Buy a business asset that costs less than $20,000

If you purchase a business asset and it is ready for use before June 30 2017 you could qualify for an instant deduction

For more on the small business tax write off visit https://www.integrityclients.com.au/news/20000-small-business-tax-break-explained/

Prepay expenses this financial year

Eligible small business can claim deductions this year if they pay taxable expenses in advance such as next year’s professional subscription, insurance policy or accounting fees.

Write off bad debts

If you have customers that are unlikely to pay their accounts in the new financial year, these accounts should be written off as a bad debt before June 30 so a deduction can be claimed. Have a record of the debt and the actions taken to recover the debt to ensure you meet tax office requirements.

Review your inventory

Check to see whether you can write off or write down the value of any of your stock to claim a deduction.

Small business restructure roll-over

Small businesses under $2m in aggregated turnover have the option to restructure their affairs without incurring any capital gains tax liability.

This may allow an entity the opportunity to genuinely restructure to a corporate entity to take advantage of a lower tax rate. Alternatively, the restructure can be reversed from a company back to a sole trader/partnership without any capital gains tax liabilities.

Delay sales to next financial year

Subject to cash flow considerations and anti-avoidance rules, income could be deferred to the following year, particularly if:

– Income in the following year is likely to be lower, or
– Tax rates for the following year are expected to be lower

High income earners will also have to factor in the effect of the 2% “budget deficit levy” applying in 2016/17. This is the final year in which the temporary budget repair levy will apply.

For cash businesses – deferral of income can be risky, especially when the deferral puts them outside the ATO small business benchmarks

When possible defer:
– Sales
– Contract dates for the sale of CGT assets
– Insurance recovery claims

Superannuation

Ensure that contributions for the June quarter are paid to a complying fund by June 30 2017 (otherwise the deduction is delayed until 2017/18).

Do not leave payment processing until late June as funds have different processing cut off dates. Check with your funds

April to June 2017 quarter contributions must be paid no later than 28th July 2017

Cap limits of concessional contribution a member can make before June 30 2017:
– $35,000 for members aged 49 or over
– $30,000 for members aged 48 or under

In the 2017/18 financial year the cap will be cut to $25,000 for all ages

For more on the changes to superannuation as of July 1 2017 visit https://www.integrityclients.com.au/news/superannuation-changes-july-1-2017/

Sources: Commonwealth Bank, Finder, ATO

For any advice on these issues please contact the Integrity One office

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

On July 1 2017, a number of superannuation changes are set to take place.
The changes include:

• Introduction of a transfer balance cap
• Concessional superannuation contributions cap reduced
• Concessional superannuation contributions tax threshold reduced
• Non-concessional contributions cap reduced and criteria introduced
• Low Income Superannuation Tax Offset to replace the Low Income Super Contribution
• Greater deductibility of personal contributions
• Allowing ‘catch-up’ concessional contributions
• More tax offsets for spouse contributions
• Changes to earnings tax exemptions
• Abolishing the anti-detriment rule
• Super Guarantee rate increase changes were previously legislated to increase according to the following timetable

Introduction of a transfer balance cap

A $1.6 million cap has been introduced on the amount that can be transferred to super in retirement phase when earnings are tax-free. Additional savings can remain in an accumulation account (where earnings are taxed at 15 per cent) or remain outside super. This comes into effect from 1 July 2017 and will be indexed in following years. Retired people with retirement phase balances below $1.7 million on 30 June 2017 will have 6 months from 1 July 2017 to bring their balances under $1.6 million.

Concessional superannuation contributions cap reduced

The annual concessional contributions cap has been reduced to $25,000 (from $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise).

Concessional superannuation contributions tax threshold reduced

The threshold at which high-income earners pay Division 293 tax on their concessional taxed contributions to superannuation has been reduced from $300,000 to $250,000.

Non-concessional contributions cap reduced and criteria introduced

The annual non-concessional contributions cap has been reduced from $180,000 to $100,000. In addition, criteria for an individual to be eligible for the non-concessional contributions cap has been introduced and other minor amendments to the non-concessional contributions rules have been made.

Low Income Superannuation Tax Offset to replace the Low Income Super Contribution

The Low Income Superannuation Tax Offset (LISTO) will replace the Low Income Superannuation Contribution from 1 July 2017. The LISTO refunds up to $500 of the tax paid on concessional super contributions for low-income earners with a taxable income of up to $37,000.

Greater deductibility of personal contributions

The requirement that an individual must earn less than 10 per cent of their income from employment to be able to deduct a personal contribution to their super to make it a concessional contribution has been removed. This will apply from the 2017-18 income year.

Allowing ‘catch-up’ concessional contributions

Individuals whose superannuation balance at the end of the previous financial year is less than $500,000 will be able to carry forward unused concessional cap amounts from the previous five years. This applies to working out an individual’s concessional contributions cap from the 2019-20 financial year onwards.

More tax offsets for spouse contributions

This increases the amount of income an individual’s spouse can earn before the individual stops being eligible to a tax offset for contributions made on behalf of their spouse. This will apply from the 2017-18 income year.

Changes to earnings tax exemptions

The earnings tax exemption has been extended to new lifetime products (including deferred products and group-self annuities). The earnings tax exemption for transition to retirement income streams has been removed. An integrity measure that will apply to self-managed super funds and other small funds has been introduced. These changes will apply from the 2017-18 income year.

Abolishing the anti-detriment rule

The anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependants will be removed from 1 July 2017.

Super Guarantee rate increase changes were previously legislated to increase according to the following timetable

The Super Guarantee contribution rate is set to reach 12% in 2025

Author
Industry Super Funds 2016

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of  Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

The Victorian Government has recently announced housing initiatives. These include the abolishment of stamp duty for some first-home buyers, changing the FHOG in regional Victoria, changes to off-the-plan concession, and a tax for vacant residential property.
These initiatives have to be approved by the Victorian Parliament before they can begin. You should only rely on the exact detail of the changes once the legislation is passed. This is likely to be in June 2017.
Here are the answers to some frequently asked questions about proposed changes to the first-home buyer duty concession and exemption.

What is it?

This is an exemption from land transfer duty (commonly known as stamp duty) for first-home buyers who buy a home with a dutiable value of $600,000 or less.

First-home buyers buying a home with a dutiable value between $600,001 and $750,000 will be entitled to a concessional rate of duty, calculated on a sliding scale.

In most cases, the dutiable value of a property is the price you pay for it minus any deductions (such as the off-the-plan concession). If the price you pay for the property is less than market value, the dutiable value will be the market value minus any deductions.

How does the Concessional Rate of Duty Work?

The concession will apply on a sliding scale. The closer the dutiable value is to $600,001, the greater the concession.

The exact detail of how this will work will be available later. This table gives you a guide on how the concession might work, however, these figures may change once the detail of the concession is finalised.

Example of proposed first-home buyer duty concession

The first-home buyer exemption and concession are available for both established and new home purchases.

How do you qualify for the exemption/concession?

There are a number of criteria you must satisfy:

1. Value of the property
   The home purchased must have a dutiable value:
   – Of $600,000 or less to receive the exemption,
   – From $600,001 and $750,000 to receive the duty concessionThe dutiable value for a property is generally the greater of its purchase price or market value minus any deductions (such as the off-the-plan concession).The off-the-plan concession deducts the construction or refurbishment costs incurred after you sign the contract from the contract price.

2. Purchaser Eligibility
   All purchasers and their partners must meet the FHOG eligibility criteria to be entitled to this duty exemption/concession.
3. Residency Requirement
   At least one purchaser must use the home as a principal place of residence (their home) for a continuous period of 12 months, starting within 12 months of becoming entitled to possession of the purchased property (this normally occurs at settlement).

When will this exemption/concession commence?

The first-home buyer duty exemption and phase-in concession is available for transfers resulting from contracts entered into on or after 1 July 2017.

If you enter into a contract before 1 July 2017 but settle after this date, you will not be eligible for the new first home buyer exemption or phase-in concession. You may, however, be eligible for the existing first-home buyer duty reduction.

Further information on transitional arrangements, including whether nominations change the availability of the new exemption and concession, will be provided as these details become available. Please continue to check our website.

You are a first-home buyer. You signed a contract to buy a vacant land prior to 1 July 2017, with settlement after 1 July 2017. You will build your home on the land within 12 months. Do you qualify for the new exemption or concession?

No. For duties purposes, the relevant transaction is the transfer of land. As the date you signed the contract to purchase the land was before 1 July 2017 the new exemption or concession will not apply. You may however obtain the existing first-home buyer duty reduction, subject to you meeting all relevant criteria for the concession.

You and your partner are buying a home. It is the first home for both of you. You have a concession card but your partner does not. How will the new duty exemption / concession apply?

Concession cards do not affect the first home buyer duty exemption / concession.

Author

State Revenue Office Victoria – March 2017

http://www.sro.vic.gov.au/node/5814

This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of  Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.