Superannuation Guarantee and rate changes

The superannuation guarantee is legislated to increase from 9.5 per cent to 12 per cent in 0.5 percentage point increments from 2021 through to 2025. This means the superannuation guarantee rate will increase to 10 per cent from 1 July 2021 and rise by 0.5 per cent per year thereafter until it reaches 12 per cent by 2025.

What is the Super Guarantee?

The Super Guarantee or SG for short, is the contribution an employer is required to make into a super fund on behalf of an employee. The current rate is 9.5% of an employee's base salary, with this rate currently set to continue until 1 July 2021, when it is due to increase to 10%.

Below are the past and present SG rates, as well as the currently legislated future changes to the rate from the Australian Government:

Financial Year

Super Guarantee Rate

1 July 2002 – 30 June 2013

9%

1 July 2013 – 30 June 2014

9.25%

1 July 2014 – 30 June 2021

9.5%

1 July 2021 – 30 June 2022

10%

1 July 2022 – 30 June 2023

10.5%

1 July 2023 – 30 June 2024

11%

1 July 2024 – 30 June 2025

11.5%

1 July 2025 – 30 June 2026 and onwards

12%


Who qualifies for the superannuation guarantee?

Almost all full-time, part-time and casual employees over 18 years of age, earning more than $450 per month are eligible for super guarantee contributions, or SGC. Employees under 18 years and private domestic workers (such as nannies) who earn more than $450 per month and work more than 30 hours a week are also eligible. Even certain contractors may be deemed to be eligible.

If you would like any further information or assistance with complying with your super guarantee obligations please contact us on 1300 885 761.

With the end of the financial year fast approaching, now is the perfect time to make some final checks and ensure everything is in order for your SMSF before 30 June. The following are some matters that you might want to know more about.

Contributions

From 1 July 2020, if you were under the age of 67 you were able to make voluntary contributions without meeting a work test. This was previously restricted to people below age 65. In addition, if 2020-21 is the first year that you no longer satisfied the work test, you may still be able to make voluntary contributions under the work test exemption if you had a total superannuation balance (TSB) of less than $300,000 on 30 June 2020.

Therefore, it is important to review your contribution strategies before 30 June 2021, to make sure you maximise your contribution opportunities whilst ensuring you are below your contribution caps.

Non-concessional (after-tax) contributions are limited to $100,000 for the 2021 financial year and only available if your TSB was less than $1.6m on 30 June 2020. 

If you were under 65 at any time during the 2020-21 financial year, you can potentially contribute up to three times the non-concessional cap (or $300 000) at once. The maximum bring forward non-concessional contribution amount you can make will depend on your TSB on 30 June 2020. Please note that draft legislation to allow older individuals to make up to three years of non-concessional superannuation contributions under the bring forward rules, has yet to be passed.

Concessional (before-tax) contributions are limited to $25,000 for the 2021 year. You may also be eligible, subject to your TSB, to make larger concessional contributions if you have any unused concessional contribution cap from the 2019 financial year onwards.

Where you have made personal contributions and intend to claim a tax deduction in 2020-21, it is important that you reconcile all employer contributions and salary sacrificed amounts to superannuation to make sure you do not breach the annual concessional contributions cap. It is also important to ensure that the relevant notice requirements are met so that you can claim a deduction.

These annual limits will increase on 1 July 2021 to $110,000 for non-concessional contributions and $27,500 for concessional contributions.

The Government also announced in the latest Federal Budget that the work test will be removed altogether to allow voluntary non concessional contributions and salary sacrificed contributions to be made up to the age of 75. If passed, these changes are expected to be available from 1 July 2022.

Meeting new pension requirements

To help manage the economic impact of COVID-19, the Government reduced the minimum drawdown requirements by half on account-based pensions and market-linked pensions for 2020-21. The Government recently announced the 50% reduced minimum pension drawdown requirements will be extended for 2021-22.

Whether or not you have taken advantage of this reduction, it is important that you reconcile all pension payments received to ensure you do not underpay the minimum pension payment required by 30 June 2021. Where this requirement is not met, SMSFs will be subject to 15% tax on pension investments instead of being tax free.

All pension withdrawals for 2020-21 must be paid in cash by 30 June 2021 and cannot be accrued or adjusted using a journal entry so it is important to attend to this as soon as possible. For example, if you are making pension payments via an electronic transfer, you need to ensure that online transfers show the money coming out of the fund's bank account by no later than 30 June.

How can we help?

If you have any questions, require assistance or would like further clarification with any aspect of your end of year superannuation matters, please feel free to contact us on 1300 885 761 to discuss your particular requirements in more detail.

2021/22 Federal Budget Highlights

On 11 May 2021 the Budget for 2021–22 was released. The measures announced as part of the 2021–22 Budget are subject to receiving royal assent and are not yet law.

There are a number of changes that may have an impact on your business, personal or superannuation situation. The key points are:

Personal income tax

1. Retaining the Low and Middle Income Tax Offset ('LMITO')

The Government has announced that it will retain the LMITO for one more income year, so that it will still be available for the 2022 income year. Under current legislation, the LMITO was due to be removed from 1 July 2021.

The maximum offset proposed for the 2022 income year is $1,080 per annum. However, the amount you receive depends on your income and how much tax you've paid throughout the year. It doesn't mean that you will automatically get an extra $1,080 in your tax return.

2. Increasing the Medicare levy low-income thresholds

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:

  • The threshold for singles will be increased from $22,801 to $23,226.
  • The family threshold will be increased from $38,474 to $39,167.
  • The threshold for single seniors and pensioners will be increased from $36,056 to $36,705.
  • The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.

For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

Business income tax

1. Temporary full expensing extension

In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months until 30 June 2023 to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.

2. Temporary loss carry-back extension

In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed 'corporate tax entities' with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years.

In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt owing to the ATO.

The eligible entity does not need to amend the earlier income years to claim the offset.

Consistent with the current law, the tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

Superannuation

Please refer to our article '2021-22 Federal Budget Update – A strong Budget for SMSFs' for the detail regarding superannuation changes.

Please feel free to contact us on 1300 885 761 if you have any questions or would like further information in regards to any of the above changes.

As expected, this year's Federal Budget has a strong emphasis on job growth and women's security. From an SMSF perspective, there were some welcome surprises for SMSF trustees, the key measures that you should be aware of are outlined below. 

All measures outlined below, other than the proposed changes to legacy retirement products, are expected to commence from 1 July 2022, once they have received Royal Assent. 

Repealing the work test for voluntary contributions

Individuals aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions without meeting the work test, subject to existing contribution caps and existing total superannuation balance limits. 

Reducing the eligibility age for downsizer contributions

The eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age. All other eligibility criteria remains unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000, per person, from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps. 

Relaxing residency requirements for SMSFs

SMSFs and small APRA funds will have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years. The active member test will also be removed, allowing members who are temporarily absent to continue to contribute to their SMSF. 

Removing the $450 per month threshold for superannuation guarantee eligibility

The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid the superannuation guarantee by their employer. 

Legacy retirement product conversions

Individuals will be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual's contribution cap. 

Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds. Amounts commuted from reserves will be taxed as an assessable contribution but will not count towards an individual's concessional contribution cap or give rise to excess contributions. 

This measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation.  


How can we help?
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2021-22 Federal Budget, please feel free to contact us on 1300 885 761.

If you are a sole trader, a small business owner or a not-for-profit organisation in NSW, you may be eligible for a small business fees and charges rebate of $1500. This includes farming businesses.

The rebate can be used to offset the costs of eligible NSW and local government fees and charges. These include, but are not limited to: council rates, food authority licences, liquor licences, tradesperson licences, event fees, outdoor seating fees, etc. Eligible businesses or not-for-profits only need to apply for the rebate once, but can submit multiple claims until the full value of $1500 is reached.

The rebate can only be used for eligible fees and charges due and paid from 1 March 2021 to 30 June 2022. It cannot be used for fines or penalties, fees and charges that have the key purpose of discouraging behaviours or inducing behaviour changes, Commonwealth government charges, rent on government premises, or taxes.

Eligibility

To be eligible for this rebate, small businesses (including non-employing sole traders) and not-for-profit organisations must:

  • have total Australian wages below the NSW Government 2020-2021 payroll tax threshold of $1.2 million
  • have an Australian Business Number (ABN) registered in NSW and/or have business premises physically located and operating in NSW
  • be registered for goods and services tax (GST)
  • provide a declaration that the business has a turnover of at least $75,000 per year.

Note: Only one $1500 rebate is available for each ABN.

What you need

To apply for the rebate, you'll need:

  • a MyServiceNSW Account
  • your proof of identity
  • your valid ABN/ACN
  • your business banking details for payment
  • other evidence for not-for-profits, including an accountant's letter verifying turnover of more than $75,000 per year.

You will need to supply supporting documentation when applying for the rebate and each time you make a claim, you will need to provide invoices and receipts showing payment of eligible fees or charges.

Proof of identity

Two proof of identity documents are required. They may include:

  • Australian driver licence
  • Medicare card
  • Australian passport
  • Australian birth certificate
  • Australian travel visa
  • Australian citizenship certificate
  • Australian certificate of registration by descent
  • Australian ImmiCard.

How to apply

The application can be lodged online through Service NSW website. Or if you are not able to apply online, you can call 13 77 88.

Guidelines on how to apply online can be found here.

If you would like any further information or assistance in regards to NSW small business fees and charges rebate please contact us on 1300 885 761.

Time to review your fringe benefits tax

What is Fringe Benefits Tax?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to employees, their employees' family or other associates. If you provide a benefit to any employee or their associates in a different form to salary or wages, FBT may be applied.

FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. If an FBT return is required to be lodged the FBT year is from 1 April 2020 to 31 March 2021 and the return will be due for lodgement on 21 May 2021.

Some examples of fringe benefits include:

  • Allowing your employees to use a work car for private purposes
  • Holiday accommodation
  • Providing entertainment by way of free tickets to concerts
  • Reimbursement of employees' expenses (e.g. school fees)
  • Salary sacrifice arrangements
  • Giving your employee a loan with no interest or a low interest rate
  • Provide your employee with property (e.g. stock, property etc.)

If you think you are providing a benefit that relates to any of the above examples please contact us to discuss any potential FBT concerns. FBT is a complex area as some benefits are exempt from being taxed. The ATO have increased their audit activity in this area as an increasing number of employers have not complied with their obligations.

Exemption

Over past year there have been many changes and restrictions due to COVID. To adapt, you may have provided your employees different benefits to those you usually provide, and these may be exempt from FBT.

Generally, you do not need to pay FBT for:

  • items provided to employees to enable them to work from home (e.g. laptop or portable device)
  • emergency accommodation, food and transport
  • emergency health care.

The minor benefits exemption may also apply for minor, infrequent and irregular benefits under $300.

If you would like any further information or assistance in regards to Fringe Benefits Tax, please feel free to contact us on 1300 885 761.

Don’t be surprised by tax next year

Tax planning is a useful tool used by many taxpayers to legally minimise their tax. A tax plan will also help you plan for upcoming tax payments that may be required.

Our annual tax planning service involves estimating your potential tax position for the financial year and looking at strategies you can implement prior to 30 June that may reduce your tax liability and enhance your financial position.

Once we have completed your tax estimates, we will generally meet with you to discuss the results and our proposed tax planning strategies.

Tax plans can be completed on an annual basis, or at any time of the year for specific events such as:   

  • You are starting a new business and would like to know which trading structure would be the most tax effective for your situation;
  • Your situation has changed and you would like to know what options you have to change your structure; or
  • You have sold or are planning to sell an asset during the year and there may be capital gains tax implications. 

If you would like to know more contact us on 1300 885 761.

Have you completed your 2020 tax return?

If you haven't yet lodged your 2020 tax return, you are running out of time. We recommend you contact us immediately to avoid a last minute rush, and to avoid potential penalties and interest for late lodgement.

For most of our clients, the due date for lodgement of 2020 tax returns is 15 May 2021. However, there are many exceptions to this deadline, especially for business taxpayers.

We will be contacting clients who have yet to complete their returns to ensure everyone lodges on time.

If you are not aware of your lodgement requirements please contact us on 1300 885 761 to discuss.

Changes to STP reporting from 1 July 2021

There are changes to Single Touch Payroll (STP) reporting for small employers with closely held payees and to quarterly reporting for micro employers from 1 July 2021.

A closely held (related) payee: is someone who is directly related to the business, company or trust that pays them, such as:

  • family members of a family business
  • directors or shareholders of a company
  • beneficiaries of a trust.

From 1 July 2021, employers must report any closely held payees through STP. You can choose to report these payees each pay day, monthly or quarterly.

Ways to report your closely held payees

From 1 July 2021, you can report payments to closely held payees through STP in any of the following ways:

  • Report actual payments on or before the date of payment – whenever you make a payment to a closely held payee, report the information on or before each pay event.
  • Report actual payments quarterly – report your actual payments to closely held payees quarterly. Each quarter, when your activity statement is due, report all payments made in that quarter.
  • Report a reasonable estimate quarterly – report amounts equal to or greater than a percentage of gross payments and tax withheld from the previous year, across each quarter.

A micro employer: is someone with one to four employees.

From 1 July 2021, STP quarterly reporting concessions for micro employers will only be available to those who meet certain eligibility requirements. These now include the need for exceptional circumstances to exist.

To be eligible for this quarterly reporting concession, you must meet all of the following:

  • be a micro employer on the day you apply (based on employee headcount)
  • lodge your activity statements electronically through a registered tax or BAS agent
  • have a non-computerised payroll. This could include running your payroll manually and keeping records on a spreadsheet or paper
  • all amounts owing to the ATO are either not yet due or subject to a payment plan
  • all lodgment obligations are either not yet due or subject to a deferral
  • for applications for a period commencing after 1 July 2021, you must also meet the guidelines for exceptional circumstances.

Exceptional circumstances

The following circumstances may be considered exceptional when considering an application for the quarterly reporting concession from 1 July 2021:

  • Seasonal or intermittent workers – for micro employers who generally have either no or between one and four employees for most of the year and then increase their workforce for less than three months of a financial year.
  • No or unreliable internet connection – ATO would consider the following:
    • an inability to connect to the internet
    • a connection that consistently requires multiple attempts
    • consistent dropouts or disconnections
    • exceedingly slow data transfer.

Note: employers with no or intermittent internet connection may also apply for an:

  • exemption via your registered tax or BAS agent
  • operational deferral – allowing up to an additional three days to lodge.

Employers can apply for this concession through the online deferral tool from 1 July 2021.

Employers who haven't started reporting through STP and don't have a deferral or exemption need to start reporting now.

If you would like any further information or assistance in regards to Single Touch Payroll, please feel free to contact us on 1300 885 761.

ATO on the hunt for unreported TPAR businesses

What is TPAR?

If you are running a business providing building construction services, cleaning services or courier services, you will need to lodge a Taxable payments annual report (TPAR) by 28 August each year. Penalties may apply for not lodging your annual report by the due date.

The TPAR contains information about payments to contractors that businesses in these industries must report to the ATO.

With the previous 28 August deadline now well overdue, the ATO has confirmed that more than 60,000 businesses have yet to lodge their TPAR, with failure-to-lodge penalties looming.

ATO assistant commissioner Peter Holt has urged business owners to lodge immediately, noting that the taxable payments reporting system (TPRS) aims to create a level playing field for contractors.

You will need to lodge TPAR if you:

  • are a business in the building and construction industry and have made payments to contractors for building and constructions services, or
  • provide cleaning services and made payments to contractors for cleaning services, or
  • provide courier services and made payments to contractors for courier services, or
  • provide road freight services and made payments to contractors for road freight services, or
  • provide information technology (IT) services and made payments to contractors for IT services, or
  • provide security, investigation or surveillance services and made payments to contractors for those services, or
  • provide mixed services (i.e. one or more of the services listed above).

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders, companies, partnerships or trusts.

The detail that you need to report about each contractor can be found on the invoice you should have received from them, and includes:

  • Australian business number (ABN), if known,
  • Name and Address and
  • The gross amount you paid to them for the financial year (including any GST).

The Taxable payments report can be lodged online or by completing a paper form.  If you are unable to lodge online, you can order the TPAR paper form from the ATO publications ordering service.

If you would like any further information or assistance with lodging your taxable payments annual report please contact us on 1300 885 761.