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Summary of Superannuation Issues and Recent Changes

Recent Issues and changes that could effect you

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Concessional contributions cap: The annual concessional contributions cap is currently $27,500 per person effective from 1 July 2021.

Making catch-up concessional contributions: From 1 July 2018, a person with an account balance of less than $500,000 is able to make “catch up” concessional contributions by using any unused portion of their concessional contributions cap from the previous five consecutive years.

Division 293 tax: The income threshold after which an additional 15% of tax (making an effective contributions tax rate of 30%) was imposed on the contributions of “high income” earners is currently $250,000.

Spouse contributions: People who make contributions for their spouse are able to claim a tax offset up to $540 per annum (at the rate of 18% up to a maximum of $3,000) where their spouse earns below $37,000.

Non-concessional Contributions (After Tax Contributions):

  • The standard annual non-concessional contributions cap is currently $110,000 effective from 1 July 2021.
  • If a member’s super balance is above the superannuation balance cap at 30 June in a year currently $1.7m (increased to $1.9m from 1 July 2023), the member is not eligible to make non-concessional contributions in the following year.
  • The three year bring forward rule is applied to enable after tax contributions up to three times the standard annual non-concessional cap, i.e. of contributions of up to $330,000 will be permitted at any time if under age 75.
  • If a member’s super balance is close to the balance cap amount at 30 June being $1.7m ($1.9m from 1 July 2023) the member is only able to bring forward the $110,000 annual cap for the number of years that would take the member’s balance to the cap amount.

Individuals with super balances at or above the balance cap are only able to increase their overall super balance via concessional contributions and investment growth.

PENSIONS

Retirement phase transfer limits: From 1 July 2017, the total amount a member can “transfer into the retirement phase” was limited to $1,600,000. This was increased to $1,700,000 from 1 July 2021 and to $1,900,000 from 1 July 2023.  Earnings arising from a pension account, which cause the account to exceed the cap, may be retained in the “retirement phase” account, but pension payments deducted cannot be replenished. Given this, a strategy of taking out only the minimum amount from pension accounts with supplementary additional amounts being withdrawn from accumulation accounts or withdrawn as commutations from the “retirement phase” accounts should be considered.

MARKET VALUATONS AS AT END OF FINANCIAL YEAR

Current market valuations of all assets were required to be incorporated into the Financial Statements. Valuations for listed investments are readily available.  Valuation of unlisted investments, including property investments are required to be arranged as at 30 June 2023, and for following years.

In respect of property investments, the ATO valuation guidelines are not definitive, however it is recommended that at least two valuations from a real estate agent or one from an independent sworn valuer is obtained.

EVENT BASED REPORTING FOR SMSF’S

Self-managed super funds (SMSFs) are subject to a reporting regime relating to the transfer balance cap and event-based reporting framework.

The transfer balance account report (TBAR) is a separate form from the SMSF annual return (SAR). The TBAR enables the ATO to record and track an individual's balance for both their transfer balance cap and total superannuation balance cap.

From 1 July 2023, TBAR’s are required to be lodged for all Funds on a quarterly basis.

RECENT CHANGES TO SUPERANNAUTION

No Work Test

If you are under age 75, from 1 July 2022 you do not have to satisfy the work test in

order to make or receive non-concessional super contributions and salary sacrificed

contributions.

Super Guarantee increase

The rate of super guarantee payable by employers increases from 10.5% to 11.0% of employee wages from 1 July 2023.

Downsize your home and add to your super

From 1 January 2023, people aged 55 or over can make contributions into their super account of up to $300,000 ($600,000 for a couple) using the proceeds from the sale of their main residence. Although these ‘downsizer’ contributions are considered non-concessional (after-tax) contributions, they are in addition to any voluntary contributions made under the current non-concessional contributions cap ($110,000 in 2022/23).

Covid-19 Superannuation Changes

Pension Reductions

There is currently a reduction to minimum pension payments for the 2020/21, 2021/22 and

2022/23 financial years, of 50%, reducing minimum percentages to :

 

SMSF Investment Strategies

The ATO’s requirements

The guidance and requirements from the ATO are summarized as follows:

Extent of Diversification

The ATO have advised that trustees should consider including in the strategy the extent to which the fund investments are diverse and the risks which could apply from a lack of diversification.

Tailored and specific

The ATO has advised that an investment strategy permitting a range of investments, for all investment categories, of 0-100 % would generally not be acceptable, as it would indicate a lack of proper consideration by the trustee.

They advise that the trustees should consider the personal circumstances of each member and explain how the investment strategy meets the retirement objectives of each member.

Investment strategy compliance

To ensure a fund’s investment strategy meets the requirements of the ATO, it is

recommended that the trustee :

  • have a current investment strategy in place;
  • review it regularly (at least annually), and in doing so :
    • document the personal circumstances of the members including their ages,
    • retirement plans, likely future contributions and employment status;
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    • consider the likely risk and return of the assets invested in;
    • consider the liquidity and cash-flow requirements of the fund;
    • consider the ability of the trustee to discharge the liabilities of the fund;
    • consider the degree of diversification of the assets invested in; and
    • consider whether insurance should be held for the members.

Proposed Super Changes

Pay Day Superannuation

It has been announced that from 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages.

The start date will provide employers, super funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change. This measure is not yet law.

Additional 15% tax on earnings where member balances are in excess of $3m.

The proposal is effectively an additional 15% tax on “earnings” on balances (excluding the first $3m), calculated as described below. It is proposed that tax will be able to paid by the Fund, or by the member personally.

The proposed method of calculation is controversial as it includes taxing unrealised capital gains and a negative result is only available to be carried forward.

The proposed start date is 1 July, 2025, and after the next deferral election, so there’s a lot of water to go under the bridge.

Based upon published information, the tax calculation methodology is summarised as follows :

  1. Closing member balances (CMB) + any withdrawals for the year – any net contributions for year, less opening balance (OB) = earnings (E).
  2. Percentage of earnings (POE) = CMB less $3m/CMB
  3. Tax = POE * E * 15%.

Hot Issues

Contact Us

Orbost

Andrew Martin CA

Born in Mansfield in the Victorian high country, Andrew started school in Orbost. After graduating from Melbourne University in 1992, Andrew commenced his career with what was then Price Waterhouse (now PWC). Andrew moved to Bairnsdale in 1995 and has lived in East Gippsland ever since. One of the founders of the practice in 2000, the year GST came to Australia, Andrew is married to Michelle, a third generation East Gippsland resident, and proud father of Nelson and Georgia, who attended local schools for their primary and secondary education.

Andrew and Georgia are keen participants in triathlon and multi-sport events, and in 2022 participated as father and daughter in the Age Group Triathlon World Championships in Abu Dahbi. This year, they will participate together in the Multi-Sport World Championships in Townsville.

As the owner and founder of a business in East Gippsland, Andrew understands the local issues that impact on your business. The impact of flood, bush fires, drought, and the vagaries of world commodity prices can be better understood when you are deeply immersed in the local community.

Dealing with banks and the Australian Taxation Office when you live in a rural area is easier to understand when they happen in your back yard.

Ryan Gaul CA

Ryan, a Chartered Accountant, relocated from Essendon to Lakes Entrance in 2020 to be with his wife, Morgan. In Melbourne, Ryan worked under the guidance of accountant and player manager Peter Jess, serving clients that ranged from small to medium-sized businesses, AFL players, entertainers, and athletes.

After his move to Lakes Entrance, he joined Martin Taylor Associates. Since joining the firm Ryan has enjoyed the challenges of the agricultural sector and has worked closely with Andrew to develop his knowledge in this area.

Ryan is actively involved in the local community. He joined the Buchan Football Netball Club as a player and took on the role of Treasurer. He also serves as the Treasurer for the East Gippsland Farm Dog Group. Ryan’s wife Morgan runs her own speech pathology business which services the East Gippsland region.

Jan Roach

Jan has worked in public accounting in Orbost for 40 years and is one of the founders of the practice. Married to Johno (now retired long-term builder), proud mother of Adam, Paul and Nick and proud grandmother to Owen, Tess, Teagan, and Millie.

Having been in business, Jan understands compliance can sometimes be overwhelming, and will help you navigate the right path. Jan has a strong affiliation with our trade and primary producer clients.

Kerry Ellis

Kerry has worked in administration in public accounting and legal practices for nearly 15 years. Kerry understands when you contact us, you need to talk to someone who has or can get an answer to your query. Kerry controls the workflow in our practice and manages our interactions with the ATO, ASIC and the banks. Kerry understands the challenges of providing information to big bank data centres and dealing with Centrelink.

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Secure File Transfer

Secure File Transfer is a facility that allows the safe and secure exchange of confidential files or documents between you and us.

Email is very convenient in our business world, there is no doubting that. However email messages and attachments can be intercepted by third parties, putting your privacy and identity at risk if used to send confidential files or documents. Secure File Transfer eliminates this risk.

Login to Secure File Transfer, or contact us if you require a username and password.

General Disclaimer

The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on the website is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs.

Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice.

Privacy Policy

Martin Taylor Associates is committed to providing quality services to you and this policy outlines our ongoing obligations to you in respect of how we manage your Personal Information.

We have adopted the Australian Privacy Principles (APPs) contained in the Privacy Act 1988 (Cth) (the Privacy Act). The NPPs govern the way in which we collect, use, disclose, store, secure and dispose of your Personal Information.

A copy of the Australian Privacy Principles may be obtained from the website of The Office of the Australian Information Commissioner at https://www.oaic.gov.au/.

What is Personal Information and why do we collect it?

Personal Information is information or an opinion that identifies an individual. Examples of Personal Information we collect includes names, addresses, email addresses, phone and facsimile numbers.

This Personal Information is obtained in many ways including correspondence, by telephone and facsimile, by email, via our website www.martintaylor.com.au, from your website, from media and publications, from other publicly available sources, from cookies and from third parties. We don't guarantee website links or policy of authorised third parties.

We collect your Personal Information for the primary purpose of providing our services to you, providing information to our clients and marketing. We may also use your Personal Information for secondary purposes closely related to the primary purpose, in circumstances where you would reasonably expect such use or disclosure. You may unsubscribe from our mailing/marketing lists at any time by contacting us in writing.

When we collect Personal Information we will, where appropriate and where possible, explain to you why we are collecting the information and how we plan to use it.

Sensitive Information

Sensitive information is defined in the Privacy Act to include information or opinion about such things as an individual's racial or ethnic origin, political opinions, membership of a political association, religious or philosophical beliefs, membership of a trade union or other professional body, criminal record or health information.

Sensitive information will be used by us only:

Third Parties

Where reasonable and practicable to do so, we will collect your Personal Information only from you. However, in some circumstances we may be provided with information by third parties. In such a case we will take reasonable steps to ensure that you are made aware of the information provided to us by the third party.

Disclosure of Personal Information

Your Personal Information may be disclosed in a number of circumstances including the following:

Security of Personal Information

Your Personal Information is stored in a manner that reasonably protects it from misuse and loss and from unauthorized access, modification or disclosure.

When your Personal Information is no longer needed for the purpose for which it was obtained, we will take reasonable steps to destroy or permanently de-identify your Personal Information. However, most of the Personal Information is or will be stored in client files which will be kept by us for a minimum of 7 years.

Access to your Personal Information

You may access the Personal Information we hold about you and to update and/or correct it, subject to certain exceptions. If you wish to access your Personal Information, please contact us in writing.

Martin Taylor Associates will not charge any fee for your access request, but may charge an administrative fee for providing a copy of your Personal Information.

In order to protect your Personal Information we may require identification from you before releasing the requested information.

Maintaining the Quality of your Personal Information

It is an important to us that your Personal Information is up to date. We will take reasonable steps to make sure that your Personal Information is accurate, complete and up-to-date. If you find that the information we have is not up to date or is inaccurate, please advise us as soon as practicable so we can update our records and ensure we can continue to provide quality services to you.

Policy Updates

This Policy may change from time to time and is available on our website.

Privacy Policy Complaints and Enquiries

If you have any queries or complaints about our Privacy Policy please contact us at:

(03) 5152 6213