ELECTION RESULTS - TAX AND SUPER CHANGES
Caitlin Mason is a Financial Adviser who specialises in social welfare payments provided by Commonwealth Government of Australia. Caitlin can be contacted via email caitlin@ambleside.net.au
19 June 2019
BUSINESS INSTANT ASSET WRITE OFF
Legislation has been passed to extend the Instant Asset Write Off to 30 June 2020. Part of the legislation also extended the threshold from $20,000 to $30,000, with this amount depending on when the asset was first used or installed in the business. For any assets over the threshold the immediate write is not available, and the small business general pool or general depreciation rules must be used instead.
SUPERANNUATION CHANGES
From 1st July, life and disability insurances will lapse if your superannuation account has been inactive for 16 months. The changes have been designed to ensure superannuation balances are not being eaten up by insurance premiums and fees. In many cases however people deliberately maintain a super account just to keep the insurance, while making contributions elsewhere. Clients must ‘opt in’ to keep the insurance by writing to the superannuation fund. Contact our office if you think you may be affected.
EOFY
As 30 June is fast approaching and falls on a Sunday this year, extra care needs to be taken when making super contributions intended to count towards this year’s caps or claiming a tax deduction in 2018/19. Also, keep in mind that, as a general guide, a contribution is ‘made’ when it is received by the super fund. For example, with electronic transfers (including BPAY) the contribution will be deemed to be made when the funds are credited to the super provider's account, not the day the transfer is made.
SALARY SACRIFICE VS PERSONAL CONTRIBUTIONS
We’re often asked what’s the difference between these two methods of contributing to super. They are both done with pre tax money, so act as a tax deduction. In short the tax outcome is very similar, it all comes down to timing. With salary sacrifice payments are made throughout the year, they are taken out of your regular pay before the money hits your bank account. Personal contributions are usually made as a single lump sum contribution, often at the end of the year. Salary sacrifice often suits salary and wage earners who have regular incomes, whereas personal contributions are often used with business owners and farmers who want more control and the ability to ‘delay’ the decision until the EOFY.
SUPERANNUATION WORK TEST
Under current rules people aged 65 to 66 must past a work test before contributing to superannuation. The work test will no longer need to be met to make voluntary contributions to superannuation from 1 July 2020 for those aged 65 and 66. This means the work test requirements will align with Age Pension age which will be 67 from 1 July 2023.
SPOUSE CONTRIBUTION
The age limit for spouse contributions will increase from 70 years old to 74 from 1 July 2020. Additional flexibility will be provided by the removal of the work test for those aged 65 and 66. This would enable spouse contributions to be made for the receiving spouse without the need to satisfy the work test up to age 66. From age 67 to 74, the work test would need to be satisfied by the receiving spouse or work test exemption applies.