets acquired by non-residents prior to this date, only part of the gain will be eligible for the 50% discount. All taxpayers should consider the value of the discount available prior to selling assets held for less than 12 months.

  The ATO believes the holding period should be at least one year and two days (i.e., twelve months plus the days of purchase and sale) for the discount to be available. Where there is a realised capital gain (subject to a discount) and a realised capital loss, the capital loss is applied to the capital gain before a discount is applied (not after the discount has been applied).

Personal Concessional (Deductible) Super Contributions

• • • A tax deduction for superannuation contributions is available in 2023/24 to all individual taxpayers aged between 18 and 75 years of age. A work test still applies to individuals aged between 67 and 75 years old who wish to claim a deduction for personal superannuation contributions.
    • Individuals with adjusted taxable income[1] over $250,000 p.a. suffer 30% tax on concessional superannuation contributions up to the concessional cap amount to the extent ATI exceeds $250,000.  Although these contributions remain tax advantageous, their effectiveness has been reduced by this measure.
    • [1] Adjusted taxable income (“ATI”) for this purpose includes taxable income plus reportable fringe benefits, concessional contributions up to the concessional contribution cap and total net investment losses less superannuation lump sums entitled to a tax offset. Certain other adjustments are also made for tax-free government pensions and benefits as well as targeted foreign income.
    • Taxpayers aged 18 years to 75 years do not need to pass a work test in order to be able to make superannuation contributions. Before 1 July 2022, if you were 67 to 74 years old you could only make or receive voluntary contributions (both concessional and non-concessional) to your super fund if you met the work test. That is, you must work at least 40 hours over a 30-day period in the relevant financial year. From 1 July 2022 this requirement was removed except for individuals aged 67 to 74 years of age wishing to claim a personal super contribution deduction.
    • If you are 75 years old or older, you can only claim a deduction for contributions you made before the 28th day of the month following the month in which you turned 75.
    • If you are under 18 years old at the end of the income year in which you made the contribution, you can only claim a deduction for your personal super contributions if you also earned income as an employee or a business operator during the year.
    • Superannuation contributions are only tax deductible when paid.  Contributions for the June 2024 quarter must be received by the relevant Fund by 30 June 2024 for a deduction to be claimed in the 2023/24 financial year.
    • According to Taxation Ruling TR 2010/1, a contribution by electronic funds transfer (EFT) is not made until the amount is credited to the fund’s bank account.
    • Consider a double contribution strategy in June 2024 where the contribution after 3 June 2024 can be directed to a contribution reserve at 30 June 2024 and then allocated to your member account in July 2024. This strategy is suited to individuals ceasing work or expecting a much higher taxable income in 2024 than in the 2025 financial year as the strategy will eliminate any ability to claim a deduction in 2024/2025.
    • For the 2023/24 financial year the concessional contribution limit is $27,500.
    • The concessional contribution limit includes deductible contributions from employers (i.e., superannuation guarantee and salary sacrificed amounts) as well as deductible personal contributions.   The limit is not applied on a per fund basis but, rather, is a universal limit that applies across all funds receiving contributions for the individual taxpayer.
    • Contributions above the annual concessional contributions cap are included in the taxpayer’s assessable income and taxed at the taxpayer’s marginal rate.  The contributions are also subject to an excess concessional contributions charge which is effectively an interest charge on the amount of tax applicable to the excess contribution. The taxpayer may claim a non-refundable offset equal to 15% of their excess concessional contributions to recognise the tax paid on the contribution by the superannuation fund.
    • An individual may elect for up to 85% of their excess concessional contribution for a financial year to be released from superannuation.  Please note that excess concessional contributions remaining in the fund are also counted towards the $110,000 annual non-concessional contributions cap, which could potentially result in a tax rate of up to 98% (although members can withdraw excess non-concessional contributions and associated earnings to avoid this charge).
    • Please contact us prior to 30 June if you believe the above contribution limits have been exceeded to discuss whether an application should be made to withdraw the excess.
    • The ATO has confirmed in a Tax Ruling that an “in-specie” contribution of certain assets (such as listed investments and business real property) into superannuation is acceptable, as long as certain criteria are met. However new rules require an independent market valuation of transferred assets for which no underlying market exists.
    • With the availability of “transition to retirement income streams” (TRIS’s) (also known as “working pensions”), taxpayers who have reached their preservation age but do not wish to retire can access their superannuation as a non-commutable income stream without permanently retiring. This strategy may be tax effective to make additional superannuation contributions and use the working pension to pay living expenses. However, from 1 July 2017 the tax free state of earnings supporting TRIS’s was removed and therefore the benefit of this strategy has been reduced. Please contact our office if you would like to discuss this strategy further.
    • Individuals with adjusted taxable income less than $37,000 were eligible to receive a Low Income Super Contribution (LISC) paid by the Government directly to the individual’s super fund. The contribution effectively refunded the 15% contributions tax paid on super contributions. The maximum rebate was $500.  The Low Income Superannuation Contribution was removed and replaced with LISTO which operates to provide a similar outcome from 1 July 2017. LISTO is a rebate to the super fund account of the low income member at the rate of 15% of eligible contributions, thus matching the tax on contributions, and up to a ceiling of $500. A minimum of $10 (low amounts rounded up to $10) is payable.

    [1] Adjusted taxable income (“ATI”) for this purpose includes taxable income plus reportable fringe benefits, concessional contributions up to the concessional contribution cap and total net investment losses less superannuation lump sums entitled to a tax offset. Certain other adjustments are also made for tax-free government pensions and benefits as well as targeted foreign income.

Notice for Claiming a Personal Superannuation Contribution

You should complete a notice if you intend to claim a tax deduction for your personal super contributions or want to vary a previous valid notice of intent you gave your super fund.

Your super fund may request the information in the notice as part of another form. If they do not request this information, use a notice to advise them of your intent to claim a deduction.

You must give a notice of intent to claim a deduction to your super fund on or before whichever of the following occurs earliest:

• the day you lodge your income tax return for the year in which the contributions were made
• the last day of the income year after the income year in which you made the contributions.

You can apply to vary a previous valid notice of intent if:

• you have not yet lodged your income tax return and it is lodged on or before 30 June in the financial year following the year you made the contribution, or
• the ATO have disallowed your claim for a deduction and you are applying to reduce the amount claimed as a deduction by the amount that the ATO have disallowed.
• Please note that to be able to claim a tax deduction for a personal super contribution you must have given your super fund a valid notice and received a formal acknowledgement from the fund in relation to the contribution.

Please contact us at our earliest convenience to discuss further.

NON-CONCESSIONAL SUPERANNUATION RE-CONTRIBUTIONS

• If you are 60 years of age or older with a significant “taxable” member balance, you may wish to consider drawing down higher pension amounts than are required to meet your living expenses and re-contributing the excess (up to the relevant cap per person of $1.7M from the 2021/22 financial year and $1.9M from the 2023/24 financial year back into superannuation as non-concessional (undeducted) contributions. This strategy will reduce the 17.0% tax payable on taxable benefits paid out of the fund to non-dependants when you pass away, (e.g., financially independent adult children) as there is no tax payable on the amount of non-concessional contributions within superannuation that are paid out on death.
• Individuals currently also have the ability, up to and including the year in which they turn 75, to bring a further two years of non-concessional contributions forward, making the contribution limit $330,000 in the first year. If $330,000 is contributed in the first year, non-concessional contributions cannot then be made in the following two years.
• The non-concessional contributions cap from 2021/22 is $110,000 ($120,000 for 2024/25). Individuals with total superannuation balance of more than $1.9 million from 2023/24 are not eligible to make any further non-concessional contributions.
• If you are considering making non-concessional contributions prior to 30 June 2024, it would be prudent to ensure both the current and proposed rules are met. As these rules are complex, please contact us prior to making any such contributions.

Government Superannuation Co-Contributions

• • • For the year ended 30 June 2024 where certain lower income taxpayers have made non-concessional superannuation contributions of $1,000, the government will also pay a contribution of up to $500. This equates to a tax and risk free return of 50%.
    • To be eligible in 2023/24, the taxpayer must be under 71 years of age at the end of the financial year, lodge a tax return and 10% or more of their total income (being assessable income + reportable fringe benefits + reportable super contributions) must be attributable to employment and/or carrying on a business.
    • Additional eligibility requirements were added from 1 July 2017 which includes:
    1.  Having a total superannuation balance of less than $1.7 million on 30 June of the year the contributions are being made ($1.9 million from 1 July 2023)
    2. Having not exceeded your non-concessional contribution cap in the relevant financial year.
    • For 2023/24, the $500 co-contribution is paid in full where personal contributions of at least $1,000 are made by taxpayers with total income (assessable income – business deductions + reportable fringe benefits + reportable super contributions) less than $43,445.  The maximum co-contribution reduces when income is in the $43,445 to $58,445 band and cuts out when income exceeds $58,445.

Superannuation Contributions for Spouses

• A tax rebate is available for super contributions on behalf of low-income spouses.
• The rebate is 18% of the contributions up to $3,000. The maximum rebate is therefore $540.
• The rebate is reduced where the spouse’s assessable income + reportable fringe benefits + reportable super contributions are in the range of $37,000 to $40,000.

Personal Contributions from After-Tax Sources

• The concessional and extremely tax effective nature of superannuation in Australia makes the contribution of discretionary personal funds (where available) into superannuation a strategy well worth considering.
• While income on assets held personally can be taxed at up to 47%, the same income in the superannuation environment is taxed at a maximum of 15%, and, where pensions are commenced, the income can be tax free (subject to the $1.9M balance transfer cap from 1 July 2023 which has the effect of taxing individual member benefits above $1.9M at a maximum of 15%).
• Taxpayers aged 18 to 75 years do not need to pass a work test in order to be able to make superannuation contributions.  Taxpayers aged 67 years to 75 years will need to have worked in gainful employment for at least 40 hours in a consecutive 30 day period in that same financial year, to claim tax deduction for making concessional contributions. Taxpayers aged 75 years or older are currently unable to make personal superannuation contributions.
• The limit for personal non-concessional contributions from after tax sources is currently $110,000 per annum ($120,000 from 1 July 2024) with the opportunity to bring forward the following two year’s limit such that an undeducted contribution of up to $330,000 be made in year one ($360,000 from 1 July 2024) (see “Superannuation Re-contributions” above).
• Please be aware that contributions in excess of the above limits will be subject to tax at 45% if left in the superannuation fund. Excess non-concessional contributions made after 1 July 2012 can be withdrawn, together with 85% of the deemed associated earnings thereon, and taxed at the member’s marginal tax rate.  Contact us prior to 30 June if you believe the above contribution limits have been exceeded.
• The Tax Office has confirmed in a Tax Ruling that an “in-specie” contribution of certain assets (such as listed investments and business real property) into superannuation is acceptable, as long as certain criteria are met.

$1.9m Super Transfer Balance Cap

• A $1.9 million cap per person exists on the amount of superannuation benefits which can be held in the tax free pension phase. A maximum limit of $1.9 million can be kept in retirement phase to pay pensions. Earnings on investments within pension accounts (retirement phase) will continue to be exempt from tax. Superannuation balances above $1.9 million can remain in super in the accumulation phase. Income is taxed at 15%. Capital Gains are taxed at 10% if the asset is held for longer than 12 months.  These are still concessional rates of tax.
• Given the tax rates within superannuation are still concessional when compared to other entities such as companies, trusts and individuals, we recommend you consider retaining as much as possible of your existing funds within superannuation, particularly where your ability to make contributions in the future is or becomes limited.
• It is possible to segregate investments within a SMSF.  The trustees may be able to select which specific assets will support the pensions (and will be tax free and CGT free) and which assets will be in the accumulation account (taxed at 15%) where the individual members combined superannuation entitlements are less than $1.9m.
• Where member balances are in excess of $1.9m segregation is not available.
• If your total superannuation balances are near to or over $1.9m you will need to contact us to discuss your circumstances and the action to be taken.

Self-Managed Super Funds

• • • Ensure that the in-house asset test is not breached (no more than 5% of the total market value of the fund’s assets to be held in most investments, loans or leases with related parties). There are some exceptions including business real property.
    • Ensure that artworks and collectibles purchased since 1 July 2011 satisfy the rules regarding storage, leasing, insurance and usage. Ensure artworks and collectibles purchased pre-1 July 2011 satisfy these rules from 1 July 2016.
    • Ensure that the fund’s investment strategy has been formulated, reviewed, updated and implemented and evidence is available of this strategy for audit purposes.
    • Trustees must consider whether the fund needs to hold life and TPD insurance for members. Review existing insurances to determine if it is more tax effective to hold the policies inside or outside of super.
    • Under “Super Stream” reforms all SMSFs must receive contributions from non-related employers electronically. Additionally, the employer must send an electronic message advising details of the contribution to the SMSF via an electronic service address (ESA) (see below).  If this is relevant to you, we recommend that you provide your employer with the following so that employer contributions can continue to be made to your fund:
    1. Fund ABN
    2. Bank details (BSB, Bank name and bank account number)
    3. Electronic service address – for this purpose there are many SMSF messaging providers listed on the ATO website at http://www.ato.gov.au/super/superstream/self-managed-super-funds/electronic-service-address/register-of-smsf-messaging-providers/
    • Confirm that the trust deed is up to date with the latest best practice and includes appropriate clauses to recognise recent legislative amendments such as transition to retirement income streams, non-lapsing binding death benefit nominations, release of excessive contributions, downsizer contributions etc.

Pension Streams

• • Ensure that the minimum pension for 2023/24 has been withdrawn by 30 June 2024 based on your age as follows. The current minimum drawdown percentages are outlined in the following table:

  Age at start or on 1 July	Current minimum drawdown % of account balance at pension commencement date or 30 June 2024
  Under 65	4%
  65-74	5%
  75-79	6%
  80-84	7%
  85-89	9%
  90-94	11%
  95 or more	14%

  • If you have commenced a transition to retirement pension, ensure that no more than 10% of the capital value of the income stream at the start date or 30 June 2024 whichever is later, has been drawn.

Early Access To Superannuation Benefits

• Under the existing ‘compassionate grounds’ conditions of release, an individual can access their preserved superannuation benefits (as a lump sum), subject to any cashing restrictions, on a number of different grounds where certain specific conditions are satisfied. For example, an individual who satisfies certain conditions could access their superannuation entitlements under this condition of release in order to pay for certain medical treatment, or to enable the individual to make a repayment on a home loan in order to prevent the mortgagee selling their home.

Salary Sacrifice

• Significant tax savings can be achieved via salary sacrificing additional superannuation contributions or by including fringe benefits within your salary package.
• Importantly, salary sacrificing arrangements must be put in place prior to the period of service to be effective from a taxation point of view.
• With the availability of “transition to retirement income streams (TRIS’s)” (also known as “working pensions”), taxpayers who have reached their preservation age but wish to stay in the workforce can access their superannuation as a non-commutable income stream without permanently retiring. In certain circumstances it can be tax effective to salary sacrifice employment income into superannuation and use the working pension to pay living expenses.  Please contact our office if you would like to discuss this strategy further.
• If you are renegotiating your salary package for the next financial year you may wish to contact us to discuss these and other options available to you as there are a number of requirements to commence transition to retirement pensions. You should also take into account the new concessional contribution caps when working out the amount of any salary sacrifice superannuation contributions for the 2024/25 tax year.
• The amount that can be provided to employees of not-for-profit entities for salary sacrificed meal entertainment benefits has been limited to a grossed up cap of $5,000 with effect from 1 April 2016. This may reduce the tax and other benefits available to such employees from their salary sacrifice arrangements.
• Employees of small businesses (turnover under $10m from the 2016/17 financial year) may be provided with more than one work related portable electronic device, even where the functions are similar, without imposition of FBT, from 1 April 2016. Please note that from 1 April 2021 (i.e., the 2022 FBT year an onwards) the turnover threshold has increased to $50 million.

Employer Termination Payments

• From 1 July 2012 two different ETP caps apply:
• The ETP cap applies to all ETPs and limits the amount of all ETPs that can receive concessional tax treatment and the ETP tax offset.  For 2023/24 that cap is $235,000 and $245,000 for 2024/25.  If the ETP exceeds this amount the balance is taxed at the top marginal rate.
• The whole of income cap of $180,000 also applies to some ETPs (golden handshakes, gratuities, unused sick leave payments etc.). Under this cap, the ETP tax offset only applies to that proportion of the ETP that, together with other taxable income, does not exceed $180,000.  The excess will be taxed at marginal rates.

Non-Resident Issues

• • The top marginal tax rate for non-residents changed to 45% from 1 July 2014. Tax rates for non-residents are currently:

  2021/22		2022/23		2023/24
  Taxable Income ($)	Rate (%)	Taxable Income ($)	Rate (%)	Taxable Income ($)	Rate (%)
  0 – 120,000	32.5	0 – 120,000	32.5	0 – 120,000	32.5
  120,001 – 180,000	37	120,001 – 180,000	37	120,001 – 180,000	37
  180,000 +	45	180,000 +	45	180,000 +	45

                                   

  • The availability of the 50% capital gains tax discount for non-residents was abolished with effect from 8 May 2012. However, the discount will remain available for capital gains that accrued prior to 8 May 2012 where a market valuation of the asset at 8 May 2012 is obtained.
  • A 10% non-final withholding tax on disposal by foreign residents of certain taxable Australian property commenced on 1 July 2016. Purchasers of residential property valued at $2 million or more are required to withhold and remit 10% of the sale proceeds to the ATO, unless they obtain an ATO clearance certificate.

Expansion of Foreign Resident CGT Withholding Regime

• The CGT withholding rate that applies to foreign tax residents was increased from 10% to 12.5% from 1 July 2017.
• Currently, the foreign resident CGT withholding obligation applies to Australian real property and related interests valued at $2m or more. This threshold was reduced to $750,000 from 1 July 2017, increasing the range of properties and interests that will come within this obligation.
• Individuals who are foreign or temporary tax residents no longer have access to the CGT main residence exemption from 7.30pm (AEST) on 9 May 2017. Properties held before this date were grandfathered until 30 June 2020.

Annual Levy for Foreign-Owned Vacant Residential Properties

• Foreign owners of vacant residential property, or property that is not genuinely available on the rental market for at least six months per year, will be charged an annual levy. The annual levy will be equivalent to the relevant foreign investment application fee imposed on the property when it was acquired.
• The measure will apply to persons who make a foreign investment application for residential property from 7.30pm (AEST) on 9 May 2017.

Land Tax

• Where you hold land other than your main residence you are required to lodge a land tax return. Land tax is imposed at different rates in each state. Individual landholders received a threshold so if the unimproved land value of your property is below the threshold you are not required to pay land tax. Please contact us if you require further assistance.

EARLY STAGE INNOVATION COMPANY

• If you invest in a qualifying early stage innovation company (ESIC), you may be eligible for tax incentives.
• The tax incentives for early stage investors (sometimes referred to as ‘angel investors’) provide eligible investors who purchase new shares in an ESIC with a:
• Non-refundable carry forward tax offset equal to 20% of the amount paid for their qualifying investments. This is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year
• Modified capital gains tax (CGT) treatment under which capital gains on qualifying shares that are continuously held for at least 12 months and less than ten years may be disregarded. Capital losses on shares held less than ten years must be disregarded.
• The maximum tax offset cap of $200,000 doesn’t limit the shares that qualify for the modified CGT treatment.
• Investors that don’t meet the ‘sophisticated investor’ test under the Corporations Act 2001 won’t be eligible for any tax incentives if their total investments in qualifying ESICs in an income year is more than $50,000.