Tax cuts new financial year cut-off

Australia's tax agency says it can retrospectively deliver tax cuts if the coalition's proposal doesn't pass through parliament before the end of the financial year.

But it remains to be seen if the tax cuts will pass parliament, with key crossbench senators still to pledge their support for the plan.

Government senator Zed Seselja is urging Labor to support the changes in order to give them a seamless course through parliament, avoiding the need for the crossbench votes.

Shadow treasurer Chris Bowen says Prime Minister Scott Morrison is already breaking election promises, after pledging Australians tax relief this financial year.

"If the Australian people have to wait another year for the tax cuts, I think it's an indictment on his government and the character of the prime minister," he told reporters in Sydney on Tuesday.

Greens leader Richard Di Natale says the minor party won't support the income tax cuts.

The party held onto all of its six Senate seats up for re-election, taking the Green's total to nine.

"We had millions of Australians voting for parties like the Greens in the Senate to hold this government to account, and we'll do that," he told ABC radio.

"We're not going to support tax cuts to people on half a million dollars … if any support is going to be given it needs to be targeted at people on low incomes."

The Australian Tax Office says it can retrospectively amend tax assessments to provide cuts if the laws pass after June.

The agency could also make administrative changes to provide tax cuts.

"If the Labor party agrees to support the coalition tax cuts as announced, then we would be able to update the tax withholding schedules, to allow the tax cuts to be reflected in people's take home pay," the ATO says on its website.

Treasurer Josh Frydenberg will meet with Treasury officials and the Australian Securities and Investments Commission in Canberra on Tuesday, before heading to Sydney to catch up with Mr Morrison.

He's expected to meet with Reserve Bank of Australia Governor Philip Lowe and the Australian Prudential Regulation Authority on Wednesday.

The meetings come as Dr Lowe prepares to deliver a major speech on the outlook for the Australian economy and interest rates in Brisbane on Tuesday.

A Labor Government on Tax & Super

Tax on investment property

In general, taxpayers are able to deduct from their assessable income any expenses they incur generating or producing that income. An investment is negatively geared when the cost of owning the asset is more than the return. Negative gearing is not limited to property but can apply to other assets such as shares. In 2016-17, Australians claimed $47.5 billion in rental deductions against gross rental income of around $44.1 billion.


A number of capital gains tax (CGT) exemptions potentially apply to investment property. For Australian resident individuals, a 50% CGT discount applies to net capital gains made on investments held for longer than 12 months.


In addition, a taxpayer's main residence is exempt from CGT. As part of this exemption, a taxpayer can be absent from their main residence for up to 6 years and still claim the property as their main residence (assuming they do not treat any other property as their main residence). So, the property can be used as an investment property for 6 years but then sold as the taxpayer's main residence.


Labor's plan seeks to:

·       Limit negative gearing to new housing from 1 January 2020. All investments made prior to this date will not be affected by the changes and will be fully grandfathered. The ALP states that the grandfathering element of the policy applies to property and assets purchased prior to the start date of the policy. "This means, for example, that if you own a property prior to 1 January 2020, you are able to negatively gear it after that date. The changes to the CGT discount will not apply to superannuation funds or to the 50 per cent active asset reduction concession that applies to small businesses."

·       Halve the capital gains tax discount for all assets purchased after 1 January 2020. This will reduce the CGT discount for assets held longer than 12 months from 50% to 25%. Once again, all investments made prior to the 1 January 2020 will be fully grandfathered.


There is no policy statement from the ALP on the main residence exemption.  The Morrison Government had introduced legislation to remove access to the main residence CGT exemption for non-resident taxpayers, but this Bill stalled in the Senate. Chris Bowen told the Australian Financial Review that it will be up to the ALP to work through outstanding tax measures and "iron out any unintended consequences" including the impact on expats and retrospectivity.  


Dividend imputation and the impact on self-funded retirees

One of the more controversial measures announced by the ALP is the reforms to the dividend imputation credit system to remove refundable franking credits from shares. The measure, as announced, would apply to individuals and superannuation funds, and exclude Australian Government pension and allowance recipients, and tax-exempt bodies such as charities and universities. SMSFs with at least one pensioner or allowance recipient before 28 March 2018 will also be exempt from the changes. The policy is intended to apply from 1 July 2019.


How does the system currently work?

A dividend is a shareholder's share of a company's earnings (profits). When a dividend is paid from an Australian company's after-tax profits, these are known as franked dividends and include a franking credit (imputation credit), which represents the amount of tax already paid by the company on the underlying profits that are being paid out in the form of a dividend.


An Australian resident shareholder pays tax on dividends they receive (as dividends are treated as income). If the dividend received is a franked dividend, the shareholder includes the franking credits in their income (i.e., a gross-up occurs) but they can then use the franking credit attached to the dividend to reduce their tax liability. If the credit exceeds their tax liability for the year then they receive a cash refund for the excess amount.


For example, an SMSF owns shares in a company. The company pays the SMSF a fully franked dividend of $7,000. The dividend statement says there is a franking credit of $3,000. The $3,000 represents the tax the company has already paid on its profits. This means the profit, before company tax was subtracted, would have been $10,000 ($7,000 + $3,000). The SMSF must declare $10,000 worth of income, and will receive the $3,000 as an offset.


The dividend imputation system was introduced in 1987 by the Hawke/Keating Government to remove the investment bias against shares which taxed interest income once but dividend income twice (once at the company level on profits and the second time at the taxpayer level on income). In 2001, the Howard Government amended the rules to enable franking credits to be paid as a cash refund where the taxpayer paid less tax than the company tax rate. In the absence of refundability, the taxpayer pays tax up to the company tax rate and any surplus franking credit is wasted.


The sensitivity of the issue

The sensitivity of this issue is how the dividend imputation system interacts with the way superannuation is taxed. Currently, income an SMSF earns from assets held to support retirement phase income streams (i.e., a pension), such as dividends from shares, is tax-free. That is, a self-funded retiree in some circumstances pays no tax on the income they earn from dividends. If they pay no tax, then any franking credits are paid as a cash refund. 


If the ALP policy comes to fruition, these self-funded retirees lose this cash payment unless they are also Australian Government pension and allowance recipients. The policy effectively unwinds the Howard reforms and returns the imputation system to its original Hawke/Keating design.


Who will be impacted by the change?

Based on information from Treasury, 85% of the value of franking credit refunds go to individuals with a taxable income below $87,000. That is, 97% of taxpayers receiving refunds have a taxable income below $87,000. And, more than half of those receiving a franking credit refund have a taxable income below the tax-free threshold of $18,200. Around 40% of SMSFs receive a franking credit refund.


Around 1.1 million individuals received a franking credit refund in 2014-15 with more than half of these over the age of 65. And, more than two thirds of refunds to SMSFs are to those whose fund balance per member is greater than $1 million. However, this figure is likely to be diminished by the 1 July 2017 reforms that imposed a $1.6m cap on retirement phase superannuation accounts and tax earnings on accumulation accounts.


The Parliamentary Budget Office has also outlined what behavioural changes they expect to see in the market as a result of making franking credits non-refundable. These include:


·       Individuals - shifting from shares to alternative investment arrangements (including to investments within superannuation), and couples shifting the ownership of shares from the lower income earner to the higher income earner such that the higher income earner can utilise the franking credits as a non-refundable tax offset.

·       Superannuation funds - rolling assets from a fund with negative net tax to a fund with positive net tax, changing funds' asset portfolio allocations, or changing the membership structure of the fund, in order to maximise the utilisation of franking credits.

·       Companies - changing the amount of dividends distributed (and profits withheld) or the level of dividend franking due to the decrease in the value of franking credits for some shareholders.


The most significant behavioural change is expected to be from SMSF trustees: "The assumed behavioural response for SMSFs in 2019-20 is equivalent to these funds, in aggregate, moving around a quarter of the value of their listed Australian shares into APRA-regulated funds that are in a net tax-paying position."


The alternative, of course, is for SMSFs to change their composition of Australian shares to reduce their holding. The Parliamentary Budget Office also notes that one potential outcome is that SMSFs will increase the number of taxpaying members. "For instance, a couple with an SMSF in the pension phase could invite two additional working-aged children into their fund, allowing them to use their excess franking credits to offset the contributions and earnings tax payable on the assets owned by their children."


More information

·       ALP - Ending cash refunds for excess imputation

·       Treasury – FOI 2292 Refundability of franking credits


Minimum 30% tax on discretionary trust distributions

There are around more than 690,500 discretionary trusts, also known as family trusts, in Australia. Discretionary trusts are popular as the trustee has the discretion on how to pay the income or capital of the trust to the beneficiaries – beneficiaries do not have an interest in the trust. Income can be apportioned by the trust to the beneficiaries on a discretionary basis, for example, to beneficiaries on a lower income tax bracket. As a result, discretionary trusts are often used to protect assets within family groups, manage succession, and to distribute income tax effectively within that group. 


From 1 July 1979, laws were introduced to ensure that distributions to minors were taxed at the top marginal tax rate to prevent trusts distributing funds to children at minimum tax rates.


The proposed reforms

The ALP reforms address the ability for distributions to be channelled to beneficiaries in low income tax brackets. Instead, a new standard minimum rate of tax for discretionary trust distributions to mature beneficiaries (aged over 18) of 30% will apply.


Tax cuts, incentives for business investment and spending on health and welfare: tonight's Federal Budget was crafted with Australia's May election in mind. Read on for CPA Australia's verdict on Budget 2019.

A stronger economy and a secure future were the promise of Federal Treasurer Josh Frydenberg in announcing a A$7.1 billion surplus, tax cuts and extra funding for infrastructure and services to regional Australia in the 2019/20 budget.

Frydenberg stressed several times that expenditure would be achieved without increasing taxes, while announcing lower taxes for 10 million people and three million small businesses.

The Treasurer delivered the first budget surplus in 12 years and announced investments in education that he said would invest in the jobs of tomorrow.

With a Federal election looming in May, pollsters are tipping that the government will be unseated by Bill Shorten's Australian Labor Party, in which case many budget announcements will not be implemented.

Labor has said, however, that it will support one-off cash payments and tax cuts for low and middle-income earners but, if elected, will deliver its own major economic statement in the second half of the year.

CPA Australia head of external affairs Paul Drum FCPA said the budget made a strong election pitch but "their biggest test is whether they can get re-elected in the coming months to enable them to deliver on these budget commitments."

The budget assumes real growth in gross domestic product (GDP) of 2.75 per cent in the 2019/20 and 2020/21, unemployment at 5 per cent over the same period and the consumer price index (inflation) at 2.25 per cent in 2019/20.

CPA Australia head of external affairs Paul Drum FCPA said the budget made a strong election pitch but "their biggest test is whether they can get re-elected in the coming months to enable them to deliver on these budget commitments."

The budget assumes real growth in gross domestic product (GDP) of 2.75 per cent in the 2019/20 and 2020/21, unemployment at 5 per cent over the same period and the consumer price index (inflation) at 2.25 per cent in 2019/20.


Wage and salary earners 

The Treasurer announced A$158 billion in personal income tax cuts through more than doubling the low and middle-income tax offset from 2018/19.  This will benefit more than 10 million people earning up to A$126,000 a year.

From July 2024, Frydenberg says the government will cut the 32.5 per cent marginal tax rate to 30 per cent, applying to all taxpayers earning between A$45,000 and A$200,000.  He says the top 5 per cent of taxpayers will pay one third of all income tax collected.


The instant asset write-off will be extended to June 2020 and increased from A$25,000 to A$30,000. The write-off allows small business with a turnover of less than A$10 million to claim an immediate deduction for a purchase below that amount but will be expanded to businesses with turnover of up to A$50 million, or another 22,000 businesses. 

Businesses will also be able to claim the deduction every time they make a purchase under the cap.

The write-off remains an annual deduction. CPA Australia has called for the write-off to be made permanent rather than extended budget to budget, to give business owners greater certainty when planning.

The government will defer to July 2020 the start date of the proposed amendment to Division 7A of the Tax Act, to allow further consultation. 

CPA Australia has argued  the Treasury-proposed changes to how business owners can make loans from private companies will discourage investment. 

Building and transport industries

The government announced increased investment in infrastructure spending, to improve rail links and address road black spots, with the Treasurer naming several projects in major state capital cities and also rural and regional Australia.

The budget includes increasing the Urban Congestion Fund to A$4 billion from A $1 billion, to cut travel times in Australia's rapidly-growing cities.

A A$500 million Commuter Car Park Fund would improve access to public transport hubs.

He promised A$2.2 billion for roads, A$1 billion to improve freight routes and access to ports and A$100 million for regional airports.


A A$525 million skills package would create 80,000 new apprenticeships in industries with skills shortages and double to A$8,000 the incentive payments to employers per apprenticeship

There were also announcements to create new training hubs, give new apprentices a A$2,000 incentive payment, and invest in science, technology and research.

Rural areas

The budget papers commit to major spending in regional and rural areas to expand water infrastructure, provide drought relief and upgrade regional airports. 

Older Australians 

Frydenberg announced A$725 million for aged care, with 10,000 new home care packages and capital works focused on regional Australia.  Single pensioners will get a A$75 one-off cash payment for their energy bills, while couple pensioners will get A$125. The ALP is expected to support the measure.

Health sector

Australians suffering from cancer, heart disease, epilepsy and who live in rural areas are likely to benefit from several major investments in assistance programs and medication. The budget also contains A$461 million for youth mental health and suicide prevention.

Superannuation industry and older Australians

People approaching retirement will be able to boost their superannuation balances, with those aged 65 and 66 years able to make voluntary contributions without satisfying the work test, from July 1 2020. Currently, people aged 65 and older must work a minimum 40 hours over a 30-day period.  Frydenberg said the measure will align the work test with the eligibility age for the Age Pension, due to rise to 67 years from July 1, 2023. About 55,000 people will benefit from the reform.

People aged 65 and 66 will also be able to access the "bring forward arrangements" to make three years' worth of non-concessional contributions (capped at A$100,000) to their super in a single year. This currently stops at 65 years.  The age limit for spouse contributions will be increased from 69 years to 74 years.

CPA Australia's Paul Drum said that a fairer and more flexible solution would be to introduce lifetime caps and "revisit" abolishing the work test.



There were few measures for corporate Australia, although many of the largest companies would benefit from spending in infrastructure, either as providers or users of improved services.

Regulatory burden on business

Business will pay more fees to regulators, through the industry funding model for the Australian Securities and Investments Commission (ASIC) and higher levies to the Australian Prudential Regulation Authority (APRA).  As part of a response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, there will be extra funding to ASIC of A$38.5 million in 2019/20 and A$118 million in 2020/21, possibly funded by extra fees to business.  APRA will get A$16.9 million and A$19 million over the same period. 

The budget allocates the Australian Taxation Office an extra A$1 billion over four years to expand its Tax Avoidance Taskforce.  Frydenberg announced the Australian Financial Complaints Authority will receive additional funding to establish a historical redress scheme for financial complaints dating back to 1 January 2008.

CPA Australia welcomed additional funding for APRA, ASIC and the Federal Court given the findings of the royal commission.

"But unfortunately, the significant cost increases that the ASIC user pays funding model places on our members and others delivering services regulated by ASIC have not been addressed in this budget," said Paul Drum.  "This government-imposed cost pressure will not only negatively impact smaller accounting practices and others providing financial services, but also consumers in the future."

CPA Australia previously recommended the government not pursue its full cost recovery model for funding ASIC's regulatory activities, and that it reinstate funding previously cut from the ASIC budget.  "The government can expect to hear more from us on this," Drum added.


The government has not introduced measures that would encourage Australians to save outside the superannuation regime.

Sport Integrity  

The Government will establish a new body, Sport Integrity Australia, to carry out anti-doping and integrity functions, and a National Sports Tribunal to hear and resolve rule violations. The Government has also signed up to the Council of Europe Convention on the Manipulation of Sports Competitions.

A standard deduction for work-related expenses should be examined with a view to eradicating the need for millions of Australians to lodge tax returns, the nation's tax watchdog has recommended. 

The Inspector-General of Taxation's (IGT) review into the Future of the Tax Profession said such a move would make it easier for millions of Australians who claim billions of dollars in work-related expense deductions each year.

ATO Taxation Statistics show that in 2016-17 there were more than 8.84 million people claiming $21.98 billion in work-related expense deductions.

The IGT has also raised concerns that the Australian Taxation Office's current online tools aimed at nudging taxpayers to amend their returns if they are out of sync with their nearest neighbour, could be possibly resulting in people under-claiming on their tax returns.

Why a standard deduction has not been introduced

Both major parties have considered the idea of a standard tax deduction in the past, but it has never been legislated due to the high cost.

Following the 2010 Henry tax review recommendation that it be considered, former treasurer Wayne Swan announced that the Rudd Government would grant a standard tax deduction and this would end in a bigger tax return for 6.4 million Australians. But the proposed legislation was never introduced into Parliament.

Then, when Scott Morrison was Treasurer, he asked a parliamentary inquiry to look into the possibility of introducing a standard deduction for all taxpayers or doing away with certain deductions in favour of lower personal tax rates.

But the 2017 Standing Committee on Economics report of its Inquiry into Tax Deductibility found the cost of such a scheme would be significant.

It found that if a standard deduction of $500 was granted, there would be an additional cost of $2.3 billion, and if the standard deduction was increased to $1,000, then the additional cost would be $4.6 billion.

Acting inspector-general of taxation Andrew McLoughlin said, while there was presently little appetite for change, a change should still be considered as there could be compliance cost savings for individuals and reduced administrative costs for the ATO. He called for a cost-benefit analysis to progress the debate.

In his response to the IGT review, Assistant Treasurer Stuart Robert said a long-standing principle of the Australian tax system was to tax an individual on their income "after accounting for legitimate costs incurred in earning that income".

But he but noted the ATO had taken steps to make compliance easier for individuals with work-related expenses, such the myDeductions app.

MYOB New STP products

New STP products


The new STP payroll products have just rolled out for MYOB and this option may suit many clients with 4 employees or less.


By choosing to go on an STP compliant software you will not have to do your 2019 PAYG summaries the old way.  This STP software includes the ability to send the ATO Year To Date information and will save you from being caught in the May or June rush.  This period if often really busy and due to the new systems required by the ATO various issues or delays may occur.


If you would like to take up any of the new options (or the $15CDF Offer)  Clarke McEwan can liaise with MYOB to setup the file for you.


Interested?   Read on for details.


+ MYOB launched 2 new payroll products in Australia on 1st April 2019

+ Essentials Payroll: A stand-alone payroll only $10/month (limited to 4 employees)

+ Essentials Connected Ledger plus Payroll: $30/month (limited to 4 employees)


$10 Payroll only Product features:

·         Process payroll for employees

·         Keep and share timesheets

·         Manage PAYG

·         Flexible wage categories

·         Automatically calculate leave

·         Capture expenses and deductions

·         Automatically calculate and pay super to your employees

·         Automatically calculate payroll tax and receive automatic updates for payroll tax tables every financial year

·         Report Single Touch Payroll directly to the ATO with 1 click

·         Complete EOY payroll tasks

·         Print or email payslips

·         Employees can access payslips and timesheets online, or on mobile


Reports include:

·         Journals

·         General Ledger Details

·         Past Pay Runs

·         Payroll Summary & Details

·         PAYG Payment Summaries

·         Pay Items Report


In Tray features include:

·         Save documents against banking and spend money transactions

·         Clients can email documents directly to the software

·         Capture receipts and automatically send to the In Tray via the app (coming soon)


Extra features from Connected Ledger + Payroll product ($30/m)

·         Cashbook Features

·         Save time and ensure accurate data by automatically importing bank transactions from your client's bank

·         View, add, edit and delete accounts from the chart of accounts

·         Client Dashboard - Drill down into your client's file directly from the dashboard & Greater coding efficiencies and improved workflows

·         Additional Reports

·   Budget Management

·   Profit and Loss

·   Balance Sheet

·   GST reports

·   Banking Reconciliation and Transactions


Looming tax bills for expatriates

Australians who work or retire abroad face higher – and possibly retrospective – tax bills if they sell their Australian homes. Accountants may need to warn clients.

Is it still worth taking a foreign posting? Australian employers wanting to send staffers abroad are already getting push-back following proposed measures to retrospectively tax expatriates who sell their home in Australia.

A measure intended to improve local housing affordability runs the risk of penalising Australians taking postings abroad and migrants who return to their countries of origin, by stripping from them the main residence exemption (MRE) from capital gains tax (CGT).

A bill before the Senate seeks to retrospectively remove the main residence exemption from CGT for non-residents from the time the property became the taxpayer's main residence, instead of from the time they became a non-resident.

Expatriates caught in housing affordability net

The Senate is still considering Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.2) Bill 2018.

"The government's position is that if you're from overseas and you buy property in Australia, but you remain a non-resident for tax purposes, you won't get the CGT MRE," says Robyn Jacobson FCPA, senior tax trainer at TaxBanter. "They're trying to make it less attractive for foreigners to buy houses here, trying to make more houses available to Australians, and trying to improve housing affordability.

"I get that. But as the proposed legislation stands, it also applies to Australian expatriates who have taken a job posting overseas and are non-residents for tax purposes, as well as Australian citizens who have chosen to retire overseas," says Jacobson.

If someone from either of these groups sells the dwelling that was their home for many years, and they happen to be a non-resident at the time of the CGT event – that is, when they sign a contract to sell the property – they will not be entitled to the MRE for the entire period they owned the home.

Retrospective laws on expat homes

Moreover, the loss of the MRE for these groups is retrospective, says Jacobson.

"When you change tax policy, it should start from the date it is announced or a future date. But as this proposed amendment currently stands, the loss of the MRE potentially goes all the way back to the date from which CGT has applied, which is 20 September 1985," she says.

Jacobsen believes the retrospectivity is unfair.

People were not to know when they bought their home that when they sold it, as a non-resident, they would have a taxable capital gain going back to when they bought it.

The proposed measures do not allow for any pro-rating of the period during which the person was a tax resident and lived in the home.

They cannot use the market value of the home on the date they became a non-resident, and confine the taxable capital gain to that which arose since that date, nor can they apply the six-year absence rule.

Tax laws currently allow people to maintain the CGT exemption on their main residence if they have a temporary absence of up to six years, as long as they are not claiming another property as their main residence at the same time."

Thousands of expats affected by tax on homes

Inadvertently or not, the Bill affects "hundreds of thousands of Australians living and working offshore," says Jacinta Reddan, chief executive of the Australian Chamber of Commerce in Hong Kong and Macau.

"This simply has not been thought through. Firstly, we're living in an increasingly globalised world, and the expatriate diaspora is both an enormous benefit to the Australian economy, because people return bringing with them increased skills, and to the nation's engagement with the world."

Secondly, she says, being an expatriate does not mean immunity from unexpected life events such as divorce or loss of a job, illness or death.

"These can hit us all regardless of where we live, and we often don't have a choice about when to sell our homes. Making all of the gains from a property sale taxable just because the person is a non-resident at the time of disposal is penalising Australians for living and working offshore, which is manifestly unfair," says Reddan.

The Chamber is seeing a backlash from corporate members who report resistance from staff offered critical offshore postings.

New tax rules hit estate administration

Ian Raspin FCPA, director at estate taxation advice specialist BNR Partners, says the amendment "opens up Pandora's box" in terms of estate administration.

"It certainly can catch a property that's been left in a will to adult children, if they inherit it from a non-tax resident. It's bad legislation, not only because it's retrospective, but because it becomes highly subjective as to whether a person is a tax resident or not. There is a lot of case law in Australia whereby it's just not clear," he says.

While various groups continue to lobby the government against the Bill, Jacobson says there are two strategies available to people who believe they might be affected by the new measures.

"First, the rules start for property sales after 9 May 2017. But a transitional rule says that if you held the property at that date and you sell it before 1 July 2019 – in other words, sell it by 30 June next year – the new rules don't apply to you. You would have had to have held the property in May last year, and you have to enter into a contract to sell it, by 30 June."

Expat homes for sale

Jacobson expects such selling to intensify over 2018 and 2019.

"It might not be the best time to sell the property but if they're going to save millions of dollars in tax, in some cases, they may want to. These will be people who are overseas and have no intention of coming back."

Another strategy may suit non-residents who don't want to sell before 30 June 2019. "They would need to genuinely re-establish their tax residency back in Australia, before they sell," she says.

This is where Raspin's concerns on subjectivity come into play. "We're concerned that this could potentially bring Part IVA (of the Income Tax Assessment Act) into consideration, where it is at least open to the Tax Commissioner to say that a person, in trying to re-establish tax residency in Australia, only moved back here to try to avoid income tax," he says."

If you are presently working abroad and you think you may need your current situation reviewed, get in touch with us.

#mainresidenceexemption #ex-pats #overseasposting #retireoverseas #internationalcitizen #capitalgains #CGTexemption #MRE #workoverseas #aussiesoverseas #australianexpats

Employer Superannuation Guarantee Amnesty


Back in May 2018, the Government announced an amnesty for employers who had fallen behind with their superannuation    guarantee (SG) obligations. Under the amnesty, employers could catch up or "self-correct" outstanding SG payments for any period from 1 July 1992 up to 31 March 2018. The intent was to reduce the estimated $2.85 billion owed by employers in late or missing SG payments.

Running from 24 May 2018 for 12 months, the amnesty was to provide relief from some of the punitive penalties that normally apply to late SG payments. To take advantage of the amnesty, employers were to make voluntary disclosures to the ATO about outstanding payments.  

But, the legislation enabling the amnesty has stalled in the Senate. Up until recently, the ATO was encouraging employers to make voluntary disclosures with the view that when the legislation passed Parliament, the amnesty would be applied. However, any employer who made a voluntary disclosure to the ATO will not benefit from the reduced punitive penalties unless the legislation passes, which at this stage, is highly unlikely in its current form.

Further, the Tax Commissioner has no discretion under the law to reduce the penalties applied to employers in this scenario, so if the legislation doesn't pass, then there isn't much the ATO can do to soften the blow.  In September 2018, an ATO spokesperson confirmed that until the legislation is enacted, the tax office will be required to apply the existing law.

"The administration component of the SG charge remains legally payable and deductions cannot be claimed. However, the ATO will not require payment of the administration component until the outcome of the legislation is known," an ATO spokesperson told Accountants Daily.

"If the proposed law does not come into effect, any contributions and payments made under the Amnesty will not be tax-deductible, and any self-assessments that anticipated the new law will need to be amended to include the administration component, and employers will be required to pay the administration component. Part 7 penalties will be imposed and may be remitted in accordance with our existing remission policies.

"You will not be able to receive a refund for payments you have made under the Amnesty if the law does not pass, as these amounts were always payable under the existing law."  However, a senior tax trainer at TaxBanter,  Robyn Jacobson believes disclosure will ultimately lead to better outcomes for employers.

"The employer will always be better off disclosing than not disclosing: they will either get a better deal on penalties if the law doesn't pass (although the amount won't be deductible, but that is the current law anyway), or they will be protected under the Amnesty if it does pass," said Ms Jacobson. 

"In this environment, there is an increased chance that the employee will become aware of their employer's non-compliance and approach the ATO directly. Importantly, if an employee does a 'dob-in', a subsequent ATO review or audit of the employer will render the employer ineligible for the Amnesty.

"Ultimately, the employer needs to decide whether to disclose now, and they need to understand the implications of their decision if they don't." **

Editors note: If the SGA affects you we urge you to contact your tax practitioner for advice about your employees and contractors.

#clarkemcewan #superamnesty #employersuper #employeesuper #SGC

**content courtesy of accountantsdaily**


To avoid disputes, with the birth of every SMSF it pays to think about death

When commencing any self managed superannuation fund (SMSF), there is one over-riding expectation that an adviser will most likely drum into newby trustees again and again - that their fund must meet the sole-purpose test. This is not only to maintain access to the various tax concessions available, but to avoid possible civil or even criminal penalties.


This "sole purpose" is that the fund has been established with the core expectation that it is there to save and make money for each members' retirement savings. Or, to quote the regulator of SMSFs (the ATO), the fund "needs to be maintained for the sole purpose of providing retirement benefits to members, or to their dependants if a member dies before retirement".


Newly minted SMSF trustees will likely be focused on the first part of the above statement, but it is the last few words - or their dependants if a member dies - that can take on greater importance as time goes by.


While no-one really wants to think about it, it is important that SMSF members/trustees have the facts before them from the outset - that way there'll be less surprises (and hurdles) if the unthinkable happens and a member dies.


As an example, consider Peter Podd and his wife Peta. They set up an SMSF, the Ps-in-a-Podd Super Fund (PIAPSF), which is a typical two-member fund with individual trustees. But what happens if Peter dies?


A legal personal representative (LPR) may be appointed as trustee for Peter to look after his interest in PIAPSF for a limited time (until benefits are paid to beneficiaries). This is only possible when the trust deed governing the fund allows for such an appointment (many SMSF trust deeds do).


Then Peta must make sure PIAPSF still meets the definition of an SMSF.


Technically, after the death benefit payment is made to the beneficiaries, the LPR will have to be removed and the surviving trustee/member (Peta) will have to adopt one of the following options to ensure the SMSF will remain complying:

(1) ask someone else to become the second individual trustee, or (2) set up a corporate trustee (with the single member becoming the sole director of the company).


Note it is possible to ask the LPR to join the fund as soon as the death benefit commences to be paid in which case he/she becomes the second individual trustee of the SMSF in their own capacity, not as LPR.


Another viable option would be to transfer PIAPSF's balance to another fund and wind up the SMSF.


Peter's death benefits must be dealt with as soon as possible. If the fund has limited cash available, assets may need to be sold to pay the benefits.


Death benefit nominations

SMSF members can nominate who will get their benefits when they die.


A binding death benefit nomination directs the trustee to pay the benefit to a legal personal representative or a dependant. Without a binding nomination, the remaining trustees will decide how the benefits are distributed by considering the trust deed and super laws.


The trust deed must be followed, even if it is different to the member's will.


To understand how death benefits can be paid you need to know who is a dependant. A dependant is generally a spouse, or someone in a close personal interdependent relationship. Or a child who is under 18, has a disability or is aged between 18 and 25 and is financially dependent on the deceased.


In regard to tax, any sum paid to a dependant of the deceased is tax free. It's not assessable income or exempt income. The SMSF doesn't withhold tax from the payment and the recipient doesn't include it in their income tax return.


A dependant can be paid a lump sum or an income stream. A non-dependent can only be paid a lump sum. If the death benefit is paid as an income stream, or is paid to a non-dependent or the trustee of a deceased estate, there may be tax to pay.


Lump sums can be paid in cash or non-cash form, for example, shares or property.


The trustee may need to withhold tax from a death benefit. Working this out can be complex and will depend on a number of factors. If a trustee has to withhold tax, they must register for PAYG withholding and complete some other ATO forms.


It's wise to plan ahead. If there is a dispute over the payment of death benefits which can't be resolved, it may lead to costly court action. Clear guidelines in the trust deed will help prevent problems.


# # # # # # # #clarkemcewan #superadvice #smsfadvice

Are you feeling an energy slump at work? Try these clever office tech tools designed to help you create a productive work environment.

1. Have more productive meetings

According to a 2012 survey by, 47 per cent of employees surveyed think work meetings are a huge time sink. While it is utopian to expect fewer meetings in our modern work culture, we can make them shorter and more productive.

To keep your meetings to the point, Less Meetings could be just the ticket. It lets you set a specific duration for each agenda item, share meeting notes and manage to-dos all in one place.

Save time and typos in meeting notes with the coolest note-taking tool – Otter. It uses voice-recognition technology to take notes in real time so you can concentrate on the talk.

2. Make emails less distracting

On average, office workers check their email 36 times in an hour, a survey by Atlassian has revealed. That's a lot of time spent switching between tasks and being unproductive.
For workers who feel bombarded by emails throughout the day, or who compulsively hit refresh every 10 minutes, email notification tools can be very helpful.

Spark's Smart Notifications app, for example, flags the most important emails you need to read and respond to immediately – or later on. The app, which is compatible with Apple Watch, allows you to reply to the email from the notification.

3. Increase focus at work

Phone calls. Office chatter. Printer sounds. In today's distraction-filled workplaces, concentration is hard to maintain. This leads to stress, fatigue and decreased productivity, according to researchers at Cornell University. A simple solution is investing in a pair of noise-cancelling headphones.

Taking you a step closer to workplace zen, Bose QuietComfort 25's noise-rejecting, dual-mic system cuts out all background noise – including distractions within offices. It also allows you to adjust the level of noise cancellation between three levels to fit your requirements.

4. Portable monitors

Now more than ever, workplaces promote multi-tasking on spaceship-like workstations that are equipped with two or three monitors. However, when it comes to business trips, a common pain point is straining your eyes on spreadsheets or presenting on small laptops.  If you are looking for a multiple-screen experience on the go, a portable monitor is a great option. Packed Pixels' lightweight, wingmirror-style monitors can be fixed to the left and right sides of your laptop's screen to give you two extra displays. You could also opt for a desktop experience with the Asus MB169C+ that has a 15.6-inch display for efficient multi-tasking.

5. For better team collaboration

Are you spending too much time collaborating via emails, texts, group chats and team meetings? If so, a team collaboration tool is what you need.

Slack is a simple yet effective tool that enables teams to work together using real-time messaging, video calling, file sharing and message search. It also integrates with other tools including Google Drive, Trello and Giphy (for all your victory dance gifs). An alternative is Flock. It lets you engage in one-on-one or in-group conversations, share screens, invite guests, share news and bookmark messages – all within one platform.

6. Schedule in mindfulness

Adding more hours into your workday doesn't always mean you are being more productive. Research shows that taking time out for mindfulness at work reduces stress and improves productivity. So, schedule time in your busy day to relax your mind and body. A simple smartphone app, Calm offers 10-minute guided video lessons on mindful movements and gentle stretching to release tension in your body and recharge the mind. Headspace is another excellent app for guided meditations.

7. Use voice-assisted tech to simplify tasks

Google Home and Alexa have already become our new housemates, and now they are gradually making their way into workplaces.

The second wave of voice assistants – Google Assistant Smart Display and Amazon's Echo Show – come with a smart speaker connected to a tablet-sized screen. Think effortless presentations, video conferencing, text and voice messaging from a single device.

8. Goodbye to office temperature wars

Air conditioners blow the same on everybody, however, according to a 2018 survey by CareerBuilder, it's either too hot or too cold in the office depending on your gender, age and body mass index. This constant pre-occupation with monitoring body temperature can have an adverse effect on workplace productivity.

One way to overcome this problem is to get a personal thermostat such as Embr Wave, a bracelet scientifically designed to regulate the wearer's temperature. You can set your exact temperature preference; it'll automatically release comforting waves to make you feel comfortable and productive at work.

 #techsavy #techtools #appsforbusiness #clarkemcewan #clarkemcewanbusiness #clarkemcewansbe #simplifytasks #appsforproductivity #betterteams #productivemeetings
#officetemperaturewars #voiceassistedapps

4 Things to consider before buying a holiday home

With summer fading from the horizon, you may be dreaming of a few lazy days at the beach or escaping to a country cottage. Perhaps you're considering buying your own piece of paradise.

Buying a holiday home is not too different from buying a family residence or investment property. Location, price and the property itself are important, but there are extra details to consider when you're on the hunt for a weekender.

1. Location

Proximity to schools and employment hubs may not be essential for your regional retreat, but you'll probably want access to some amenities. A petrol station or local shop where you can pick up the basics would be useful. Is it really absolute seclusion you crave, or would you rather have cafés and restaurants nearby?

If you plan to retire to the property in the future, consider distances to hospitals, shops and a local community.

Consider how easy it is to get to the area you've selected. You'll want to be close to highways and maybe airports – but not too close. Much more than two hours' travel from home might make you think twice about that weekend getaway.

2. Features

When looking for a full-time home, you should decide on features such as how many bedrooms you need and how big you want the kitchen and living areas to be. Do the same for your holiday home.

Also, ask yourself how important it is to have views. Do you mind being close to the neighbours? How much land can you manage? Consider maintenance requirements: you want to relax at your weekender, not spend time making repairs.

Remember you won't be around all the time, so think about security. Check whether the property could be at risk of fires or floods, and what you could do to protect it.

3. Costs

As with any housing purchase, make sure you budget for all the costs. These may include a deposit, stamp duty, mortgage insurance and solicitors' fees.

Get inspection reports, ideally by people who are experts in the local area. Regional properties may face different issues from those you're used to in the city. Noxious weeds, for example, are unlikely to concern you if you live in central Melbourne or Sydney, but they can be a major problem in the country.

Factor in furnishing costs. Some holiday homes are sold with furniture and appliances. If not, you'll have to find money to fit out your retreat. And don't forget transport costs to get there.

4. Tax and investment

A holiday home is not your primary residence, so you may be subject to capital gains tax when you sell. You may also have to pay land tax.

If you plan to rent out your weekender when you're not using it, you'll have to pay tax on any income earned, although you may be able to claim deductions for expenses. You should always seek professional advice on financial and tax-related matters.

Remember, when you're considering buying your own slice of heaven, it's the little details that will make all the difference to your weekend getaway.

We are happy to advise on all the above matters prior to entering into a contract. We love to see people realise their dreams.  Contact us now for an obligation free consultation. about securing that cabin-at-the-lake or beach house.