ATO claws back $850m

Miranda Brownlee

25 October 2018

Compliance activities undertaken by the ATO in the 2017-18 financial year saw the ATO raise around $850 million in unpaid super entitlements.

ATO deputy commissioner, superannuation, James O’Halloran said that during the 2017-18 financial year, the ATO received around 31,000 employee notifications and contacted approximately 24,000 employers.

“We also completed 19,000 employee-generated cases. Additionally, we initiated a further 13,000 SG audits and reviews based on our risk modelling. Total liabilities raised by this casework were approximately $850 million,” said Mr O’Halloran.

Contributions: 10% rule repealed

PERSONAL SUPERANNAUTION CONTRIBUTIONS CLAIMING A TAX DEDUCTION

With the end of the financial year fast approaching, it is time to start thinking about income tax deductions.

Under the new Government changes to super, effective 1 July 2017, the 10% maximum earnings condition for personal superannuation contributions was removed for the 2017-18 and future financial years.

This rule provided that an individual must have earned less than 10% of their income from their employment related activities to be able to deduct a personal contribution.

This change ensures that individuals receiving employment income are not dependent on whether their employers offer salary sacrifice arrangements. Self-employed individuals and individuals in receipt of passive income can make deductible personal contributions regardless of the amount of salary or wages they earn.

This means most individuals under 75 years old can now claim a tax deduction for personal contributions to their SMSF (including those aged 65 to 74 who meet the work test).

Before the end of the financial year you need to:

• Review if you have income available to contribute to your SMSF.
• Review your total concessional contributions to ensure they are below the annual cap of $25,000.
• Review any current salary sacrifice arrangement you may have for its necessity and benefits.

To be eligible for the deduction, you need to provide a valid notice of intention to deduct and have received acknowledgement of this notice from the fund.

Splitting amounts to your spouse

If you are planning to split all or part of your personal contributions with your spouse, you should give your trustee the notice of intent to claim a deduction first.

If your trustee has accepted your application to split your contributions, they cannot accept the notice to claim a deduction.

This change may require you to adjust your contribution strategies going forward.

This will most likely be the case if you are under 75 and the previous 10% rule prohibited you from making personal superannuation contributions.

2018/2019 Contributions Guides

You can make two types of superannuation contributions – concessional and non-concessional – to your super fund.

For each type of super contribution there is a limit on how much an individual can contribute each year, before additional tax may be payable. The annual limit is known as a contributions cap, and there is an annual concessional (before-tax) contributions cap, and an annual non-concessional (after-tax) contributions cap. The annual contributions caps are adjusted periodically.

You must follow the super contributions rules, or risk making excess contributions (which may trigger extra tax), or risk losing the tax benefits associated with super contributions. Depending on your age and your circumstances, there are some exceptions to these main contributions rules.

For easy-to-understand explainers of the super contributions rules, see the following Super Guides:

· Super concessional (before-tax) contributions: 2018/2019 survival guide

· Your 2018/2019 guide to non-concessional (after-tax) contributions

· Salary sacrifice and super: A guide for employees and employers

· Who can make tax-deductible super contributions?

· Super opportunity: Catch-up concessional contributions from July 2018

· Bring-forward rule: A definitive super guide

· Cashing in on the co-contribution rules (2018/2019 year)

· Boost your spouse’s retirement kitty: 10 things you need to know

· Superannuation and employees: 10 facts about your super entitlements

· Contributing super by downsizing your home: 10-point guide

· Excess contributions rules: A quick summary

Super vs mortgage tool

This tool asks questions to help you decide whether you're more comfortable putting extra money into your mortgage or into super.

Why contribute more?

• putting extra money into your mortgage means you can pay off your debt quicker and save interest.
• putting extra money into super builds your retirement nest egg.

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/super-vs-mortgage-calculator