Category Archives: Q&A

Q&A8 Contribution payment timing

Tax Planning Questions and Answers

Do I have to pay my superannuation contribution prior to 30 June to ensure its tax deductible in that year?

Answer – Yes. In both cases where you pay employee super and personal superannuation contributions, you must ensure the payment has not only been made, but to be certain, the payment must have also been cleared in your bank account. It is best not to leave these type payments until 30 June, in fact, to be sure make them at least 5-10 days prior to 30 June.

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A7 Super Co-contribution payments

Tax Planning Questions and Answers

Super Co-contribution payments

Answer: If you are a low or middle-income earner and make personal (after-tax) super contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount of $500.

You will be eligible if you can answer yes to all of the following:

  • you made one or more eligible personal super contributions to your super account during the financial year
  • you pass the two income tests
    • your total income for the financial year is less than the higher income threshold ($50,454 for 2015-16)
    • 10% or more of your total income comes from eligible employment-related activities or carrying on a business, or a combination of both
  • you were less than 71 years old at the end of the financial year
  • you did not hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa)
  • you lodged your tax return for the relevant financial year.

You are not entitled to a super co-contribution for personal contributions you have been allowed as a tax deduction.

Source: http://bit.ly/1Mc167f

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A6 Self Education Expenses

Tax Planning Questions and Answers

Can I claim Self Education Expenses for a course I am undertaking?

Answer – Self-education expenses are deductible when the course you undertake leads to a formal qualification and meets the following conditions.

a) The course must have a sufficient connection to your current employment and:

  • maintain or improve the specific skills or knowledge you require in your current employment, or
  • result in, or is likely to result in, an increase in your income from your current employment.

You cannot claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current employment even though it:

  • might be generally related to it, or
  • enables you to get new employment.

Source: http://bit.ly/1BLosLZ

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A5 Super Contribution Splitting

Tax Planning Questions and Answers

Splitting your Super contribution into your Spouse’s super and reap the tax savings rewards

Answer: You can split up to 85% of you pre-tax super contribution with your spouse. This can help their super grow and possibly reduce the tax you’ll pay as well if you make salary sacrifice contributions. The types of contributions you can split include your Super Guarantee Liability and Salary Sacrifice (RESC).

Source: http://bit.ly/1PSxVRh

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A4 Tax on Interest or Dividends

Tax Planning Questions and AnswersDo I pay more tax on Interest or Dividends?

Answer – They are taxed is the same, it’s at your marginal rates (for individuals). What makes these two types of income streams different for tax purposes are:

Interest is paid on funds held in bank accounts or that were loaned to people/entities. Dividends are distributions to shareholders;

a) If any tax is withheld, it is prior to its distribution to you.

b) In most cases, Interest has no tax withheld from it prior to it being paid to you (an exception to this is where you have not quoted your TFN to the bank or are a foreign resident).

Dividends are made up of Franked and Unfranked components. Franked Dividends have had 30% tax taken out already when they are paid to you. You can claim the tax taken out already in Franked Dividends as a credit, which helps reduce your overall tax payable / refundable for an income tax year. Unfranked dividends, are like interest and have no tax withheld from it prior to it being paid to you (an exception to this is where you have not quoted your TFN to the bank or are a foreign resident).

c) How they are treated when bank accounts are closed versus selling your shareholding.

When you close a Bank Account or are repaid a loan that was earning interest, these are cash payments and the type of assets are all cash. The are no Capital Gain Tax Implications on Cash Assets.

On the other hand, any profit between the sale price and the purchase price of shares sold are subject to Capital Gains Tax. If you have owned the shares for more than 12 months, current law allows you to half that capital gain (for individuals).

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A3 Spouse Super Contribution Rebate

Tax Planning Questions and AnswersHave you heard about the “Spouse Super Contribution Rebate”

Answer: You will be entitled to a tax offset of up to $540 per year if:

  • You make an after-tax contribution of up to $3,000 into your spouse’s super;
  • the sum of your spouse’s assessable income, total reportable fringe benefits amounts and reportable employer superannuation contributions was less than $13,800
  • the contributions were not deductible to you
  • the contributions were made to a superannuation fund that was a complying superannuation fund for the income year in which you made the contribution
  • both you and your spouse were Australian residents when the contributions were made, and
  • when making the contributions you and your spouse were not living separately and apart on a permanent basis.

Source: http://bit.ly/1q4RTTO

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A2 Work Related Expenses

Tax Planning Questions and AnswersIf I have my Work Related Expenses reimbursed, can I also claim them as a tax deduction in my personal tax return?

Answer – No, because your Employer will claim the reimbursement paid to you as a tax deduction and because you have been reimbursed, you’re overall out of pocket expense is $Nil.

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Q&A1 Work related expenses

Tax Planning Questions and AnswersAm I better to have a work related expense reimbursed from my Employer or claim it as a tax deduction?

Answer – This one is easy, you are always better to have any work related expenses reimbursed from your employer as opposed to not having it reimbursed and claiming it as a tax deduction. Why? Because when you claim work related expenses as a tax deduction, you will only get the percentage of tax saved as a benefit. The top marginal tax rate is 49% (including medicare levy), therefore, the maximum benefit you will get from any tax deduction is 49% of its cost. If you are reimbursed for the expense, the benefit you have received will be 100%.

 

Disclaimer

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.