July 30, 2022
Downsizer Contribution Age Changes

During the 2022 Federal election, the government announced it would support a reduction to the downsizer eligibility age to 55years. Confusion ensued for some, as this reduction is not yet law.

Instead, from 1 July 2022, people aged 60 years and over will be eligible to make downsizer contributions of up to $300,000 per person or$600,000 per couple from the sale proceeds of their home into a complying superannuation fund.

Off the back of the aforementioned election confusion, it’s important to note that any contributions made from members who are 55-59 years old will be ineligible to be treated as downsizer contributions. If you fall into this age bracket and have made contributions under the guise of a downsizer contribution, they will instead need to be reported as personal contributions.

Sadly for some, the result may mean you could exceed your non-concessional contributions cap. Although this is not ideal, it’s not the end of the world yet and you should discuss the situation with the Attune team to ensure the outcome fits your goals and superannuation strategy before going further.

If however, you are 60 or older and you have or are looking at making downsizer contributions (which are eligible), they won’t impact or count towards your concessional or non-concessional super contribution caps.

 Lastly, the downsizer contribution is a once-off option that can not be applied to the sale of any residences in the future.

 

The general eligibility requirements:

1.    You must be 60 years of age or older

2.    You must sell a property that is located inAustralia

3.    You must have owned the property for at least 10years

4.    The proceeds from the sale of your home must be either exempt or partially exempt from CGT under the main residence exemption (details can be found here).

 Making large contributions to your superannuation (SMSF or not), should always be discussed with your accountant and indeed your fund first. The Attune team has extensive experience with superannuation and SMSFs and are in the perfect position to give you sound, strategic advice that help you achieve your future goals.

To discuss contributions and putting the right processes and structure in place for your super, contact the Attune team on 1300 866 133 or send us an email to start the conversation.

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July 29, 2022
Borrowing In An SMSF

Over a decade ago now the rules of borrowing in self-managed superannuation funds (SMSFs) were relaxed, meaning that SMSFs can borrow to invest in some circumstances.

The relaxation meant that instead of just being able to borrow for investing in shares SMSFs can now use funds for property asset purchases. Further to this, legislative changes in 2020 also made it possible for SMSFs to acquire property with limited recourse borrowing arrangements (LRBA) using a holding trust. 

Obviously, there’s more to the story, but with that snapshot behind us let’s dive a little deeper …

Using your SMSF to invest in property can be a great strategy for tax purposes; help diversify your investment portfolio; and it can put the cash in your fund to good use. With the introduction of the LRBA, this investment strategy has grown in popularity over recent years, but this is one area you really do need to make sure you know what you’re getting into.

The rules imposed by the ATO and the Superannuation IndustrySupervision Act (SISA) can be super complex so we recommend you speak to our qualified team at Attune before jumping into anything, but let’s look at the overview…

The general SMSF property rules include… (but there are many more!)

• The property must not be purchased from a related party or SMSF member

• The property can be a residential property, but it must not be lived in or rented by a fund member or any related party

• For a commercial property, it can be rented to a related party, but it must be used solely for their business, and it must be rented at market value

• As always when it comes to your SMSF, it must meet the ‘sole purpose test’ of solely providing retirement benefits for its members

How does the finance work?

Obtaining finance can sometimes be hard as the borrowing criteria can be stricter, and the banks usually demand a higher loan to value(LVR) ratio when compared to borrowing outside of super.  

The bank will also make sure the fund will be able to service the loan over the years to come, and they will factor in the estimated rental returns plus how much the fund will receive in super contributions, based on what you’ve contributed over recent years. It’s important to remember that loan repayments must be made from your SMSF, and as the ATO can sometimes limit your ability to put money into super, this cashflow needs to be carefully considered.

How does the tax work?

The tax benefits can be a massive pro to this strategy if you can get it to work. SMSFs are generally a low tax environment compared to entities outside of super and can even end up tax-free based on your age and retirement status.

The SMSF generally pays 15% tax on any rental income it receives from the property. If the property is held for more than 12 months, the fund receives a one-third discount on any capital gain it may make upon sale. This brings the capital gains tax liability down to 10%.

Ongoing Compliance

Maintaining a SMSF and staying on top of your annual compliance requirements can be a big job, and as trustee of the SMSF you are responsible for this.

However with help from your trusted Attune advisor we can help you make the right decisions when it comes to your SMSF and if embarking on a LRBA is the right path for you and your investment needs.

If you’d like to discuss options for investing using yourSMSF, get in touch with the team today on 1300 866 113 or send us an email to start the conversation.

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July 28, 2022
New Electric Vehicles Concessions

Considering their effect on reducing fossil fuel emissions, electric vehicles are becoming more available around the world and the Australian government is looking to increase their uptake here in our country.

As it is, just 1.5 per cent of cars sold in Australia are electric or plug-in hybrid compared with 17 per cent in the UK and 85 per cent in Norway. It’s clear that we can certainly build on the number of Aussies going electric and with the huge numbers of us saying we’d consider buying electric for our next car, an incentive may just be all we need to make it happen. 

With no electric cars available in Australia for under$40,000 and just five available for under $60,000, the cost to go electric is a major consideration when you compare pricing elsewhere. As an example there are more than 25 electric models available in the UK for under AU$60,000!

It’s with this in mind that at a National Press Club address earlier this year, The Minister for Industry, Chris Bowen announced that theGovernment will introduce concessions for Electric Vehicles effective from 1July 2022 to make them more affordable for Australians (while reducing climate emissions).

The concession is designed to bring the cost down to help us go electric. Here’s what they include:

• Import Tariff reduction of 5% on electric vehicles costing less than $77,565; and

• FBT exemption for electric vehicles that are provided through work for private use.

According to the ALP’s website this translates into benefits that are real and tangible:

“The Electric Vehicle Council estimates that a $50,000 model (such as the Nissan Leaf) will be more than$2,000 cheaper as a result of removing the import tariff.”
“If a $50,000 model is provided through employment arrangements, Labor’s fringe benefits tax exemption will save employers up to $9,000 a year. Often FBT is passed on to employees –and those employees will benefit directly from Labor’s policy.”

The proposals would seem to be win-win for we as taxpayers, enabling us to save on tax while doing something positive for the environment.

Other positives to end-users are pretty clear, with examples like the estimates on the Nissan Leaf showing a saving of $30 per week in running and maintenance costs.  

In addition, with the potential removal of FBT from electric vehicles, this could produce a significant revival in salary sacrificing of cars for employees and become a feature of tax planning going forwards.

Not only will the concessions benefit end-users, the cut-off will hopefully also encourage manufacturers to import and supply more affordable electric models in Australia, giving the industry as a whole reason to pivot slightly to meet demand.

If you’re considering your next asset purchase and would like advice on concessions like the Electric Vehicle Discount, speak with theAttune team today on 1300 866 113 or send us an email to start the conversation.

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July 15, 2022
What To Do With a MissedSuper Deadline

Although employee super guarantee payments may not be at the top of your list when it comes to managing your business finances, they should be very close to avoid charges and more serious issues with ongoing payment delays.

With the July 28 deadline just around the corner (consider this a reminder!), we thought we’d look at what you should do with a missed super deadline or indeed if you’ve simply paid an incorrect amount.

There is a charge …

The penalty for late super (which also applies if you need to adjust after an incorrect payment), is called the Superannuation GuaranteeCharge (SGC) and is calculated based on how much you owe alongside the recipient’s salary. The fee includes:

• The shortfall amount (if the contribution is late OR incorrect)

• Interest of 10% per annum, and

• an administration fee of $20 per employee, per quarter

But don’t let panic set in…

Firstly, if you realise you’ve underpaid or missed a payment, remain calm and contact the ATO once you’ve identified the issue and the details around amount(s) missed or underpaid.

If Attune act as your accountant, missing a payment like this will be very unlikely, but if you think there is an error, contact us so we can check your workings and take appropriate action with the ATO if required.

It’s important to note that if the amount is restrictive for your business, the ATO can support you with payment options within reason.

How can I avoid missed or incorrect payments moving forward?

Put simply, with the Attune team on your side, you’ll be sitting pretty. But, if you’re yet to have us assist with this kind of thing here are some considerations:

  1. Your employee’s super contribution is only considered“paid” on the date it is received by the super fund. This is a big deal – paying on the due date, may find you with an unintended SGC fee.
  2. If you’re using a clearing house, ensure you’re aware of their processing timeframes as any payments that don’t arrive in the fund on time will be considered late.
  3. Using Single Touch Payroll-compliant platforms allow you to set up regular payment systems that take care of on-time payments. If you’d like help setting this up for your business, the Attune team is here to assist.
  4. For a self-service style approach, the ATO have a solid super guarantee compliance system that can help you get your payments right byway of tools and calculators. You can contact the ATO for specific help on this via phone on 13 10 20.
  5. Speak with the Attune team. We can put the right strategies in place for your business that will help you manage your super payments effectively and with very little effort on your part. You can start the conversation with us via email or by calling us on 1300 866 113.

One more thing …

Although the SGC is not tax deductible (and companyDirectors can be held personally liable for fees), there are options for offsetting late payments against the SGC, but eligibility criteria apply which is again, something we can assist you with.

If you’d like help managing your business’ super contributions or indeed your own Self Managed Super Fund, the Attune team is perfectly equipped to assist.

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