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The last month has seen tremendous upheaval in the Federal Government. Another new Prime Minister, another By-Election. Our new Prime Minister, Scott Morrison, has taken steps to re-build trust within his cabinet room, his party and with the Australian people. It seems that our PM has a big job to do to regain that trust and now the question is when will the election be called? Despite no change in the official cash rate, three of the big banks have now increased their variable mortgage interest rates by 14-16 points due to higher wholesale funding costs, with only NAB not lifting rates at this time. The cost of borrowing in overseas money markets has increased following successive US Federal Reserve rate rises. The US rate is currently 2%, its highest level since 2008. So, it is reasonable to expect further rate increases are more likely and not driven by the official cash rate. This competition between our very profitable banks means it will pay to be in contact with your banker and ask for the best deal you can. Keep in mind it's not just about lowest rate – the overall range of facilities provided, the security on offer and the relationship with a good banker are also vitally important. But make sure you ask. One of our clients has alerted us to the fact that the Fair Work Ombudsman (FWO) is conducting audits to assess compliance with minimum entitlements under the Fair Work Act 2009. Currently the FWO is conducting the NSW Outer West – Blue Mountains Wollondilly Regional Audit 2018. There have been a rash of cases nationally where workers have been underpaid or outright exploited and it appears the FWO is getting serious. The audit targets record-keeping obligations as an employer and in the first instance the FWO has requested employee timesheets and payslips for the last pay period. Clearly there is a focus on ensuring employees are paid correctly for the work they do and get their full entitlements under the Fair Work Act. In the meantime, we are all getting on with business. Please see below for the latest technical and other updates this month.
As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email. Warm regards, Shaun
Liability limited by a scheme approved under Professional Standards Legislation Super sector must address trust deficit In a speech to the Financial Services Council Summit on 26 July 2018, Australian Securities and Investments Commission (ASIC) Chair James Shipton said the superannuation sector must restore the "trust deficit" and be more mindful of the responsibilities that come with being the custodians of other people's money. Mr Shipton said the super industry has been exploiting opportunities to make money from members, citing examples of conduct that could lead to poor member outcomes, including poor advice, treatment of customers and defensiveness when it came to transparency about fund operations. Mr Shipton said there is an urgent need for super funds to invest in systems, procedures and policies that can quickly identify emerging conduct and systemic issues. A recent ASIC review of 12 banking groups found that it took an average of four years between an issue occurring and being identified internally for investigation, before a significant breach report was finally lodged with ASIC.
Call to boost instant asset write-off to $100,000 These recommendations stem from the Ombudsman's November 2017 paper, Barriers to investment: a study into factors impacting small to medium enterprise investment. Tax return required for excess super non-concessional contributions The annual non-concessional cap for individuals is $100,000 (or $300,000 over three years for people aged under 65), provided you have a total superannuation balance of less than $1.6 million at 30 June of the prior year. The ATO determines if you have exceeded the non-concessional cap by looking at your date of birth and the information reported by your super funds and in your tax return. Taxpayers who go over the non-concessional cap can withdraw the excess non-concessional contributions (plus 85% of the associated earnings). The full amount of the earnings (100%) are then included in the taxpayer's assessable income (and subject to a 15% tax offset). If an individual does not withdraw the excess contributions they are taxed at the top marginal tax rate (plus the Medicare levy). APRA's response to Productivity Commission draft report However, APRA has rejected the Commission's claim that APRA's powers and role, and their significant overlap with the powers and role of the Australian Securities and Investments Commission (ASIC), have resulted in "confusing and opaque" regulatory arrangements, poor accountability and a lack of strategic regulation. APRA Deputy Chair Helen Rowell said APRA's role is to administer the prudential and retirement income provisions of the Superannuation Industry (Supervision) Act 1993. In that context, APRA is primarily responsible for ensuring that registrable superannuation entity (RSE) licensees manage their business operations to deliver quality member outcomes. By comparison, ASIC's role is to oversee specific conduct obligations that apply to RSE licensees dealing with individuals in relation to disclosure, financial product advice and complaints. Protecting Super Bill: Senate Committee report The Bill, which is still before the Senate, contains the following measures to prevent the erosion of super balances:
First Home Super Saver scheme: ATO guidance The FHSS scheme is designed to help eligible first-home buyers by allowing them to make voluntary superannuation contributions and then withdraw those amounts and associated earnings to use when purchasing a first home. People who meet the eligibility criteria can access the scheme by applying to the ATO for a determination and a release authority. They must make superannuation contributions that are eligible for release under the scheme, namely voluntary concessional or non-concessional contributions that come within the relevant contributions cap. There are limits on the amounts withdrawn ($15,000 per financial year and $30,000 in total, subject to the contribution caps). ATO targeting car sharing platforms You must declare in your tax return any income you receive, and you cannot avoid tax by calling the car sharing a hobby. While any car sharing expenses you claim as tax deductions must relate directly to the renting, hiring or sharing of your car, the Assistant Commissioner has said that most car sharers can legitimately claim deductions for costs like platform membership fees, availability fees, cleaning fees and car running expenses. Delay in extending reportable payments to courier and cleaning services In the 2017–18 Federal Budget the Government announced that from 1 July 2018, businesses that supply courier or cleaning services will need to report payments they make to contractors for courier or cleaning services. The payments must be reported to the ATO each year using the taxable payments annual report (TPAR). However, legislation to implement this is still before the Senate. The ATO will not require TPARs to be lodged up until the law change is passed by Parliament. Taxpayers will be expected to keep sufficient business records to enable a TPAR to be prepared and lodged "as soon as is reasonably practicable after the law is enacted". GST: supplies of real property connected with Australia It states that a supply of real property is connected with Australia if the real property, or the land to which it relates, is in Australia. The ATO stresses that the test is the physical land's location, not the location of the interest or right over the land. The supply of a right to accommodation in Australia also constitutes the supply of real property connected with Australia. |
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