Let us keep you informed

Super contribution caps to rise The big news story for those contributing to super is that the contribution caps are set to increase from 1 July 2024 . The concessional contribution cap will increase from $27,500 to $30,000 . This 'CC' cap is broadly applicable to employer super guarantee contributions, personal deductible contributions and salary sacrificed contributions. The non-concessional contribution cap will increase from $110,000 to $120,000 . This 'NCC' cap is generally applicable to personal non-deductible contributions. The increase in the NCC cap also means that the maximum available under the three-year bring forward provisions will increase from $330,000 to $360,000 . This is provided that the 'bring forward' is triggered on or after 1 July 2024. The 'total superannuation balance' threshold for being able to make non-concessional contributions (and the pension general transfer balance cap) will remain at $1.9 million . We recently released a Tax Alert on this topic, to see full details click here .

Government announces changes to proposed 'Stage 3' tax cuts Despite previous assurances, and after much speculation, the Government has announced tweaks to the 'Stage 3' tax cuts that will apply from 1 July 2024. More particularly, the Government proposes to: reduce the 19% tax rate to 16%; reduce the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold; increase the threshold at which the 37% tax rate applies from $120,000 to $135,000; and increase the threshold at which the 45% tax rate applies from $180,000 to $190,000. The Medicare levy low-income thresholds for the 2024 income year will also be increased. We recently released a Tax Alert on this topic, to see full details click here .

Christmas Parties & Gifts 2023 With the well-earned 2023 holiday season on the way, many employers will be planning to reward staff with a celebratory party or event. However, there are important issues to consider, including the possible FBT and income tax implications of providing 'entertainment' (including Christmas parties) to staff and clients.

ATO's lodgment penalty amnesty is about to end The ATO is remitting failure to lodge penalties for eligible small businesses. Businesses which have not yet taken advantage of the ATO's lodgment penalty amnesty only have until 31 December 2023 to do so. Businesses must meet the following criteria in order to be eligible for the amnesty: had an annual turnover under $10 million when the original lodgment was due; have overdue income tax returns, business activity statements or FBT returns that were due between 1 December 2019 and 28 February 2022; and lodge between 1 June and 31 December 2023. When taxpayers lodge their eligible income tax returns, business activity statements and FBT returns, failure to lodge penalties will be remitted without the need to apply. The amnesty does not apply to privately owned groups or individuals controlling over $5 million of net wealth. Directors who bring their company lodgments up to date can also have penalties remitted and, if they are reliant on company lodgments to finalise their own tax affairs, any failure to lodge penalties will be remitted. This also applies to eligible lodgments made between 1 June and 31 December 2023.

Background For the year ending 31 December 2024, VRLT only impacts properties in 16 of Melbourne’s inner and middle suburbs, which is imposed in addition to any other land tax or surcharge land tax that may apply. A property is taken to be “vacant” if it has not been lived in for more than six months out of a calendar year, and this does not need to be a consecutive period of occupancy. Determining whether a property is “vacant” is done by considering the use of the land in the year that immediately precedes the relevant land tax year (ie. the use in the 2024 calendar year will determine whether VRLT applies in 2025).  VRLT is an annual tax for vacant land (subject to some exemptions), and for the year ending 31 December 2024, the VRLT rate is 1.0% of the capital improved value ( CIV ) of taxable land. The CIV of a property is a value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. It is displayed on the council rates notice for the property.

Background During February 2023, the Treasury Laws Amendment (2023 Measures No 1) Bill 2023 ( the Bill ) was introduced to improve the integrity of off-market share buy-backs undertaken by listed public companies. These measures were first announced in the October 2022–23 Federal Budget. At that time, the difference between the total purchase price and that part of the purchase price debited against the company's share capital account (in relation to the off-market share buy-back ) was taken to be a dividend, which could be franked where imputation credits were available. Conversely, at that time, in the case of an on-market buy-back (ie. on an exchange in the ordinary course of trading), no part of the buy-back price was treated as a dividend and the total amount received by the shareholder was treated as consideration for the sale of the shares. The amendments put forward in the Bill proposed to ensure that where a listed public company undertakes an off-market share buy-back of a share, no part of the purchase price in response of the buy-back will be taken to be a dividend.

Government releases draft legislation on total superannuation balances over $3 million On 3 October 2023, the Government released draft legislation to impose tax on individuals with total superannuation balances ( TSB ) of $3 million or more at 30%, rather than 15%. The higher 30% rate only applies to “taxable superannuation earnings” which represents the proportion of earnings corresponding to the part of the TSB that exceeds $3 million. An individual’s TSB includes all of their superannuation interests and is not a separate figure for each interest, for example, the $3 million threshold will be applied on a “per-individual basis” and not on a “per-account or per-fund basis”. Unfortunately, the way the tax is imposed is very unusual, and will (amongst other issues) result in such individuals paying tax on their super fund's unrealised capital gains. The consultation process for this draft legislation has been completed and the submissions made by professional accounting and superannuation bodies are currently being considered. We note this is not law yet, however we continue to watch this space as the draft legislation moves towards the final release of the legislation.

Taxpayers need to get their 'rental right' The ATO reminds rental property owners and their tax agents to take care when lodging their tax returns this tax time. When preparing their tax returns, taxpayers should make sure all rental income is included, including income from short-term rental arrangements, renting part of a home, and other rental-related income. Rental income must be reported in the year the tenant pays, rather than when the taxpayer’s agent transfers it to them, and it must be reported as the gross amount received (ie. before the property managers fees and other expenses they pay on the taxpayer’s behalf are taken out). There are three categories of rental expenses, as follows: Expenses where taxpayers cannot claim deductions – ie. expenses arising from a taxpayer’s personal use of their property and capital expenses; Expenses where taxpayers can claim an immediate deduction in the income year they incur the expense – ie. interest on loans, council rates, general repairs and maintenance, and depreciating assets costing $300 or less; and Expenses where taxpayers can claim deductions over a number of income years – ie. 'capital works' deductions and borrowing expenses incurred when setting up a loan. The ATO is particularly focused on interest expenses and ensuring rental property owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes, or the loan was re-financed for some private purpose. Taxpayers should ensure they have the records to demonstrate they incurred expenses for their rental property and the extent to which the expenses relate to producing rental income.

Appointing an SMSF auditor The ATO reminds self-managed superannuation funds ( SMSF ) trustees that they need to appoint an approved SMSF auditor for each income year, no later than 45 days before they need to lodge their SMSF annual return. An SMSF’s audit must be finalised before the trustees lodge their SMSF annual return, as the trustees will need some information from the audit report to complete the annual return. An SMSF’s auditor is to perform a financial and compliance audit of the SMSF’s operations before lodging. An audit is required even if no contributions or payments are made in the financial year. An approved SMSF auditor must be independent, which means that an auditor should not audit a fund where they hold any financial interest in the fund, or have a close personal or business relationship with members or trustees. If a fund doesn’t meet the rules for operating an SMSF, the auditor may be required to report any contraventions to the ATO.