The ATO considers the lodgment of an SMSF's annual return on time to be a fundamental part of an SMSF trustee's obligations.
Consequently, from 1 October 2019, if an SMSF is more than two weeks overdue on any annual return lodgment due date and hasn't requested a lodgment deferral, the ATO will change their status on Super Fund Lookup ('SFLU') to 'Regulation details removed' until any overdue lodgments have been brought up to date.
Editor: We can request a lodgment deferral on our behalf to ensure the SMSF's status remains ‘complying’ (unless the fund does not meet the
agreed date of referral).
Having a status of ‘Regulation details removed’ means APRA funds won't roll over any member benefits to the SMSF and employers won't make any super guarantee ('SG') contribution payments for members to the SMSF. The ATO says it is taking this approach because "non-lodgment combined with disengagement indicates that retirement savings may be at risk". While the fund's status is 'Regulation details removed', members should alert their employer to make any SG payments into the employer's default super fund or a fund of the member's choice until the SFLU status of the SMSF has been updated to 'complying'.
A taxpayer has unsuccessfully tried to challenge an excess transfer balance tax liability, despite following the ATO's instructions. The taxpayer was receiving three pensions in 2017, including two capped defined benefit income streams and one account based pension. Based on information reported by the super funds, the ATO became aware that the taxpayer had exceeded his $1.6 million transfer balance cap, and so it issued the taxpayer with an excess transfer balance determination of $376,646.72 on 3 January 2018.
The taxpayer then commuted $376,646.00 from his account based pension on 31 January 2018, but additional earnings continued to accrue due to the commutation being 72 cents short, so the ATO had to issue another excess transfer balance determination of $3,841.96 on 1 July 2018 (which the taxpayer acted on by making another commutation in August 2018). Finally, in September 2018, the ATO issued an excess transfer balance tax notice of assessment, assessing the taxpayer for excess transfer balance tax of $2,867.85.
The taxpayer challenged this before the AAT, contending that, despite doing what was required of him by the 3 January 2018 letter, he was still liable for the excess transfer balance tax, to which the AAT replied: “That is true but the problem for the applicant is that the determination period on which the tax liability is based is not determined by reference to when the taxpayer is first informed of his excess transfer balance. Further, the applicant does not avoid a tax liability by complying with the request to commute funds out of his superannuation income streams. That is made clear by the letter from the Commissioner dated 3 January 2018 which requests the applicant to commute the necessary funds but goes on to say “when you are no longer in excess of your cap we will send you a separate ‘Excess transfer balance tax notice of assessment’ detailing the tax amount payable”.”
The AAT agreed with the ATO’s contention that the taxpayer was liable for the excess transfer balance tax, that it had been calculated in accordance with the tax legislation, and that there was no discretion for the tax to be waived.
The ATO has provided a novel, though important, reason for businesses to update their ABN details: to help businesses to manage the coming disaster season.
ABN details are used by emergency services and government agencies to help identify and contact businesses during times of emergency and potential disaster. Therefore, to make sure they don’t miss out on receiving important information, the ATO asks that businesses update their ABN details, including authorised contacts, physical location, email and phone number. Also, if a taxpayer is no longer in business, the ATO asks they cancel their ABN so they aren't contacted unnecessarily.
From 1 January 2020, eligible individuals with multiple employers can apply to opt out of receiving super guarantee ('SG') from some of their employers, to help them avoid unintentionally going over the concessional contributions cap.
If appropriate for them, they should submit the relevant ATO form to apply for an SG employer shortfall exemption certificate, which releases one or more of their employers from their SG obligations for up to four quarters in one financial year.
Editor: We can assist with the lodgment of this form. Note that this measure may not benefit everyone who is eligible, so before lodging the form, it is important to consider the individual's employment arrangements, such as how their pay and other entitlements may change (if at all), and the effect of any relevant award or workplace agreement applicable to them.
The measure only became law on 2 October 2019, so to give eligible employees time to make an application, the ATO will accept applications for the 2019/20 financial year as follows:
Third quarter commencing 1 January 2020 - lodge on or before 18 November 2019
Fourth quarter commencing 1 April 2020 - lodge on or before 31 January 2020.
A separate application is required for each financial year.
Multiple owners increase depreciation claims split reports help accelerate deductions
An increase in BMT Tax Depreciation Schedules for more than one owner suggests
co-ownership is becoming an increasingly popular trend.
Owning a property with others can provide improved purchasing power. This can be particularly useful in capital cities where it can be difficult to break into the property market.
It can also balance out the expenses of owning an investment property including ongoing repairs, maintenance and fees. Additionally, co-ownership can provide improved depreciation deductions, allowing more items to be depreciated at a higher rate. This is where a BMT Tax Depreciation split report can assist.
How does a split report work?
A split report calculates depreciation deductions based on each owner’s percentage of ownership for each asset*. This involves splitting the value of the assets based upon each owner’s interest in the assets before applying depreciation rules.
BMT’s split reports simplify the process for both investors and Accountants and allows owners to receive a maximised return on their investment. Each split report can be provided in CSV format for easy importing into accounting software.
There is an option for owners who prefer a depreciation schedule without any split applied should this be required.
* Under new legislation outlined in the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 passed by Parliament on 15th November 2017, investors who exchange contracts on a second-hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on previously used plant and equipment assets. Investors can claim deductions on plant and equipment assets they purchase and directly incur the expense for. Investors who purchased prior to this date and those who purchase a brand-new property will still be able to claim depreciation as they were previously.
To learn more visit www.bmtqs.com.au/budget-2017 or read BMT’s comprehensive White Paper document at www.bmtqs.com.au/2017-budget-whitepaper.
Visit www.bmtqs.com.au/co-ownership-example to see how a split report increases deductions for two owners.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS,MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.
Bushfire smoke warning: health advice
Current bushfire conditions have resulted in very poor air quality in Brisbane, Ipswich and Gold Coast areas. Queensland Health recommends that these communities take the following actions.
Protecting your health
The community is advised to remain alert to the levels of smoke from current bushfire conditions.
Bushfire smoke - what is it?
Bushfire smoke is a mixture of different-sized particles, water vapour and gases, including carbon monoxide, carbon dioxide and nitrogen oxides. During bushfires and similar events, large amounts of finer particles are released that are small enough to breathe deep into the lungs and can cause adverse health effects.
All other fire affected communities should follow Queensland Health’s general bushfire and health advice, and for those with pre-existing respiratory conditions, to follow their health management plans.
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