1st Quarter 2016

The Federal Government announced that there will be "no new taxes on superannuation" and only a few proposed super changes including:

RELAXATION OF EARLY RELEASE RULES FOR THOSE WITH A TERMINAL ILLNESS

From 1 July 2015, the Government proposes to amend the provision for accessing superannuation for people with a terminal illness. Under the current provisions, in order to gain unrestricted access to their super a patient must currently have two medical practitioners certify that they are likely to die within one year. The Government will change this life expectancy period to 2 years.

CUTTING THE RED TAPE FOR UNCLAIMED AND LOST SUPER

From 1 July 2016, a package of measures is proposed to reduce the red tape for super funds and individuals around lost and unclaimed super. Redundant reporting obligations will be removed and lost and unclaimed super administrative arrangements will be streamlined.

These changes will make it easier for individuals to be reunited with their lost and unclaimed super.

TIGHTER ACCESS TO THE AGE PENSION.

From 1 January 2017, the government will increase the assets test limit to qualify for a full pension. The maximum value of assets a person can own, in addition to their family home, and still receive the full pension will increase from $202,000 to $250,000 for single homeowners. For couples who own their own home this figure will increase from $286,500 to $375,000. Pensioners who do not own their own home will have their threshold increased to $200,000 more than homeowner pensioners.

The maximum value of assets a retiree can hold beyond the family home and qualify for a part pension will be reduced. The new thresholds will be $823,000 (decrease from $1.15 million) for a homeowner couple and $547,000 (decrease from $775,000) for a single homeowner. The previously announced proposal by the Government to change the indexation of the age pension has been dropped.

What’s counted under the assets test?

Every asset you own (including the market value of your super pension, collectibles, personal use assets, motor vehicles) other than your family home is counted in this test.

One strategy worth considering if you might lose access to a part-pension is superannuation splitting. This works where one partner in a couple is younger than the other. Under the assets test, the super of your partner is not included if they are not yet of pension age. So, while you will now be effectively assessed under the lower single assets test limit and CentreLink will consider your combined assets, they will exclude your partner’s super balance.

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MEDICARE LEVY INCREASE

From 1 July 2014, the government increased the Medicare levy rate from 1.5% to 2% of taxable income for the 2014–2015 income year and later income years to help fund DisabilityCare Australia.

Medicare levy low-income thresholds will be increased from 1 July 2015. The thresholds under which you don’t have to pay the Medicare levy are increasing as follows:

• Senior Australian Pensioner Tax Offset recipients - $33,044 (up from $32,279);
• Couples with no children - $35,261 (up from $34,367);
• Couples with dependant children - $35,261 (up from $34,367) plus $3,238 for each dependant child; and
• Singles - $20,896 (up from $20,542).

TEMPORARY BUDGET REPAIR LEVY

As part of the 2014–2015 federal Budget the government introduced a temporary budget repair levy. From 1 July 2014, individual taxpayers with a taxable income of more than $180,000 per year have had additional tax withheld by their employer. The levy is payable at a rate of two per cent of each dollar of a taxpayer’s taxable income over $180,000. If the levy applies to you, it will appear on your 2015 notice of assessment.

NET MEDICAL EXPENSES TAX OFFSET PHASE-OUT

The net medical expense tax offset (NMETO) is being phased out. To be eligible to claim the NMETO in your 2015 tax return, you must have received an amount of the tax offset in both your 2013 and 2014 notices of assessment. If you did, you can claim for all types of eligible medical expenses.

If you did not receive an amount greater than zero for this offset on both your 2013 and 2014 notices of assessment you can only claim net medical expenses that relate to disability aids, attendant care or aged care.

The eligibility rule does not apply to out-of-pocket medical expenses relating to disability aids, attendant care and aged care. These expenses can continue to be claimed until 30 June 2019.

MATURE AGE WORKER TAX OFFSET ABOLISHED

The mature age worker tax offset has been abolished and cannot be claimed in your 2015 tax return. The 2014 tax return was the last tax return in which the offset could be claimed.

NOTICE OF ASSESSMENT AND TAX RECEIPT DELIVERY FOR MYGOV ACCOUNT HOLDERS

If you have created a myGov account and linked the ATO you will receive your notice of assessment, tax receipt and other mail direct to your myGov Inbox. By linking the ATO to your myGov account you have agreed to receive ATO correspondence in your myGov Inbox, instead of the ATO sending the mail to you.

TAX FILE NUMBER (TFN) DECLARATION FORMS

TFN declaration forms will no longer include a payer’s copy. For record keeping purposes, you will need to make your own copies of completed declaration forms.

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14 JULY 2015

• Payers must issue 2014-2015 PAYG Withholding payment summaries to payees (that is, employees and other workers).

21 JULY 2015

• June 2015 monthly activity statements - final date for lodgement and payment. To ensure you receive the correct amount of credit in your income tax assessment, finalise all your PAYG instalments before you lodge your tax return.

• Taxable payments annual report – final date for lodgement. Businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year.

28 JULY 2015

• Superannuation guarantee contributions for Quarter 4 (April - June 2015) are to be made to the fund by this date. If an employer does not pay the minimum superannuation guarantee contributions for Quarter 4 by this date, they must pay the SGC and lodge a Superannuation guarantee charge statement-quarterly by 28 August 2015. The SGC is not tax deductible.

14 AUGUST 2015

• PAYG withholding payment summary annual report – final date for lodgement for payers who have no tax agent or BAS Agent involved in preparing the report. Use this to report amounts withheld from salary and wages and other payments. These amounts are reported at Label W2 of the activity statement.

21 AUGUST 2015

• July 2015 monthly activity statements - final date for lodgement and payment.

25 AUGUST 2015

• Quarter 4 activity statements (April - June 2015) – final date for lodgement and payment for electronic lodgement (ELS, ECI, Tax Agent Portal or BAS Agent Portal). To ensure you receive the correct amount of credit in your income tax assessment, finalise all your PAYG instalments before you lodge your tax return.

28 AUGUST 2015

• Superannuation guarantee charge statement quarterly – due date and payment if the employer did not pay enough contributions on time.

21 SEPTEMBER 2015

• August 2015 monthly activity statements - final date for lodgement and payment.

30 SEPTEMBER 2015

• PAYG withholding payment summary annual report – final date for lodgement for payers who use a tax agent or BAS Agent to help prepare the report.

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SMSF BANK ACCOUNT AND ELECTRONIC SERVICE ADDRESS DETAILS

The Self-managed superannuation fund annual return 2015 has been updated to:

• allow self-managed super funds (SMSFs) to provide different bank accounts for tax refunds and super payments (such as super co-contributions or unclaimed super money rollovers); and
• collect the electronic service addresses of SMSFs.

SMSF TAX RATE CHANGES

Due to the temporary budget repair levy and increase in the Medicare levy, the following tax rates for SMSFs have also changed.

The tax rate for arm's-length income of complying SMSFs remains unchanged at 15%.

MINIMUM ANNUAL PENSION PAYMENT

Trustees are reminded to make sure any members in pension phase have been paid the annual minimum pension amount. Once an account-based pension commences, there is an ongoing requirement for you, as trustee of a complying super fund, to ensure the pension standards in the super laws are satisfied; this includes meeting the minimum pension payment requirements.

If a fund fails to meet the minimum pension payment requirements in an income year the super income stream will be taken to have ceased at the start of that income year for income tax purposes.

From the start of the income year the account is no longer supporting a super income stream and any payments made during the year will be super lump sums for both income tax and SIS Regulations purposes.

This is the case even if the member remains entitled to receive a payment from the fund for the pension under the governing rules or under general trust law concepts. This means the fund will not be entitled to treat income or capital gains as exempt current pension income (ECPI )for the year.

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