From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30% to 15% (excluding the Medicare levy) and may be liable to pay Division 293 tax.
The Government has introduced this measure to make the superannuation system fairer by reducing the higher tax concession that very high income earners receive on their concessional contributions, to align it more closely with the concession received by average income earners. This reform will only reduce the tax concession which very high income earners receive on their contributions into superannuation.
The definition of 'income' for the purpose of this measure will include taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free government pensions and benefits, less child support.
Concessional contributions' for the purpose of this measure include all employer contributions (both superannuation guarantee and salary sacrifice contributions) and personal contributions for which a deduction has been claimed. For members of defined benefit funds (both funded and unfunded schemes), it will include all of their notional employer contributions.
If an individual’s income for surcharge purposes and low-tax contributions are greater than $300,000, they may have to pay an extra 15% tax on their Division 293 taxable contributions. Taxable contributions will be either the low-tax contributions amount or the excess above the $300,000 threshold – whichever is the lower amount.
If an individual's income excluding their concessional contributions is less than the $300,000 threshold, but the inclusion of their concessional contributions pushes them over the threshold, the reduced tax concession will only apply to the part of the contributions that are in excess of the threshold.
For example, someone with income excluding their concessional contributions of $285,000, and concessional contributions of $20,000 (taking their total income to $305,000), would have the reduced tax concession only apply to $5,000 of their contributions.
The reduced tax concession will not apply to concessional contributions which exceed the concessional contributions cap and are therefore subject to ‘excess contributions tax'. These contributions are effectively taxed at the top marginal tax rate and therefore do not receive a tax concession.
To calculate whether an individual has income and low-tax contributions greater than $300,000, the ATO will look at income reported on your income tax return and contributions reported in your member contribution statement (MCS) and/or self-managed superannuation fund (SMSF) annual return.
Division 293 tax notices of assessment will start issuing from early February 2014. The notice of assessment for Division 293 tax will state total earnings for Division 293 tax purposes, taxable contributions and the amount of Division 293 tax (15% of the taxable contributions) that is due and payable by the prescribed due date.
Individuals are responsible for paying their Division 293 tax liability by the due date, which is generally 21 days after the notice of assessment has issued. A release authority will be issued with the notice of assessment. Individuals can choose to use the release authority to have their fund pay the Division 293 tax or they can pay it out of their own pocket.
A business name is a name or title under which a person or entity conducts a business. In Australia, unless you fall within an exemption (refer to ASIC Regulatory Guide 235), you must register your business name with ASIC. It is a legal obligation if you plan to carry on business or trade in Australia using a name other than your own.
Exceptions to this include:
In order to register your business name with ASIC you must have an Australian Business Number (ABN) or an ABN application reference number and you must make sure the proposed business name is available to register. Registration periods are for either one year ($33) or three years ($76).
Registration doesn't provide exclusive ownership of your business name or preventing other people from being able to register and use similar names. Generally, the only way to get exclusive use of a particular business name is to register it as a trade mark.
CANCELLING YOUR BUSINESS NAME
If you've got a business name that you don't use, you should consider cancelling it. Cancelling your business name removes your current details from the Business Names Register and will make it available for others to use and in addition avoid reminder notices being sent from ASIC.
You need to be aware that when you cancel your ABN, the business name is not automatically cancelled by ASIC and you still need to cancel your business name through ASIC.
If you've sold or handed over your business to a new owner, and the business name was part of the agreement, you'll need to transfer it. Transferring the business name reserves the name for the new owner, so no one else can register it.
21 APRIL 2014
• March 2014 monthly activity statement except for small business clients who report GST monthly and lodge electronically using a registered agent.
28 APRIL 2014
• Super guarantee contributions for Quarter 3 (January – March 2014) are to be made to the fund by this date. Employers who do not pay minimum super contributions for Quarter 3 by this date must pay the super guarantee charge and lodge a Superannuation guarantee charge statement - quarterly (NAT 9599) with the ATO by 28 May 2014. Remember, the super guarantee charge is not tax deductible.
15 MAY 2014
• Income tax returns for the 2013 financial year for all other entities that did not have to lodge earlier and are not eligible for the 5 June 2014 concession. Due date for lodging and due date for company and super funds to pay where required. Individuals and trusts in this category to pay as per their notice of assessment.
21 MAY 2014
• April 2014 monthly activity statement - due date for lodgement and payment.
• Final date for appointing a tax agent for a fringe benefits tax role. You must tell us by this date to make sure you receive the lodgement and payment concessions for fringe benefits tax returns.
26 MAY 2014
• Quarter 3 activity statements (January - March 2014) - due date for lodgement and payment (all lodgement methods).
28 MAY 2014
• Superannuation guarantee charge (SGC) statement - quarterly and paying the super guarantee charge for Quarter 3 (January – March 2014), if the employer did not pay enough contributions on time.
5 JUNE 2014
• Income tax return lodgement for the 2013 financial year, including companies and super funds where the return is not required earlier and both of the following criteria are met: non-taxable or refund as per latest year lodged and non–taxable or receiving a refund in the current year. This is for all entities with a lodgement end date of 15 May 2014, excluding large/medium business taxpayers. Income tax returns due for individuals and trusts with a lodgement end date of 15 May 2014 provided they also pay any liability due by this date. This is not a lodgement end date but a concessional arrangement where you will not have to pay failure to lodge on time (FTL) penalties if you lodge and pay by this date.
21 JUNE 2014
• May 2014 monthly activity statement – due date for lodgement and payment.
30 JUNE 2014
• Last day for appointing a registered agent for an activity statement role. You must tell us by this date to make sure your Quarter 4 activity statements are linked to us.
• Super guarantee contributions must be paid by this date to qualify for a tax deduction in the 2013–14 financial year.
Receive FREE information and advice on Accounting & Taxation every QuarterSignup