Controversial South Australian land tax changes were approved and passed by SA Parliament on 28th November 2019. The new bill won the support of both houses after further concessions ensured the backing of the Greens in the upper house.

The reform package delivers $189 million in tax cuts to investors over three years, including tax relief for thousands of smaller family investors. It also slashes the top land tax rate from 3.7 per cent, the highest in the nation to 2.4 per cent. The Government hopes that this will deliver a more competitive, investment-attracting environment for the State, and would drive significant jobs and economic growth.

The government first unveiled the land tax reforms in the June state budget but the initial proposals were heavily criticised by business groups and investors. Since then it has revamped the legislation several times. In the most recent changes, it agreed to include a $25 million transition fund to help small investors who might be hit by the tax changes. The Government has kept one of the most controversial features, effectively closing a loophole which allowed some large investors with multiple holdings to avoid paying any land tax. The aggregation provisions stop people using complex ownership structures in order to reduce or eliminate their tax bill.

If you have any queries about Land Tax, please talk to your advisor today.

360Private is partnering with Ray White Marion and Brighton to present a Property Investment Seminar on Wednesday 28 August.

We invite you to attend and listen to a range of industry professionals who will present the most up to date information on assisting landlords and investors manage their portfolio and also gaining insight into how you can enter the market.

Please see the attached flyer with details of this complimentary seminar and ask you to book your ticket now through EventBrite via the link below, or contact Mel Charters for any assistance or queries you may have on 8291 2111.

https://www.eventbrite.com.au/e/property-investment-seminar-tickets-63616002175

Single Touch Payroll (STP) is an electronic method for employers to provide payroll information to the Australian Tax Office at the same time you pay your employees. This information will include details of salaries, wages, tax withholding and superannuation information. With the STP go-live date looming, the ATO and the Government have been busy releasing information on the practical application of STP in practice.

Below is a summary of some of the key announcements made that may affect you if you are a business that has employees.

• The ATO will offer micro employers (one to four employees) help to transition to STP and a number of alternative options — such as allowing those who rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run.
• Small employers can start reporting any time from 1 July to 30 September 2019. The ATO may grant deferrals on an application basis.
• There will be no penalties for mistakes, missed or late reports for the first year.
• The ATO will provide exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no Internet connection.
• Employers who do not have an Australian Business Number (ABN) but instead have a Withholding Payer Number (WPN) are exempt from reporting under STP for the 2018/19 and 2019/20 financial years.
• Insolvency practitioners are exempt from mandatory reporting through STP for the 2018/19 financial year in respect of the entities they administer.
• STP reports lodged by employers will be shared with social security agencies from 1 July 2020.

If you would like to discuss the impact of STP to your business, please contact your 360Private advisor today.

Why Should I have a Will?

Is a Will a must have or just something your advisors keep telling you that you need?

Let’s take a closer look.

When you pass away you will either have a Will, or not have a Will. If you have a Will then your Estate (a combination of your personal items, bank accounts, property, investments, superannuation, etc.) will be administered according to the terms of your Will and pass to the people you have nominated as beneficiaries. If you pass away without a Will it is said that you have died ‘intestate’ and your Estate will instead be distributed in accordance with the laws of intestacy.

Laws of Intestacy

Each Australian jurisdiction has legislation that prescribes how a person’s Estate must be distributed if they pass away intestate. This legislation varies significantly between jurisdictions.

In South Australia the laws of intestacy provide that:

1. If you have a spouse (this includes wedded spouses as well as domestic partners) and no children then your Estate will pass to your spouse. Sometimes it can be quite complicated for the surviving partner to prove the existence of the domestic relationship, especially in the case of blended families. Ex-spouses are also entitled to benefit in some circumstances, in which case your Estate may be split between spouses!
   
   
2. If you have a spouse and children, then your spouse will receive your personal items and the first one hundred thousand dollars ($100,000.00). The remaining assets will be split with half going to your spouse and the other half to your children. This can cause a lot of anguish and even financial hardship for your spouse if, for example, he/she only receives half of the house. The other half of the house will be held by the Public Trustee on behalf of any minor children until they reach the age of eighteen. This means that your spouse may be unable to sell the property without the consent of the Public Trustee. 
   
   
3. If you do not have a spouse or children then your parents will receive the full benefit of your Estate. If you do not have any parents living then your siblings and then nieces and nephews will benefit.

 A Valid Will

 The benefits of having a valid Will are:

1. You are able to ensure that the people you wish to benefit from your Estate do benefit. You are able to gift specific items or cash amounts to different people.
   
   
2. You are able to choose who will make arrangements for your Estate after you have passed away and to administer your Estate (this person is called the Executor). 
   
   
3. You are able to ensure that your beneficiaries receive their inheritance at an age you think will be appropriate. You may wish to ensure they do not have access to a large sum of money until they are older and more mature. 
   
   
4. You may direct that your assets are to be held in a Testamentary Trust for the benefit of one or more beneficiaries and their lineal descendants. Testamentary Trusts are tax effective and give additional protection to your inheritance from your beneficiaries’ spouses, bankruptcy and/or spendthrift habits! 
   
   
5. Your Estate will likely incur fewer costs and will be administered more quickly.

People often say they do not need a Will because they do not have any assets. Even if this is the case now, a lot can change by the time you pass away. Assets such as life insurance and superannuation benefits may form part of your Estate and can be more significant that you think.

If you have a spouse and/or children then passing away without a Will leaves them in a tough spot. They will likely incur significant legal costs, not to mention emotional hardship, in proving their relationship and/or paternity to the court. This sometimes creates disputes with your parents and/or siblings.

If you do not want the intestacy laws to apply to you, do not want additional costs to your Estate and wish to provide guidance and support to your next of kin then a Will is a must have!

Please contact Mark Lumley at 360Private Legal for personal and professional legal advice.

Retirement Village Contracts

Entering a retirement village is a major financial and lifestyle decision.  It is prudent to include your family in the decision to move in to a retirement village.

Retirement villages for the most part offer a fulfilling, communal lifestyle but you need to be aware of some of the key features of the retirement village model, these being;

• You don’t purchase the bricks and mortar of the retirement village unit, you are purchasing a right to occupy the unit by way of an interest-free loan to the retirement village operator;
• You do not receive a certificate of title and you will not be noted on the title (which is held by the retirement village operator);
• You are required to pay an entry fee which is returned to you or your estate less deductions when your tenure comes to an end;
• You still need to pay a regular maintenance fee (either weekly, fortnightly or monthly) whilst you are living in the retirement village; and
• Each retirement village has its own residence rules governing the conduct of the residents.

The financial contribution required to enter a retirement village comprises three categories of fees;

1. The ingoing contribution;
2. The ongoing contribution (usually described as the “maintenance fees” or “general service charges”); and
3. The outgoing contribution (which includes a “Deferred Management Fee” and outstanding charges).

Your solicitor or financial adviser will be able to discuss these fees with you and give you a general  idea of how much of your ingoing contribution will be returned to you or your estate once you leave the village. It should be noted that the amount that gets deducted will vary according to the length of your tenure – the longer you stay, the greater the deductions.

The contract and ancillary documents provided to a prospective resident are lengthy and comprehensive and can be quite overwhelming. In South Australia the contract must state in clear terms that it is recommended that you obtain legal and financial advice before entering the contract.

While it is not compulsory it is recommended that a prospective resident obtain independent legal advice before signing the contract. In addition to the financial considerations there are other matters that need to be considered such as;

• The services and facilities that are offered by the retirement village;
• The residence rules and their impact on you;
• Your rights and obligations in the event of a dispute with another resident or the retirement village operator; and
• Your rights and obligations in relation to termination of the contract.

It pays to know where you stand before you sign on the dotted line!

If you are considering moving in to a retirement village please contact Mark Lumley at 360Private Legal for personal and professional legal advice.

As you may be aware Single Touch Payroll (STP) is expected to become a requirement for all employers, regardless of employee headcount, from 1 July 2019.

Employers with more than 20 employees have been required to comply with STP since 1 July 2018, and generally do so using electronic payroll software specifically designed to handle the reporting requirements.

What is Single Touch Payroll?

Single Touch Payroll (STP) is an electronic method for employers to provide payroll information to the Australian Tax Office at the same time you pay your employees.  This information will include details of salaries, wages, tax withholding and superannuation information.

STP provides businesses with opportunities for efficiency, particularly around the end of the financial year. Organisations reporting via STP will no longer be required to complete employee payment summaries, as payroll and super information will already be available to employees through the MyGov system.

Australian Taxation Office Compliance

The ATO will initially take a soft-touch approach to STP compliance for smaller businesses, and have communicated that they will not force businesses to utilise a payroll or bookkeeping software. The intention is to support small businesses by assisting them to meet the requirements.

Although yet to be confirmed, micro-employers (1-4 employees) are expected to benefit from additional reporting options not available to larger employers, such as quarterly reporting via their registered tax or BAS agent initially rather than reporting each pay cycle.

Check your Software

If you have employees in your business, your existing payroll software may need to be upgraded for STP reporting – you will need to confirm these details with your current software provider or accountant.

Our team of Advisors are able to answer any queries that you may have around the introduction of STP, and have a great deal of experience in assisting with software transitions or upgrades.

Please contact us on 8291 2111 if you would like further information regarding STP, advice on your specific obligations and requirements, or assistance with selecting and moving to appropriate software packages.

Risk Claims

You automatically insure your car and house, and more than likely you have medical insurance too, but what about those things that are most important to you?  What could be more important that your family, your income and your life?

With any luck you will enjoy life without ever having to make a claim, but if something should befall you, insurance makes a world of difference to you and your family, relieving financial pressure at an already difficult and stressful time and ensuring you maintain your independence.

During 2018, 360Private have secured benefits for our Clients of over $630,000 – you and your family’s lifestyle is something you have worked hard to achieve, so protecting it is essential.

Whether you are looking to buy a new home, start a family, or nearing retirement our Risk Advice team can assist with a private assessment of your needs. Please contact us today.

Payroll Tax Reduction 1 January 2019

Please note that legislative amendments which reduce payroll tax for small businesses will come into effect from 1 January 2019, with businesses with an annual taxable wage of up to $1.5 million no longer liable for payroll tax. Those with taxable wages between $1.5m and $1.7m will benefit from a reduced payroll tax rate.  As these changes come into effect mid-financial year, the 2018-19 financial year will be split into two return periods:

Period 1: 1 July 2018 to 31 December 2018

Period 2: 1 January 2019 to 30 June 2019

What Do You Need To Know?

Will I Need To Continue To Lodge Monthly Returns?

• As payroll tax is based on your annual taxable wages, you will need to remain registered for the 2018-19 financial year. If you have advised RevenueSA that your estimated Australia-wide wages, or group wages, for the 2018-19 financial year are under $1.5m, RevenueSA will convert you to an annual cycle so you will not be required to lodge monthly returns for the January 2019 to May 2019 periods.

When Can I Lodge My 2018-19 Annual Reconciliation?

• You will need to complete the 2018-19 Annual Reconciliation by 22 July 2019. An email will be sent to you once the Annual Reconciliation opens in mid-June.

When Can I Cancel My Registration?

• If you expect your 2019-20 financial year Australia-wide wages, or group wages, to remain under $1.5m, you should cancel your registration as part of the 2018-19 Annual Reconciliation. If you cease employing in South Australia before 30 June 2019, please contact RevenueSA
  
  
• Employers with estimated wages between $1.5 million and $1.7 million for 2018-19

Will The Rate Change For My Monthly Returns?

• You will continue to lodge your monthly returns using your current deduction entitlement (now called the ‘exempt amount’). The rate of tax you pay will be automatically calculated when you complete and lodge your returns.
  
  
• The rate at which payroll tax is applied will depend on your estimated annual wages (for Period 2 between 0 per cent and 4.95 per cent). This will be automatically calculated through the online return process and a calculator will be available by mid-December this year to calculate your new rate.

Will Both Periods Be Calculated In My 2018-19 Annual Reconciliation?

• When you complete your 2018-19 Annual Reconciliation you will need to provide your, or your group’s, total South Australian and Australia-wide wages for the year, together with a split of wages for the two periods (as specified above). Payroll tax payable and the deduction/exempt amount will be calculated based on the proportion of your wages paid in each period.

Employers With Wages Over $1.7m For 2018-19

There is no change. You will continue to lodge your monthly and annual reconciliations returns using your current deduction entitlement (up to $600,000 p.a.).

Please call your Advisor today if you have any further queries.

Important: Clients should not act solely on the basis of the material contained above. Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This is issued as a helpful guide to clients and for private information. If you need any clarification or direct advice please call us and make an appointment with an Adviser.

New Law for Fodder Storage Assets

The Government has recently announced that it will assist farmers with drought proofing their properties by allowing all primary producers to immediately deduct the cost of fodder storage assets, rather than claiming the depreciation over 3 years.  This offers a significant tax incentive on investment in fodder storage items such as silos, grain storage, liquid feed supplement storage tanks, hay sheds etc.

You will be eligible to claim a deduction for the full cost of a fodder storage asset if you:

• Incurred the expense either
  • On or after 19 August 2018
  • before 19 August 2018 and it was first used or installed ready for use on or after 19 August 2018
• Mainly use it to store fodder
• Use it in a primary production business on land in Australia, even if you are only a lessee of the land
• Claim the deduction in the year you incurred the expense

Our Tax and Accounting specialists are able to assist you with any review of your current situation and determine where you may have a deduction entitlement.

Please contact us directly for more information or to discuss your personal situation. 

With the end of the 2018 income tax year rapidly approaching, this issue draws attention to year-end tax planning strategies and compliance matters that you need to consider to ensure good tax health. It focuses on the most important issues for small to medium businesses and individuals to consider.

Deferring derivation of income

If your business recognises income on an accruals basis (when an invoice is raised) and your cash flow allows, you may consider delaying raising some invoices until after 30 June, meaning the assessable income will be derived after the 2018 income tax year.

For business income derived on a cash basis (interest, royalties, rent and dividends), you may consider deferring the receipt of certain payments until after 30 June 2018. For example, setting term deposits to mature after 30 June 2018 rather than before.

Bringing forward tax-deductible expenses

To qualify for deductions in the 2018 income tax year, you may be able to bring forward upcoming expenses so that you incur them before 30 June 2018. Small businesses and individual non-business taxpayers may prepay some expenses (such as insurances and professional subscriptions) up to 12 months ahead. This should only be done subject to available cash flow and where the prepayment makes commercial sense.

Lower company tax rates and imputation

Company tax rates are falling in Australia. Companies carrying on a business with turnover of less than $25 million will pay a rate of 27.5% in 2018 – the rate of 30% only applies if turnover is $25 million or more, or the company is not carrying on a business.

By 2027, the tax rate will reach a low of 25% for companies carrying on a business with turnover up to $50 million.

Deductions for small business entities

Small business entities (companies, trusts, partnerships or sole traders with total turnover of less than $10 million) will qualify for a raft of tax concessions in the 2018 income tax year:

• the $20,000 instant asset write-off – an immediate deduction when buying and installing depreciating assets that cost less than $20,000.
• the simplified depreciation rules – accelerated depreciation rates of 15% or 30% for depreciable assets that cost $20,000 or more;
• the small business restructure rollover;
• an immediate deduction for start-up costs;
• an immediate deduction for certain prepaid expenses;
• the simplified trading stock rules – removing the need to do an end-of-year stocktake if stock value has changed by less than $5,000;
• the simplified PAYG rules – the ATO will calculate PAYG instalments;
• cash basis accounting for GST – the ATO will calculate the GST instalment payable and annual apportionment for input tax credits for acquisitions that are partly creditable;
• the FBT car parking exemption (from 1 April 2017); and
• the ability for employees to salary-sacrifice two identical portable electronic devices (from 1 April 2016).

These concessions are very powerful for small businesses, and can lead to substantial tax savings.

Small business CGT concessions

If you’re selling a business that has an aggregated turnover of less than $2 million (a “CGT small business entity”) or the value of its net CGT assets is $6 million or less (it satisfies the $6 million “net asset value” test), you may be able to access the small business CGT concessions.

These concessions include:

• a 15-year exemption – no CGT is payable;
• a 50% active asset reduction – a 50% CGT discount in addition to the 50% general discount;
• the retirement exemption – up to $500,000 lifetime tax-free limit; and
• the active asset rollover – minimum two years’ deferral.

No more Budget repair levy

The Budget repair levy (2% of the part of your taxable income over $180,000) no longer applies in 2018. This means that the top marginal rate for 2018 (including the 2% Medicare levy) is 47%, as opposed to 49% in 2017. The FBT rate is also 47% for the 2018 FBT year.

Deduct work-related expenses

People overclaiming deductions for work-related expenses like vehicles, travel, internet and mobile phones and self-education are on the ATO’s hitlist this year. There are three main rules when it comes to work-related claims:

• You can only claim a deduction for money you have actually spent (and that your employer hasn’t reimbursed).
• The expense must be directly related to earning your work income.
• You must have a record to prove the expense.

Deductions are not allowed for private expenses (eg travel from home to work that’s not required to transport bulky equipment) or reimbursed expenses (eg for the cost of meals, accommodation and travel). And although you don’t need to include records like receipts with your tax return, the ATO can deny your claim – and penalties may apply – if you can’t produce the evidence when asked.

Superannuation contributions and changes

There have been a number of fundamental changes to the superannuation landscape for the 2018 income tax year, including changes to the caps for concessional contributions (now $25,000 for all taxpayers) and non-concessional contributions ($100,000, or $300,000 under the three-year bring forward rule) and the introduction of the general transfer balance cap and total super balance threshold (each currently $1.6 million).

Also from 2018, both employees and self-employed individuals can claim a tax deduction annually (maximum $25,000) for personal superannuation contributions, provided the superannuation fund has physically received the contribution by 30 June 2018 and the individual provides their superannuation fund with a “notice of intention to claim” document.

There have been recent changes to:

• the tax treatment associated with residential rental properties (eg travel deduction and depreciation changes);
• CGT and GST withholding tax obligations for purchasers of property;
• superannuation measures impacting home ownership (eg the first home super saver scheme and the superannuation downsizer incentive); and
• stamp duty and land tax, which varies from state to state.

The government has also proposed to abolish the main residence CGT exemption for taxpayers who are no longer Australian tax residents at the time they sign a contract to sell their home, regardless of how long the home has actually been used as a main residence.

Single Touch Payroll

From 1 July 2018, employers with 20 or more employees will have to run their payroll and pay their employees through accounting and payroll software that is Single Touch Payroll (STP) ready. This is a major reporting change, as employers will report payments such as salaries and wages and allowances, PAYG withholding and super information to the ATO directly from their payroll solution at the same time employees are paid.

GST on low value imported goods

From 1 July 2018, overseas vendors with GST turnover of AUD$75,000 or more in Australian sales will have to account for GST on sales of imported goods costing AUD$1,000 or less to consumers in Australia.

Payments to contractors in building and construction

Businesses in the building and construction industry must report to the ATO about their total annual payments to contractors by 28 August 2018. The government has proposed to extend this reporting regime to cleaners and couriers (from 1 July 2018) and to security providers, road transport and computer design services (from 1 July 2019).

What is Single Touch Payroll?

Single Touch Payroll (STP) is a new electronic method for employers to provide payroll information to the Australian Tax Office at the same time you pay your employees.  This information will include details of salaries, wages, PAYG withholding and super information.

STP provides businesses with opportunities for efficiency, particularly around the end of the financial year.  Organisations reporting via STP will no longer be required to complete employee payment summaries as payroll information will already be available to employees through the MyGov system.

For employers with 20 or more employees, STP reporting starts from 1 July 2018. Employers with less than 20 employees can report voluntarily.

From 1 July 2019, STP requirements will expand to include all employers regardless of employee headcount.   

There are a couple of things as a business owner you will need to do to be ready for STP:-

Check your headcount

If you had 20 employees or more on 1 April 2018 you will need to commence preparation for the STP reporting requirements from 1 July 2018.  

Check your Software

Your existing payroll software may need to be upgraded for STP reporting – you will need to confirm these details with your current software provider or accountant.

For employers with 20 or more employees at 1 April 2018, there is an urgency to adopt STP suitable software as soon as possible to ensure that compliance with the reporting requirements are maintained.

If you have less than 20 employees, we recommend that you plan any required adjustment to your payroll systems by later this year.

Our team of Advisors are able to answer any queries that you may have around the introduction of STP and can assist you.  Please contact us on 8291 2111.

Are you aware that the superannuation changes introduced on the 1^st of July 2017 were not just about capping the amount of capital that can be transferred to retirement pension phase? They also included big changes to tax deductible and non-deductible contributions.

For the 2018 Financial Year, the concessional contribution cap is $25,000 for everyone who is eligible to make these contributions. There’s no longer a higher cap for anyone 50 or over. The tax deduction for personal contributions has also changed, but there’s a bit of a catch as personal super contributions claimed as an income tax deduction count towards the concessional contribution cap of $25,000 for the financial year 2018.

The annual non-concessional contribution cap for the 2018 Financial Year is $100,000. This has been reduced from the 2016/17 figure of $180,000. However, if the total amount you have in super on the 30^th of June in the previous financial year is not less than $1.6 million, you won’t be able to make a non-concessional contribution for that financial year.

The work test still applies for those 65 and above when they make a contribution to super, but this means no personal contributions after age 75. For those aged at least 65, from the 1^st of July 2018, there’s a new type of personal contribution which allows those who qualify to contribute up to $300,000 to superannuation from the sale of their family home that has been owned for at least 10 years.

If you require clarification on any of these points, please contact your 360Private Advisor.