Newsletter - May 2021

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Cents & Sensibility | Tax News | Views | Clues 

 

21 May

End of Financial Year Superannuation Tax Planning Strategies – Victoria Kogan


Our SMSF specialist, Victoria Kogan, has prepared the following superannuation tax planning strategies ahead of the end of financial year.

 

Superannuation Caps

 

  • The tax-deductible super contribution limit is $25,000 for all individuals under the age of 75.
  • Individuals will need to satisfy the work test if they are over 67 years of age. The work test involves remunerated employment for at least 40 hours in a 30-day period for the financial year.
  • To save tax, individuals can consider making the maximum tax-deductible super contribution before 30 June 2021. The advantage of this strategy is that superannuation contributions are taxed between 15% to 30% (for high income earners). This tax rate can be compared to typical personal income tax rates between 34.5% and 47%.
  • Effective 1 July 2021, the Superannuation contribution caps are increasing as follows:

 

Concessional Contribution Cap ($27,500)

- Employer and Personal Tax-Deductible payments to super.

- Applicable to all individuals under the age of 75.

 

Non-Concessional Contribution Cap

- Non-Concessional Contributions (post-tax payments to super): Threshold increased from $100,000 p.a. to $110,000 p.a.

- The total superannuation balance (TSB) threshold will increase to $1,700,000.

- Refer to table below regarding eligibility to contribute non concessional contributions.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carry Forward Concessional Contributions

 

  • Rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.
  • This means if you do not use the full amount of your concessional contribution cap ($25,000 in 2019, 2020 and 2021), you may be eligible to carry-forward the unused amount and take advantage of it up to five years later (Eligibility Criteria must be satisfied).

 

Spouse Super Contributions

 

  • You may be eligible to make super contributions on behalf of your spouse (married or de-facto), provided you meet the eligibility criteria.
  • Implementing a contribution splitting strategy not only helps to boost your spouse’s super, but it can also help you save tax if your spouse has limited income.
  • You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less.

 

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

 

Victoria is an authorised representative of SAN. Authorised representative #001248637. This information in this newsletter is for general information only and does not constitute financial advice. It does not take into account your objectives, financial situation or needs.

 

End of Financial Year Superannuation Tax Planning Strategies – Victoria Kogan


Our SMSF specialist, Victoria Kogan, has prepared the following superannuation tax planning strategies ahead of the end of financial year.

Superannuation Caps
 

  • The tax-deductible super contribution limit is $25,000 for all individuals under the age of 75.
  • Individuals will need to satisfy the work test if they are over 67 years of age. The work test involves remunerated employment for at least 40 hours in a 30-day period for the financial year.
  • To save tax, individuals can consider making the maximum tax-deductible super contribution before 30 June 2021. The advantage of this strategy is that superannuation contributions are taxed between 15% to 30% (for high income earners). This tax rate can be compared to typical personal income tax rates between 34.5% and 47%.
  • Effective 1 July 2021, the Superannuation contribution caps are increasing as follows:

 

Concessional Contribution Cap ($27,500)

- Employer and Personal Tax-Deductible payments to super.

- Applicable to all individuals under the age of 75.

 

Non-Concessional Contribution Cap

- Non-Concessional Contributions (post-tax payments to super): Threshold increased from
           $100,000 p.a. to $110,000 p.a.

- The total superannuation balance (TSB) threshold will increase to $1,700,000.

- Refer to table below regarding eligibility to contribute non concessional contributions.

 

 

Carry Forward Concessional Contributions

 

  • Rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.
  • This means if you do not use the full amount of your concessional contribution cap ($25,000 in 2019, 2020 and 2021), you may be eligible to carry-forward the unused amount and take advantage of it up to five years later (Eligibility Criteria must be satisfied).

 

Spouse Super Contributions

 

  • You may be eligible to make super contributions on behalf of your spouse (married or de-facto), provided you meet the eligibility criteria.
  • Implementing a contribution splitting strategy not only helps to boost your spouse’s super, but it can also help you save tax if your spouse has limited income.
  • You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less.

 

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

 

Victoria is an authorised representative of SAN. Authorised representative #001248637. This information in this newsletter is for general information only and does not constitute financial advice. It does not take into account your objectives, financial situation or needs.

 

End of Financial Year Superannuation Tax Planning Strategies – Victoria Kogan

 

Our SMSF specialist, Victoria Kogan, has prepared the following superannuation tax planning strategies ahead of the end of financial year.

 

Superannuation Caps

  

  • The tax-deductible super contribution limit is $25,000 for all individuals under the age of 75.
  • Individuals will need to satisfy the work test if they are over 67 years of age. The work test involves remunerated employment for at least 40 hours in a 30-day period for the financial year.
  • To save tax, individuals can consider making the maximum tax-deductible super contribution before 30 June 2021. The advantage of this strategy is that superannuation contributions are taxed between 15% to 30% (for high income earners). This tax rate can be compared to typical personal income tax rates between 34.5% and 47%.
  • Effective 1 July 2021, the Superannuation contribution caps are increasing as follows: 

 

Concessional Contribution Cap ($27,500)

- Employer and Personal Tax-Deductible payments to super.

- Applicable to all individuals under the age of 75.

 

Non-Concessional Contribution Cap

- Non-Concessional Contributions (post-tax payments to super):
            Threshold increased from $100,000 p.a. to $110,000 p.a.

- The total superannuation balance (TSB) threshold will increase
            to $1,700,000.

- Refer to table below regarding eligibility to contribute non
            concessional contributions.

 

 

Carry Forward Concessional Contributions

 

  • Rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.
  • This means if you do not use the full amount of your concessional contribution cap ($25,000 in 2019, 2020 and 2021), you may be eligible to carry-forward the unused amount and take advantage of it up to five years later (Eligibility Criteria must be satisfied).

 

Spouse Super Contributions

 

  • You may be eligible to make super contributions on behalf of your spouse (married or de-facto), provided you meet the eligibility criteria.
  • Implementing a contribution splitting strategy not only helps to boost your spouse’s super, but it can also help you save tax if your spouse has limited income.
  • You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less.

 

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

 

Victoria is an authorised representative of SAN. Authorised representative #001248637. This information in this newsletter is for general information only and does not constitute financial advice. It does not take into account your objectives, financial situation or needs.

 

JobKeeper comes to an end

 

The ATO has advised that the final JobKeeper payment will be processed in April 2021.

 

Enrolled businesses do not have to do anything when the program closes, although they will need to complete their final March monthly business declaration by 14 April 2021.

 

Also, once a business is no longer claiming JobKeeper Payments, it may start to be eligible to receive the JobMaker Hiring Credit for any additional employees that started employment on or after 7 October 2020.

ATO loses case on JobKeeper and backdated ABNs

 

On 24 March 2021, the Full Federal Court handed down its decision in a case concerned with the requirement that an entity claiming JobKeeper must have had an ABN on 12 March 2020, or a later time allowed by the ATO.

 

The Registrar of the Australian Business Register had reactivated the relevant entity's previously cancelled ABN after 12 March 2020, but with a backdated effective date on or before 12 March 2020. 

 

The Court held that backdating an ABN to have an effective date on or before 12 March 2020 did not satisfy the requirement for the entity to have had an ABN on 12 March 2020.

 

However, the Court also held that the ATO's decision not to allow the entity a "later time" to have an ABN was a "reviewable decision", and that the Commissioner's discretion should be exercised in these circumstances (i.e., the Court held that the entity should be entitled to JobKeeper).

 

The Court's decision does not change the need to satisfy all of the other eligibility requirements.

 

Editor: Where the ATO has postponed finalising a decision regarding a taxpayer's eligibility for JobKeeper (and/or the cash flow boost) pending the Court's decision, the ATO will contact the affected taxpayer shortly to provide them with an update.

First criminal conviction for JobKeeper fraud

 

A person claiming to be a sole trader was convicted of three counts of making a false and misleading statement to the Commissioner of Taxation, in order to receive $6,000 in JobKeeper payments to which he was not entitled, as he was not operating a genuine business and he had already agreed to be nominated by his full-time employer for the allowance.

 

The ATO has a dedicated integrity strategy that supports the administration of the Government’s stimulus packages, with robust and efficient compliance systems that make it very easy to identify fraudulent behaviour and stop it. 

 

ATO Deputy Commissioner Will Day said, “Since the first payments were made in April, the ATO has monitored every payment, every day, every month, and will continue to do so until the last payment is made."

Below is an Open Letter to our valued knp Solutions Clients.

 

Friday 17th May 2021

 

Dear valued client,

 

Recently the Australian Prudential Regulation Authority (APRA) who are the government regulator for life insurance companies, made some substantial changes to how insurance companies design and build Income Protection policies. Consequently, Income Protection products will not be as generous and comprehensive as they are today. They will still offer the necessary protection that we all need, however they will be removing some of the key features and benefits of these products.


Due to these upcoming changes later this year, it is crucial to review your current Income Protection policy to ensure you are provided with the best possible cover. Recently, there have been improvements in these policies. Therefore, it is prudent to be aware of these changes, enabling us to make necessary changes before it is too late.

 

To lessen the impact of APRA’s changes, you may want to make alterations to your Income Protection policy. Like all insurance, any alterations to income protection need to be carefully considered and can take a substantial amount of time.

 

I look forward to hearing from you soon.

 

Ali Roshan

Senior Financial Planner

 

Ali Roshan is an Authorised Representative (ASIC No. 000378611) of Lifespan Financial Planning

 

ABN 23 005 921 735 AFSL Number 229892

 

No Advice Warning / General Advice


The purpose of this article is to provide general information only and the contents of this website do not purport to provide personal financial advice. knp Solutions strongly recommends that investors consult a financial adviser prior to making any investment decision.

 

The contents of this knp Solutions article does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions.

 

The information is selective and may not be complete or accurate for your purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation.

End of Financial Year Superannuation Tax Planning Strategies – Victoria Kogan


Our SMSF specialist, Victoria Kogan, has prepared the following superannuation tax planning strategies ahead of the end of financial year.

 

Superannuation Caps

 

  • The tax-deductible super contribution limit is $25,000 for all individuals under the age of 75.
  • Individuals will need to satisfy the work test if they are over 67 years of age. The work test involves remunerated employment for at least 40 hours in a 30-day period for the financial year.
  • To save tax, individuals can consider making the maximum tax-deductible super contribution before 30 June 2021. The advantage of this strategy is that superannuation contributions are taxed between 15% to 30% (for high income earners). This tax rate can be compared to typical personal income tax rates between 34.5% and 47%.
  • Effective 1 July 2021, the Superannuation contribution caps are increasing as follows:

 

Concessional Contribution Cap
       ($27,500)

- Employer and Personal Tax-
         Deductible payments to super.

- Applicable to all individuals under the
         age of 75.

 

Non-Concessional Contribution Cap

- Non-Concessional Contributions
          (post-tax payments to super):
           Threshold increased from $100,000
           p.a. to $110,000 p.a.

- The total superannuation balance
           (TSB) threshold will increase to
           $1,700,000.

- Refer to table below regarding
           eligibility to contribute non
           concessional contributions.

 

 

Carry Forward Concessional Contributions

 

  • Rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.
  • This means if you do not use the full amount of your concessional contribution cap ($25,000 in 2019, 2020 and 2021), you may be eligible to carry-forward the unused amount and take advantage of it up to five years later (Eligibility Criteria must be satisfied).

 

Spouse Super Contributions

 

  • You may be eligible to make super contributions on behalf of your spouse (married or de-facto), provided you meet the eligibility criteria.
  • Implementing a contribution splitting strategy not only helps to boost your spouse’s super, but it can also help you save tax if your spouse has limited income.
  • You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less.

 

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

 

Victoria is an authorised representative of SAN. Authorised representative #001248637. This information in this newsletter is for general information only and does not constitute financial advice. It does not take into account your objectives, financial situation or needs.