Superannuation downsizing measures to become reality

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The government has passed elements of its housing affordability plan, allowing those over the age of 65 to funnel money from the sale of their home into super.

As of 1 July 2018, Australians aged 65 and over who are selling a home they’ve owned for at least 10 years will be able to funnel up to $300,000 of the proceeds into their superannuation accounts.

This is “over and above existing contribution restrictions”, Treasurer Scott Morrison and assistant minister, Michael Sukkar MP said in a statement about the First Home Super Saver Scheme (FHSSS).

They said: “The downsizing measure removes a financial obstacle from older Australians who are considering moving to homes that better suit their needs.

“Both members of a couple may take advantage of this measure, together contributing up to $600,000 from the proceeds of the sale into superannuation.

“This will encourage older Australians, where appropriate, to free up homes that no longer meet their needs for younger growing families.”

Simultaneously, first home buyers will be able contribute up to $30,000 into superannuation.

According to the ministers, this means “most first home buyers will be able to accelerate their savings by at least 30 per cent using the scheme”.

“The measures legislated today are part of the Turnbull government’s comprehensive approach to housing affordability,” they continued.

The Treasurer called the incentives a “very significant tax cut” as those first home buyers would be granted the lower rate of tax afforded by putting their money into superannuation.

The FHSSS legislation comes as the Turnbull government announces that Treasury will review the rules that govern the early release of superannuation when it comes to financial hardship and on compassionate grounds.

It will also consider the circumstances under which superannuation assets could be made available to pay compensation to victims of crime.

 

If you have any questions regarding the above please call (02 9954 3843) or email us (admin@hurleyco.com.au).

 

Reference: https://www.nestegg.com.au/tax/11263-superannuation-downsizing-measures-to-become-reality?utm_source=Nestegg&utm_campaign=11_12_17&utm_medium=email&utm_content=1

 

 

ATO’s 2018 hit list targets smaller tax avoiders

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In an interview with Acuity, Australian Tax Commissioner Chris Jordan FCA spells out his new agenda for 2018, where he sets small business and big spenders in his sights.

In Brief

  • ATO Commissioner Chris Jordan gives Acuity the first detailed explanation of his 2018 tax “hit list”.
  • The hit list focuses on small businesses and individuals, after several years of focus on large businesses and multinationals.
  • Undeclared income, wrongly-claimed expenses and unpaid superannuation are key features of the 2018 hit list.

By David Walker.

Australian Tax Commissioner Chris Jordan has revealed in detail the tax issues that the Australian Tax Office will target in 2018 as it moves its focus to individuals and small business.

The hit list for 2018 and beyond includes undeclared business income, wrongly-claimed non-business expenses and unpaid superannuation guarantee contributions.

In a frank interview with Acuity, Jordan confirms the ATO believes it can now gain more from these smaller targets than from large multinationals. Big businesses, from BHP Billiton to Google, have been the highest-profile ATO focus for most of Jordan’s time as commissioner.

Jordan told Acuity that the “tax gap” – the estimated gap between tax theoretical tax payable and the amount actually paid – is bigger for small taxpayers as a group than for its “large market” group of big businesses. The ATO estimates the large market tax gap at A$2.5 billion. 

Next year’s hit list is based both on internal ATO work and on the work of the federal government’s Black Economy Task Force, says Jordan. The Task Force report is yet to be released.

Here the Tax Commissioner walks Acuity through the detail of the ATO’s 2018 list of target issues one by one:

  • Undeclared income: “If we look at cash businesses, for example, why today do people want to have a cash-only business?” Jordan asks. “People say to me: ‘it’s terrible – people steal the money, you’ve got to count it, you’ve got to reconcile it, you’ve got to have security around it, you’ve got to take it to the bank’ … There’s no compelling business reason to have cash only.” Cash-only businesses are often paying cash salaries, and that may mean employees are also failing to receive proper conditions and benefits.
  • Unexplained wealth or lifestyle:Jordan gives the example of a business-owning family which has reported parent incomes of $70,000 and $50,000, but has three children at private schools and has taken business class flights on overseas trips three times in the past two years. The ATO can source such information through feeds from the Department of Immigration, and even Facebook when the ATO risk filters throw up flags, he says. 
  • Private expenses wrongly claimed: Salary and wage-earners are claiming expenses that they can’t prove are related directly to work. And there are “small businesses that are mingling some of their private expenses with their business expenses”. Jordan acknowledges expenses have long been an issue for the ATO, but  he wants to “renew the discussion to highlight that we are going to be focusing on these areas”.
  • Unpaid superannuation guarantee contributions: Unlike cash wages, unpaid contributions create “a real loss” for the employee, he says, so there will be “a much greater focus” on the issue. The new single-touch payroll reporting system, which starts in July 2018, will provide the ATO with much better and earlier information on unpaid contributions.
  • Concentrations of cash-only businesses: The ATO has been making visits to businesses based on a data map of cash-only businesses and those which do not much use electronic payment facilities. Suburbs visited include Sydney’s Cabramatta and Haymarket. Some visits have been made in tandem with the Fair Work Commission or the Department of Immigration. “Often there are people there that are not supposed to be working, or they’ve overstayed visas,” he says.

He also repeats previous concerns that tax agents often fail to check that individual taxpayer clients have actually spent money before on “standard” claims for clothing, laundry and car expenses.

As commissioner, Jordan says he needed to previously address the tax failings of large businesses before he could turn his attention to smaller businesses and individuals.

He also criticises the attitudes of people who take a casual approach to paying their own tax but are outraged to hear of people abusing the welfare system. Cash payments facilitate welfare fraud, he notes. And he points out that undeclared income is one area where the ATO can use its data intelligence and analytics better. 

Reference: https://www.acuitymag.com/finance/atos-2018-hit-list-targets-smaller-tax-avoiders?ecid=O~E~Newsletter~Acuity~201710