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For many Australians, the control and flexibility offered by an SMSF makes this an attractive option for managing their superannuation. However, being an SMSF trustee carries significant responsibilities. In a case last year (Hart and Commissioner of Taxation), the Administrative Appeals Tribunal underlined the consequences that can flow when SMSF trustees do not take their responsibilities seriously. The case concerned a married couple who were the trustees and members of their SMSF. After their marriage broke down in 2012, the SMSF’s auditor notified the ATO that the fund had breached a superannuation law. An ATO audit then uncovered many [...]

The Productivity Commission’s recent report on Australia’s superannuation system reveals some concerning weaknesses in the APRA-regulated funds sector – particularly for millions of member accounts in “MySuper” default funds. It also identifies three areas of concern for SMSFs. The report should prompt all Australians to assess whether they currently have the right superannuation arrangements in place for their circumstances. The release of the much-anticipated report comes as Australia debates the merits of raising the compulsory superannuation rate, scheduled to increase from the current rate of 9.5% to 12% by 2025–2026. While funds have, on average, performed well, the Commission [...]

Individuals with a total superannuation balance (TSB) below $500,000 are now able to “carry forward” their unused concessional contributions (CC) cap space to future years in order to catch up on contributions later when they have the capacity to do so. Usually, an individual’s CCs are capped at $25,000 per financial year, and exceeding the cap will generally attract an excess contributions tax penalty. CCs include compulsory superannuation guarantee contributions; additional salary-sacrifice contributions made by your employer; and personal contributions (for those under the age of 75) that you make from your after-tax income for which you claim a [...]

The ATO has recently warned taxpayers to be alert to malicious scammers who are using increasingly sophisticated methods and technology to impersonate the ATO. A new tactic on the rise involves “spoofing”, whereby scammers mimic a legitimate ATO phone number visible on caller ID to call or send SMS messages to taxpayers, or mimic a legitimate email domain to send emails. The SMSs and emails sometimes ask the recipient to click on a link and provide their personal details in order to obtain an alleged “refund” from the ATO. Alternatively, the scammers may ask the taxpayer to pay a [...]

The extension of the instant asset write-off for a further year is great news for small businesses who may be planning to purchase assets for use in their business in the near future. The key is for businesses to ensure the asset will be used in their business (or ready to use) in the year they claim the write-off, and to consider how any private use of the asset may affect their claim. The write-off is a temporary measure that allows small businesses to claim an immediate deduction for certain capital expenditures, rather than having to deduct these costs [...]

If you are an employee and you sometimes work from home, you may be able to claim deductions for some of the expenses you incur, provided you are not reimbursed by your employer. Here, we consider two common types of expenses that employees may claim and how you must substantiate your deductions. Running expenses such as heating, cooling and lighting costs are only deductible if you exclusively use these services while performing work at home. For example, the ATO says that you would not be able to claim deductions for these expenses if you work on your laptop while [...]

Individuals with income and super contributions above $250,000 are subject to an additional 15% Div 293 tax on their "low tax contributions" (ie concessional contributions). Concessional contributions include all employer contributions, such as the 9.5% super guarantee and salary sacrifice contributions, and personal contributions for which a deduction has been claimed. As a result of this Div 293 tax, the effective contributions tax is doubled from 15% to 30% for certain concessional contributions (up to the concessional cap). The maximum Div 293 tax payable is $3,750 ($25,000 x 15%). Despite this extra 15% tax, there is still an effective [...]

  The ATO has reported that some businesses are making simple mistakes reporting their GST. The ATO reminded taxpayers to avoid the following common GST reporting errors: Transposition and calculation errors No tax invoice  Transaction classification  Accounting systems  If a taxpayer finds a mistake made on a previous activity statement, the ATO says they can: correct the error on a later activity statement if the mistake fits the definition of a "GST error" and certain conditions are met; lodge an amendment - the time limit for amending GST credits is 4 years starting from the day after the taxpayer [...]

If you are a trustee of an SMSF then you should be well versed on the requirement to appoint an SMSF auditor no later than 45 days before the annual return is due to be lodged, but have you had the same auditor for years? Whilst familiarity with you and your fund may be a good thing, there are also some additional issues which should be considered. Registration with ASIC Is perhaps the most basic of requirements. When you retained your auditor you probably checked with ASIC to ensure that they were registered and had an SMSF audit number. [...]

Travel Allowance or living-away-from-home allowance (LAFHA)? Understanding the difference between these two allowances can be difficult, particularly when there is the perception of an overlap. The allowances are in fact different and have different consequences for the person receiving them. An amount paid by your employer to cover expenses such as accommodation, food, or drinks while you travel for business is typically know as a travel allowance. There is also another type of allowance, called the living-away-from-home allowance (LAFHA), which compensates you for additional expenses when you are required to live away from home due to work duties. So, [...]