November 2023 Newsletter

Contents:

ATO flags small business tax debt, SG as key focus areas for FY23–24
Staffing over the holiday season: What’s legal and what’s not?
How your super will be taxed when you die
Draft legislation for tax on members with more than $3m in super
Employers are ‘oblivious’ to casual employee rights
Are you paying tax by not starting a super pension?
Announcements

ATO flags small business tax debt, SG as key focus areas for FY23–24

Addressing collectable debt and improving small business tax performance continue to be critical focus areas, the ATO warns in its annual report.

The Tax Office has outlined that addressing collectable debt, improving small business tax performance and strengthening superannuation guarantee (SG) will be important focus areas in the ATO’s strategy for the remainder of the 2023–24 financial year.

Staffing over the holiday season: What’s legal and what’s not?

The holiday season is a time for many of us to unwind, but if you’re a small business owner, the festive season can bring a level of stress. Many businesses wind down over Christmas and New Year – and many employees plan to take leave because their workplace will shut.

Whether you’ll be open for business or not, how can you confidently navigate what you can and can’t legally do over the holiday season? We spoke to Sam Nottle, Senior Associate at employment law firm JewellHancock, to find out.

How your super will be taxed when you die

We are in the opening stages of the largest intergenerational wealth transfer in history. An estimated $3.5 trillion of assets in Australia will be passed on prior to 2050. As it stands now, 21% of household wealth is held in superannuation. As contributions continue to rise superannuation will continue to be a significant stake of household wealth.

When this transfer of superannuation takes place, how much will go to your next of kin?

Draft legislation for tax on members with more than $3m in super

Fundamentally, the Government hasn’t moved from its original direction and so the deeply unpopular elements remain:

The mechanism for calculating the “earnings” that will be taxed is based on movement in a member’s total superannuation balance. By default, that will include unrealised capital gains.
No refunds in years when earnings are negative.

Employers are ‘oblivious’ to casual employee rights

Casual employees have been a key part of the Australian workforce since the 1980s. However, all these years on, casual employees tend to be unaware of their entitlements.
In 2022, twenty-three per cent of the Australian workforce was employed on a casual basis.
Despite this, according to the Australian Council of Trade Unions (ACTU), casual employees in Australia are paid $11.95 less per hour than permanent employees.

Are you paying tax by not starting a super pension?

Over age 60, superannuation benefits paid as either a lump sum or pension are tax free and not assessable for income tax. Why doesn’t everyone convert from accumulation to pension as soon as possible? In the recent Class Benchmark Report, one graphic stood out. While only 12% of SMSF members aged 65 and over remained entirely in accumulation, half of APRA fund members over 65 had not switched any of their super to pension. The amount not switched to pension by over 65s is estimated at $225 billion. They may be paying too much tax and should be advised of the choice.

Announcements:

This month we have no work anniversaries or birthday’s to acknowledge!

Important ATO Dates

Lodgement Program	Date
October monthly activity statements	21/11/2023
Quarter 1 (July–September) activity statements lodged electronically – final date for lodgment and payment	28/11/2023

Other News

Office Closed

Our office will be closed the afternoon of Friday 10 November from 12.30 pm for a staff function. We apologise for any inconvenience!

31 October Tax Deadline???

About this time every year the ATO heavily advertise that your tax return is due by 31 October 2023 and you need to lodge it by this date to avoid fines (starting at $313 and increasing to a maximum of $1,565).

Please note that this deadline only applies to those taxpayers that prepare and lodge their own return (a self-preparer). If you are on a tax agents lodgement list (as all our clients are) you receive a lodgement extension through to 15 May 2024 (there are some excepts).

If you have any queries please contact our office!

50% Pension Drawdown Ended 30 June 2023

The government had applied reduced minimum drawdown rates by 50% for all account-based pensions, up to 30 June 2023 as a COVID relief measure. However, from 1 July 2023, the government’s standard minimum drawdown rates will apply to all account-based pensions, with no reductions.

AGE AT 1 JULY EACH YEAR	MINIMUM DRAWDOWN RATES
Preservation age to 64	4%
65 to 74	5%
75 to 79	6%
80 to 84	7%
85 to 89	9%
90 to 94	11%
95 and over	14%

Automatic Refunds of Franking Credits

During tax time 2023, to make it easier to receive your refund the ATO will automatically refund franking credits to eligible individuals and issue them a notice of assessment. To do this they use information that is reported to them by share registries. Unless advised by the ATO, eligible people won’t need to separately apply for a refund of their franking credits.

For more information

Quarterly SMSF Reporting (TBAR)

This is a reminder to all Self Managed Superannuation Fund (SMSF) Trustees that you may be required to provide quarterly ‘Transfer Balance Account Reporting’ (TBAR) reports if certain events have occurred over the last quarter.

These events include:

Starting a new retirement phase and/or death benefit income stream
If you paid yourself a lump sum amount from your retirement phase income streams (in addition to your regular pension payment)
Made payments under a limited recourse borrowing arrangement (LRBA) where the payment results in an increase in the value of the member’s interest that supports their retirement phase income stream
Complied with a commutation authority issued by the Commissioner
Received a personal injury (structured settlement) contribution

* Please note that regular pension payments do not need to be reported – see point 2 above! If you are unsure if any of these events have occurred, please contact your financial adviser for clarification.

If none of these events have occurred no action is required at this time but you may be affected in future quarters.

Please contact our office at your earliest convenience if anyone of the above events has occurred as we will lodge the TBAR report on your behalf by the lodgement date. Alternatively, please let us know if you would like to undertake this compliance requirement yourself.

If you have any further queries please contact our office!