Use it or Lose it – Carried Forward Super Contributions – FY25

Super Contributions: Use it or Lose it

If your superannuation account balance was less than $500,000 as at 30 June 2025, you have until 30 June 2025 to catch up any unused concessional superannuation contributions from 2020.

From the 2020 financial year onwards, new rules came into effect that enabled individuals with a total superannuation balance of less than $500,000 to catch up on superannuation contributions that may not have been maximised made in prior years. 

For example, in the 2020 year, the total concessional contribution cap was $25,000.  If you only made contributions of $15,000, then you have $10,000 unused from that same year.  You can carry this unused cap balance forward for up to 5 years.  After 5 years, the unused balance expires.  This means that you have until 30 June 2025 to use up any unused concessional cap from the 2020 financial year.  If you don’t use up the 2020 carried forward balance before 30 June 2025, it will be lost.

But there’s a catch: your current year contributions first go towards this year’s cap.  Once that is maxed out, any extra goes towards past years, starting from the oldest.

So, to claim your 2020 unused cap, you’ve first got to max out your 2025 contributions ($30,000).  Anything above that goes towards your unused caps from previous years, starting with 2020.

Not sure what your prior year unused caps are?  Check your myGov account or as your tax agent.

Now, before you go all in, chat with your financial planner to make sure it aligns with your retirement goals.

Remember, if you are looking to claim a personal tax deduction for superannuation contributions, you need to:

  1. Ensure the contribution is received by your superfund prior to 30 June 2025;
  2. Give your superannuation fund a “Notice of Intention to Claim a Tax Deduction” for the contributions;
  3. Receive an acknowledgement letter from your fund prior to lodging your 2025 tax return.

If you’re considering extra contributions this year, talk to your tax agent and your financial planner to figure out how much and if it fits your retirement plan.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Federal Budget 2024-25

On Tuesday night, 14 May 2024, Federal Treasurer Jim Chalmers handed down his third Federal Budget for the Labor Government.  If anything, it was quite an underwhelming budget, leaning towards higher spending particularly over the upcoming year.  While this is the second consecutive budget surplus for the Labor Government, there is a forecast $28.3 billion deficit for the next financial year.  In fact, for the four years after the current year surplus, the forecast is for a combined deficit of $122 billion.

The economic story though is all about inflation at the moment: “When will we be rid of it?”  “And how much damage has it done along the way?”

Energy bill relief – $2.6 billion – yes it makes your electricity bills cheaper today, but will this lead to upwards inflationary pressure over the longer period?

The Government indicates inflation will be under control by Christmas 2025, but many economists and perhaps, more importantly, the RBA may not agree with that.

We would still call for more broader tax reforms including reducing state based taxes like transfer duty and payroll taxes, and replacing it will greater broad based consumption taxes (like GST).

Production tax credits and critical mining projects and fast-tracked investment processes were helpful wins for the top end of town.

We’ve outlined below some of the measures that were announced in the Budget that will impact on our clients.  As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  We will keep you updated on the status of any proposed measures.

Impact for individuals

Individual income tax rates

As previously announced by the Treasurer, the Stage 3 individual income tax rates were amended to provide tax relief to all taxpayers. 

The current tax rates (to 30 June 2024) are as follows:

 

From 1 July 2024, the reduced tax rates are as follows:


The tax savings for certain income levels are as follows:

 

The last table shows the difference between the tax payable for the 2024 financial year, compared to the tax payable for the 2025 financial year and how much that translates to a weekly saving.

Energy bill relief

A $300 rebate will be applied to all Australian households towards their electricity bills.  This will be a $75 credit on each quarterly electricity bill in the 2024-25 financial year.  Eligible small businesses will receive a credit of $325.

HECS

Another measure that was announced last week was the change to the HECS indexation rate.  Currently, HECS debts are indexed each year on 1 June using the Consumer Price Index (CPI).  Given the high rates of inflation, this resulted in an indexation rate of 7.1% applied to HECS debts on 1 June 2023.

The Budget announcement is to use the lower of CPI and Wage Price Index (WPI) to index HECS debts (backdated to 1 June 2023).  This means that the 7.1% CPI indexation rate used last year will be replaced with a 3.2% WPI (and a credit applied to HECS accounts to reflect the lower indexation at 1 June 2023).

It is also forecasted for the WPI to be 4% for the 1 June 2024 indexation.

Please read our article for more information about the indexation of HECS debts and whether it is beneficial to repay some or all of your debt.

Medicare Levy Low-Income Thresholds

The Medicare Levy low-income thresholds for singles, families, seniors and pensioners will also be increased from 1 July 2023.  The family income threshold will also now be increased by $4,027 per child (up from $3,760).

Rent Assistance

The Commonwealth Rent Assistance maximum rates have been increased by 10% from 20 September 2024 to address rental affordability challenges.

Paid Parental Leave

$1.1 billion was allocated in the budget towards paying superannuation on Commonwealth Funded Paid Parental Leave for births and adoptions on or after 1 July 2025.

Impact for businesses

The Budget contained a few measures to help small businesses:

Instant asset write-off threshold extended

From 1 July 2023, the instant asset write-off threshold was due to reduce to $1,000.  Last budget, this threshold was increased to $20,000 for businesses with an aggregated turnover of less than $10 million.  The increased threshold was to apply until 30 June 2024.  The announcement in this budget was to extend the $20,000 threshold to 30 June 2025.  We note that the announcement from last year’s budget (to increase the threshold to the $20,000) has still not passed by Parliament, leaving this measure uncertain as we close in on the end of the financial year.

We also note that, assets acquired for more than $20,000 can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first year and 30% thereafter.

ATO Counter-Fraud Strategy

$187 million has been allocated to the ATO Counter Fraud Strategy, including allocating funds to:

  • Identify and block suspicious activity in real time
  • Recover lost revenue from fraud
  • Counter fraud
  • Extend the period for which the ATO can withhold GST refunds (extended from 14 days to 30 days)

ATO Tax Avoidance Taskforce

The ATO Tax Avoidance Taskforce has been extended for 2 years from 1 July 2026.  The task force pursues key tax avoidance risks from multinationals, large public and private businesses and high-wealth individuals.

Foreign Resident CGT regime

The foreign resident capital gains tax (CGT) regime will be strengthened to provide greater certainty about the operation of the rules.  The amendments will apply to CGT events on or after 1 July 2025 and will:

  • Clarify and broaden the types of assets that foreign residents are subject to CGT on
  • Amend the point-in-time principal asset test to a 365-day testing period
  • Require foreign residents disposing of shares and other membership interests exceeding $20 million to notify the ATO, prior to the transaction being executed

Supporting Small Businesses

$41.7 million has been specifically allocated to supporting small businesses, as follows:

  • $25.3 million to support the Payment Times Reporting Regulator;
  • $10.8 million to extend the Small Business Debt Helpline;
  • $3 million to implement the Government’s response to the Review of the Franchising Code of Conduct;
  • $2.6 million for the Australian Small Business and Family Enterprise Ombudsman to support unrepresented small businesses to navigate business-to-business disputes through alternative dispute resolution.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Use it or Lose it – Carried Forward Super Contributions

Super Contributions: Use it or Lose it

If your superannuation account balance was less than $500,000 as at 30 June 2023, you have until 30 June 2024 to catch up any unused concessional superannuation contributions from 2019.

From the 2020 financial year onwards, new rules came into effect that enabled individuals with a total superannuation balance of less than $500,000 to catch up on superannuation contributions that may not have been maximised made in prior years. 

For example, in the 2019 year, the total concessional contribution cap was $25,000.  If you only made contributions of $15,000, then you have $10,000 unused from that same year.  You can carry this unused cap balance forward for up to 5 years.  After 5 years, the unused balance expires.  This means that you have until 30 June 2024 to use up any unused concessional cap from the 2019 financial year.  If you don’t use up the 2019 carried forward balance before 30 June 2024, it will be lost.

But there’s a catch: your current year contributions first go towards this year’s cap.  Once that is maxed out, any extra goes towards past years, starting from the oldest.

So, to claim your 2019 unused cap, you’ve first got to max out your 2024 contributions ($27,500).  Anything above that goes towards your unused caps from previous years, starting with 2019.

Not sure what your prior year unused caps are?  Check your myGov account or as your tax agent.

Now, before you go all in, chat with your financial planner to make sure it aligns with your retirement goals.

Remember, if you are looking to claim a personal tax deduction for superannuation contributions, you need to:

  1. Ensure the contribution is received by your superfund prior to 30 June;
  2. Give your superannuation fund a “Notice of Intention to Claim a Tax Deduction” for the contributions;
  3. Receive an acknowledgement letter from your fund prior to lodging your 2024 tax return.

If you’re considering extra contributions this year, talk to your tax agent and your financial planner to figure out how much and if it fits your retirement plan.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Ensuring Asset Valuations: A Vital Responsibility for SMSF Trustees

Ensuring Asset Valuations:

A Vital Responsibility for SMSF Trustees

 

If you are a trustee of a self-managed superannuation fund (SMSF), you need to ensure that your fund’s assets are reflected at market value in the annual financial statements.

Our SMSF auditor will check that the assets have been valued correctly and that the basis of the valuation is appropriate.  These valuations are also reported to the ATO on an annual basis via the tax return. 

The ATO is using the data reported in the tax returns to identify funds who have recorded the same values for assets in their annual returns for the past several years (which suggests that these assets are not reported at an appropriate market value).

There are approximately 16,500 funds who have reported the same value for certain assets for at least three income years.  This includes residential and commercial property, unlisted companies and unlisted trust investments.  Furthermore, there were no auditor contravention reports listed for these funds for potential breaches of the market valuation rules for the assets.

The ATO will be sending messages to trustees of these particular SMSFs to remind them of the obligation to report assets at market values (and the next tax return will be monitored by the ATO).

If your fund fails to meet the valuation requirements, the fund and members may be required to pay additional tax and could be liable to administrative penalties. 

What do you need to do?

If you are the trustee of an SMSF, you need to review the value of the assets that you hold.  Each year, we will request evidence from you of the market value of these assets.  Often, these values will be readily available (for example, the current price of listed shares).  Other times, the services of an independent valuer may be required to confirm the valuation.  For example, if your fund holds direct real property, you need to factor in the cost of an annual valuation into the ongoing running costs of your fund.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Superannuation – Concessional Cap Increases

Superannuation Caps

 

From 1 July 2024, the concessional contribution cap for superannuation is increasing to $30,000.  This will have a flow on effect to other areas of super as well:

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

New super tax for balances over $3 million

Proposed New Tax for Superannuation Balances over $3 million

 

On 3 October 2023, the Federal Government released draft legislation proposing a 15% additional tax on earnings for individual superannuation balances that exceed $3 million.  The new measure is set to commence on 1 July 2025.

This proposed new tax will impact on individuals that have a total balance in super or more than $3 million (this is across all superannuation accounts held).

The 15% tax will be levied on the member’s account “earnings” which will be calculated as the movement between the member’s opening and closing balance for the year (after adjusting for withdrawals, contributions and other specific exclusions).  It will only apply to the proportion of an individual’s account balance that is above $3 million (so if your balance is only just over the $3 million threshold, only a small proportion of the earnings will be subject to the new tax).

This means that for individuals who have a total superannuation balance in excess of $3 million, a proportion of unrealised gains of the fund will be taxed at 15%.  This may cause a cash flow concern for the member as they will have to pay tax on gains that have not been realised (and may be held within illiquid assets).

Where there have been negative earnings, the loss can be carried forward to offset future “earnings”.  However, there is no provision in the draft legislation for the losses to be carried back to reduce prior year unrealised gains. 

As yet, there is also no provision for the $3 million threshold to be indexed.

The tax will be levied directly to the individual member (and not the superfund).  The ATO will issue an assessment to the member personally and they can elect to pay the liability personally or withdraw funds from their superfund balance to pay the liability.

We will keep you up to date on the progress of the draft legislation.  Please do not hesitate to contact us if you would like to discuss the impact of the proposals on your superannuation fund.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Increased Penalty Units: Implications for Taxpayers

Increased Penalty Units: Implications for Taxpayers


Under tax laws, the ATO can impose administrative penalties if you fail to meet your tax obligations.

From 1 July 2023, the base penalty unit has increased by almost 14% to $313. 

When the ATO imposes penalties, they can calculate the penalty using either:

  • a statutory formula, based on the taxpayers behaviour and the amount of tax avoided; or
  • multiples of the base penalty unit.
Examples of Tax Penalties

These are some of the examples of penalties that the ATO may impose:

  • Failing to retaining records as required (maximum 20 penalty units = $6,260)
  • Failing to register (or cancel) GST registration when required (maximum 20 penalty units = $6,260)
  • Failure to lodge a return or statement for a small entity (1 penalty unit for each 28 days late, up to 5 penalty units = $313 to $1,565)

Superannuation funds

The increase in penalty units can impact significantly on superannuation funds.  For superannuation funds, the penalty units are imposed per trustee.  Where a fund has a corporate trustee, the penalty will be imposed solely on the corporate trustee.  However, where a fund has individual trustees, the penalty will be imposed on each trustee.  Effectively doubling the penalty where the fund has two individual trustees.

This is another reason that we recommend that a superannuation fund should have a corporate trustee.

It is possible to change the trustee of your superfund to a corporate trustee.  Please contact us if you would like to discuss this further.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Unravelling the Super Liability for Contractors

Unravelling the Super Liability for Contractors

Do you engage contractors for your business?  It is important that you are aware of your obligations regarding contractors.  There are two factors you need to think about:

(1) Whether the worker is actually an employees for your business (and not a contractor) – which means your business will be liable to withhold tax and pay super for the worker;

(2) If they are legally a contractor, whether your business still has a super obligation.

We have looked at each of these below.

1. Contractors or employees?

The first issue you need to consider is whether the workers you pay as “contractors” are actually employees?

If they are actually employees, then your business will be liable to withhold tax from their payments and also pay their super.

The ATO have a table on their website (extracted below) which outline the factors to consider when determining whether your workers are contractors or employees.  No single factor is definitive.  Rather, you need to consider the whole of the relationship.

Factor 1 – Control

  • Employee: Your business has the right to control how, where and when the worker does their work.
  • Contractor: The worker can choose how, where and when their work is done, subject to reasonable direction by you.

Factor 2 – Integration

  • Employee: The worker serves in your business.  They are contractually required to perform work as a representative of your business.
  • Contractor: The worker provides services to your business.  The worker performs work to further their own business.  They may choose to present themselves as part of your business.

Factor 3 – Method of Payment

  • Employee: The worker is paid for either time worked, a price per item or activity, a commission.
  • Contractor: The worker is contracted to achieve a specific result, and is paid when they have completed that result, often for a fixed fee.

Factor 4 – Ability to Subcontract or Delegate

  • Employee: The worker must perform the work themselves and cannot pay someone else to do the work for them.
  • Contractor: The worker is free to delegate to others who the worker will pay to complete the work on their behalf.

Factor 5 – Provision of Tools an Equipment

  • Employee: Your business provides all or most of the equipment, tools and other assets required to complete the work or the worker provides the tools but your business provides them with an allowance.
  • Contractor: The worker provides all or most of the equipment, tools and other assets required to complete the work, and you do not give them an allowance.
Factor 6 – Risk
  • Employee: The worker bears little or no risk. Your business bears the commercial risk for any costs arising out of injury or defect in their work.
  • Contractor: The worker bears the commercial risk for any costs arising out of injury or defect in their work.

Factor 7 – Goodwill

  • Employee: Your business benefits from any goodwill arising from the work of the worker.
  • Contractor: The worker’s business benefits from any goodwill generated from their work, not your business.

Source: Australian Taxation Office – https://www.ato.gov.au/Business/Employee-or-contractor/Difference-between-employees-and-contractors/#Employeeorcontractor

2. Super for contractors

Even if the person engaged is a contractor, you may still have a liability to pay super on their behalf.   If you pay your contractor predominantly for their labour, they will be regarded as “employees” for superannuation purposes and you will need to pay super for them.

When will a contractor be an “employee” for superannuation purposes?

A contractor will be an employee for superannuation purposes if:

  • They are engaged mainly for their labour (more than half of the dollar value of their contract is for their labour);
  • Their payment isn’t dependent on them achieving a specific result (ie. they are paid for their labour regardless of the result);
  • They cannot delegate the work to someone else.

If you enter into a contract with a company, trust or partnership, this entity will never be regarded as an employee for superannuation purposes.

What are the penalties for not paying superannuation for your contractors?

The penalties for not paying super for your contractors are the same as not paying super for employees.

If you do not pay super when required, there can be penalties of up to 200% of the liability (which means you have to pay the original liability plus another 2 x the liability as a penalty – and none of these payments will be deductible).  Further, the unpaid superannuation liability may become a personal liability of the directors of your company if it remains unreported and unpaid.

What should I do now?

We recommend that you:

  1. Download a list of the payments you are currently making to your contractor
  2. Summarise the payments and group all payments to the same contractor together.
  3. Review each contractor to determine whether they will be an employee for superannuation purposes (the ATO have developed a specialised decision tool that you can use to determine whether your business is required to pay super for contractors – see here.)

If you determine that your contractors are eligible for super, you will need to comply with the standard employer obligations for super (see here).

Please do not hesitate to contact us if you would like to discuss your obligation to pay super for contractors.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Federal Budget 2023-24

On Tuesday night, 9 May 2023, Federal Treasurer Jim Chalmers handed down his second Federal Budget for the Labor Government.  According to the Budget papers, the Budget has returned “into the black”, delivering a surplus for the first time in 15 years.  Our country’s financial position has benefited from high commodity prices and a stronger than expected jobs market.  Similar to last year, the Treasurer has cast the Budget with aims to provide cost of living relief whilst not placing additional pressure on inflation.

Some wins from the Budget will be for those eligible for the Government’s energy relief package.  High income earners are also winners with no mention of changing or removing the stage 3 income tax cuts legislated to come into effect on 1 July 2024.

Those not so happy with the budget will be middle income earners who lost the low and middle income tax offset (LMITO) in the October 2022 budget and who are ineligible to share in most of the incentive packages announced in this budget.

The Treasurer warned of more “difficult decisions” to come.  Hopefully those difficult decisions are answered from a position of fiscal responsibility and not just a politically motivated standpoint.  Difficult decisions do need to be made around a well-rounded, broad tax revenue base in years to come.

We’ve outlined below some of the measures that were announced in the Budget that will impact on our clients.  As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  We will keep you updated on the status of any proposed measures.

Income tax measures

The previously legislated stage 3 tax cuts for individuals starting 1 July 2024 remain untouched.

There was no extension announced to the low and middle income tax offset (LMITO) beyond the 2021-22 year.  As such, the LMITO has now ceased.  Consequently, low-to-middle income earnigns (incomes up to $90,000 but phasing out up to $126,000) will see their refunds reduced between $675 and $1,500 from the 2023 year onwards.

The Medicare Levy low-income thresholds will marginally increase from 1 July 2022 (which increases the point from which the Medicare Levy will start to apply). 

Business measures

The Budget contained a few measures to help small businesses:

Instant asset write-off threshold increased to $20,000

From 1 July 2023, the instant asset write-off threshold was due to reduce to $1,000.  This budget measure has increased this threshold to $20,000 for businesses with an aggregated turnover of less than $10 million.  The increased threshold will apply until 30 June 2024.

Assets acquired for more than $20,000 can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first year and 30% thereafter.

Small Business Energy Incentive

Small businesses with a turnover of less than $50 million can deduct an additional 20% of the cost of eligible depreciating assets that promote greater energy efficiency.

A range of depreciating assets will be eligible for the incentive (including energy efficient fridges, heat pumps and electric heating or cooling systems, batteries and thermal energy stores).  The assets will need to be first used (or installed ready for use) between 1 July 2023 and 30 June 2024.

Up to $100,000 of total expenditure will be eligible for the incentive (which will provide a maximum bonus deduction of $20,000).

Energy Price Relief Plan

Small businesses customers of electricity retailers will benefit from $1.5 billion in funding that the Government has committed to provide energy bill relief.

Payday Super

From 1 July 2026 employers will be required to pay their employees’ super guarantee at the same time as their salary and wages.

Help to manage tax instalments

The GDP adjustment factor for PAYG tax instalments and GST instalments will be 6% for the 2023-24 financial year (down from 12% under the statutory formula).

Startup support

$431.9 million is being provided over 4 years to support small and medium businesses and startups to commercialise their ideas and grow their operations.  This funding will be targeted at businesses operating in the priority areas of the National Reconstruction Fund.

Register of beneficial ownership

$1.9 million provided to establish a public register of beneficial ownership of companies and other legal vehicles (including trusts).

Expanded ATO Compliance Programs

Funding is being provided to extend several ATO compliance programs. 

Personal Income Tax Compliance Program

$90.2 million will be provided to the ATO and Treasury to extend the Personal Income Tax Compliance Program for 2 years from 1 July 2025 and to expand the scope from 1 July 2023.  This enables the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including over-claiming of deductions and incorrect reporting of income. 

GST compliance

$588.8 million will be provided to the ATO from 1 July 2023 for the ATO to continue a range of activities that promote GST compliance. 

Debt collection

Additional funding will be provided to the ATO to facilitate engagement with taxpayers who have high-value debts over $100,000 and aged debt older than 2 years.

Lodgement penalty amnesty

Small businesses with an aggregated turnover of less than $10 million will have failure to lodge penalties remitted for outstanding tax statements lodged between 1 June 2023 and 31 December 2023 (where those statements were originally due between 1 December 2019 and 29 February 2022).  This is designed to encourage small business owners to re-engage with the tax system.

Superannuation guarantee compliance

$40.2 million provided to the ATO in the 2023-24 year to assist with enforcing superannuation guarantee compliance.  The ATO will continue to use data matching to identify superannuation guarantee underpayment.

Superannuation

Tax changes for super account balances above $3 million

The Government confirmed their commitment to increasing the tax rate for earnings on superannuation accounts in excess of $3 million from 1 July 2025.  Earnings that correspond to the proportion of an individual’s superannuation balance over $3 million will be taxed at 30%.  Earnings that relate to assets below the $3 million threshold will continue to be taxed at 15% (or 0% if held in a retirement pension account).

Other measures of interest

Some other measures of interest include:

  • Increase to certain government payments
    • The base rate of the working age and student payments will increase by $40 per fortnight from 20 September 2023 (this applies to JobSeeker, Youth Allowance, Parenting Payment, Austudy, ABSTUDY, Disability support pension, special benefit).
    • The maximum rates of Commonwealth Rent Assistance allowance will increase by 15%.
    • Parenting Payment (single) will be extended to single principal carers with a young child under 14 years of age (currently, the payment only supports single principal carers with a child under 8 years of age).
  • Household Energy Upgrades
    • $1.3 billion in funding is being provided to establish the Household Energy Upgrades Fund which will provide low-cost finance and mortgages (in partnership with private institutions) for home upgrades to save energy.
  • Childcare
    • $72.4 million in funding over 5 years to support the Early Childhood Education and Care sector to build and retain their workforce.
  • Aged Care
    • From 30 June 2023, there will be a 15% increase to the award wages for many aged care workers. 
    • Over $1.1 billion provided to improve the in-home aged care system and the delivery of aged care services.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Maximising Downsizer: A Strategy to Boost your Retirement Savings

Maximising Downsizer:

A Strategy to Boost your Retirement Savings

The Downsizer Contribution enables individuals to contribute additional money into super after selling their family home.

Eligibility

You are eligible to make a downsizer contribution if you meet the following conditions:

  1. You have reached the eligible age:
    • From 1 January 2023 – 55 years or older
    • From 1 July 2022 – 60 years or older
    • From 1 July 2018 – 65 years or older
  2. Your home was owned by you or your spouse for 10 years or more prior to sale (generally calculated from settlement of purchase to settlement of sale);
  3. Your home is in Australia (and is not a caravan, houseboat or other mobile home);
  4. The capital gain/loss on sale would be exempt (or partially exempt) under the CGT main residence exemption;
  5. You have not previously made a downsizer contribution.

How do I make the contribution?

If you meet the above conditions and can make a downsizer contribution, to make the contribution, you must:

  1. Provide your superfund with a Downsizer contribution into super form before or at the time of making the contribution (if you make multiple contributions, you must provide a form for each contribution – up to the maximum contribution limit of $300,000);
  2. Make the contribution within 90 days of receiving the proceeds of the sale (this is generally the settlement date).

How much can I contribute as a downsizer contribution?

You can make a downsizer contribution up to a maximum of $300,000 (each spouse) but the contribution can’t be greater than the total proceeds from the sale of your home.

How does a downsizer contribution differ to other types of super contributions?

The contribution doesn’t count towards any of the contribution caps (so these caps will still be available to you). 

The downsizer contributions will count towards your transfer balance cap.  This cap will be considered when determining eligibility for the age pension.

If I’m eligibility, should I make a contribution to super as a downsizer contribution?

This is a good question, and one that we are often asked as accountants.  Unfortunately, the question of should you make this contribution is one that a financial planner needs to answer for you.  As an accountant, we can give you the facts about whether or not you are eligible and the limits on what you are able to contribute.  However, we cannot advise whether you should do so.  We work closely with several financial planners and we can put you in touch with these planners.  They can provide you with holistic advice for your financial position and whether or not a downsizer contribution is right for you.

What should I do next?

If you are over the relevant age to make the downsizer contribution and you are thinking of selling your home, give us a call or book in a meeting to talk about your eligibility.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.