Super contribution caps to rise
The big news story for those contributing to super is that the
contribution caps are set to increase from the 2025 income year.
- The
concessional contribution cap will increase from $27,500 to $30,000.
This 'CC' cap is broadly
applicable to employer super guarantee contributions, personal deductible
contributions and salary sacrificed contributions.
- The
non-concessional contribution cap will increase from $110,000 to $120,000.
This 'NCC' cap is
generally applicable to personal non-deductible contributions.
The increase in the NCC cap also means that the maximum available under
the three-year bring forward provisions will increase from $330,000 to $360,000. This is provided that the 'bring forward' is
triggered on or after 1 July 2024.
The 'total superannuation balance' threshold for being able to make non-concessional contributions (and the
pension general transfer balance cap) will remain at $1.9 million.
Small business concessions
The ATO has recently issued a reminder that small business owners may be
eligible for concessions on the amount of tax they ultimately pay.
This depends on their business structure, their industry and their
aggregated annual turnover.
For example, small business owners who have an aggregated annual
turnover of less than:
- $2 million can access the small
business CGT concessions;
- $5 million can access the small
business income tax offset; and
- $10 million can access the small
business restructure roll-over.
The ATO expects small business owners to check their eligibility each
year before they apply for any of these concessions.
Furthermore, taxpayers generally need to keep records for five years to
prove any claims they make.
Editor: We are always on the look-out for what tax concessions may be of use to our clients based on their individual circumstances. These small business concessions in particular, can be very beneficial when applicable.
FBT time is fast approaching!
The ATO has advised employers that 'FBT time' is just around the corner,
and they need to stay on top of their fringe benefits tax (FBT) obligations.
Employers need to ensure they have attended to the following matters
this FBT time:
- Identify if they have an FBT liability
regarding fringe benefits they have provided to their employees or their
associates between 1 April 2023 and 31 March 2024.
- Identify if they have an FBT liability as
they will need to lodge an FBT return and pay the amount due by 21 May.
- Identify if they are currently registered
for FBT and let the ATO know if they do not need to lodge an FBT returnn (Editor: by asking us to lodge an FBT non-lodgment notice) to prevent the ATO
seeking a return from them at a later date.
- Employers should also remember that when
the new FBT year starts on 1 April, they can choose to use existing records
instead of travel diaries and declarations for some fringe benefits.
Furthermore, the ATO has released PCG 2024/2 which provides a
short cut method to help work out the cost of charging electric vehicles ('EV')
at an employee's home for FBT purposes.
Eligible employers can choose to use either the EV home charging rate of
4.2 cents per kilometre or the actual cost.
Ultimately, all employers need to make sure they understand their FBT
obligations and the records they need to keep to avoid an FBT liability.
Jail sentence for fraudulent
developer
A developer who conspired to lodge fraudulent business activity
statements has been convicted and sentenced to 10 years in jail with a
non-parole period of six years and eight months.
The developer was involved with two companies that formed part of a
group known as the 'Hightrade Group' which developed properties such as a hotel
and golf course in the Hunter Valley, NSW.
The developer fraudulently obtained GST refunds by using three tiers of
companies (developers, building companies and suppliers) to grossly inflate the
construction costs of his developments.
The companies he was involved with also claimed to have purchased goods
when no such purchases had occurred. In
total, the developer intended to cause a loss to the Commonwealth of more than
$15 million.
His sentencing has closed a complex case, known as Operation 4. The ATO noted that "Tax crime, like the fraud uncovered in Operation 4, affects the whole community."
Penalties soon to apply for
overdue TPARs
Businesses that pay contractors to provide certain services may need to
lodge a Taxable Payments Annual Report (TPAR) by 28 August each
year.
From 22 March, the ATO will apply penalties to businesses that:
- have
not lodged their TPAR from 2023 or previous income years;
- have
received three reminder letters about their overdue TPAR.
Taxpayers that do not need to lodge a TPAR can submit a 'non-lodgment advice form'. Taxpayers that no
longer pay contractors can also use this form to indicate that they will not
need to lodge a TPAR in the future.
Avoiding common Division 7A errors
Private company clients who receive payments, benefits or loans from
their private companies need to ensure compliance with their additional tax
obligations (which are often referred to as their 'Division 7A' obligations).
There are multiple ways in which business owners may access private
company money, such as through salary and wages, dividends, or what are known
as complying Division 7A loans.
Division 7A is an area where the ATO sees many errors and the ATO is
currently focused on assisting taxpayers in managing their obligations when
receiving payments and benefits from their private companies.
In this regard, the ATO has recommended that business owners do the
following:
- keep adequate records;
- properly account for and
report payments and use of company assets by shareholders and associates; and
- comply with rules around
Division 7A loans.
Understanding these Division 7A obligations is essential in order to:
- make informed decisions when
receiving private company money and using private company assets; and
- avoid unexpected and
undesirable tax consequences.