As the financial year ends, business owners must prepare for their tax obligations. The End of Financial Year (EOFY) presents an opportunity to assess your business's financial health, review your tax strategy, and ensure compliance with Australian tax laws. We outline key steps to help you get ready for EOFY.
Organise Financial Records Ensure your financial records are accurate, complete, and up-to-date. Gather documents such as income and expense statements, bank statements, payroll records, and invoices. Review and reconcile your accounts, identifying any discrepancies or missing information. Well-organised records will streamline the tax return process and help you track your business's financial performance. Review and Lodge Your Business Activity Statements (BAS) Reconcile your BAS and GST records for the financial year. Check for any outstanding lodgments and ensure your reporting is accurate. If necessary, consult with an accountant to rectify any errors or address complex GST matters. Lodge your BAS on time to avoid penalties. Superannuation Obligations Ensure you have met your superannuation obligations for your employees. Make any outstanding superannuation guarantee contributions by the required due dates to avoid penalties. Lodge the necessary reports and documentation with the ATO. Plan for the New Financial Year EOFY is an ideal time to reflect on your business's performance and set goals for the coming year. Review your financial statements, analyse profitability, and identify areas for improvement. Develop a budget and cash flow forecast to guide your business decisions. Preparing for the End of Financial Year is crucial for individuals and business owners alike. By following these tips, you can streamline your tax obligations, maximise deductions, and ensure compliance with Australian tax regulations. Be proactive, organise your financial records, seek professional guidance when needed, and use this opportunity to set your business finances on the right track for the new financial year.
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Your Checklist Claims for deductions Receipts for deductions Car claims and log books Please review the information below and contact our office if you need assistance. Tax saving strategies prior to 1 July 2023
A strategy often used to reduce taxable income (and, in turn, tax payable) in an income year is to bring forward any expected or planned deductible expenditure from a later income year. However, any individuals with potentially reduced income for the 2023 tax season may want to instead consider deferring any deductible expenditure (if possible). 2023/24 Budget Update On 9 May 2023, Treasurer Jim Chalmers handed down the 2023/24 Federal Budget. Some of the measures announced by the Government (including some which were actually announced prior to the Budget), include: from 1 July 2026, employers will be required to pay their employees’ superannuation at the same time as their salary and wages; providing businesses with annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy (the 'Small Business Energy Incentive'); and increasing the capital works tax deduction depreciation rate for eligible new build-torent projects from 2.5% to 4% per year. In addition to these, one of the most important aspects of this Budget was that the Government has provided some further depreciation relief for small businesses once temporary full expensing comes to an end on 30 June 2023. Specifically, from 1 July 2023 until 30 June 2024, the Government will temporarily increase the instant asset write-off threshold for small businesses (with an aggregated annual turnover of less than $10 million) from $1,000 to $20,000. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool. Also, the provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024. Other important measures the Government announced include: amending (and limiting) the non-arm’s length income (‘NALI’) provisions which apply to expenditure incurred by superannuation funds; reducing the tax concessions available to individuals with a total superannuation balance exceeding $3 million; and exempting lump sum payments in arrears from the Medicare levy. In the ATO's sights this Tax Time The ATO has announced its three key focus areas for this Tax Time: rental property deductions; work-related expenses; and capital gains tax. ATO Assistant Commissioner Tim Loh said the ATO is continuing to prioritise areas where they often see mistakes being made: "Within these areas, we have identified common mistakes, and are particularly focused on addressing these and supporting taxpayers and registered tax agents to get their claims right this year." However, the ATO also recognises that many people are "doing it tough" this year, and expects fewer people will receive a refund, or they may receive smaller refunds than they were expecting, and more may have tax debts to manage. ATO advice regarding year-end trustee resolutions The ATO has advised that, in the lead up to 30 June, trustee clients who wish to make beneficiaries presently entitled to trust income for the 2023 income year should ensure their trustee resolutions are effective. This includes where trustees may want to make beneficiaries 'specifically entitled' to franked dividends and capital gains included in that income (i.e., where trustees want to 'stream' those classes of income to certain beneficiaries). It is important that trustee clients: check their trust deed to ensure that the intended beneficiaries are within the class of persons entitled to trust income (or of trust capital, if they intend to stream a capital gain that is not income of their trust) and are not excluded from being beneficiaries; comply with any requirements in the trust deed that concern how to validly 'appoint' (or distribute) trust income to beneficiaries; recognise that, for tax law purposes, beneficiaries need to be made presently entitled to trust income by 30 June of the relevant year; are aware that, if they fail to do what is required in a trust deed, or fail to appoint income by 30 June, this may cause outcomes to arise that differ to what they intended. This could include other beneficiaries being assessed on the relevant share of the trust's net (taxable) income (or the trustee being assessed at the top rate of tax); and ensure that resolutions are unambiguous. Side hustles' in the ATO's sights Editor: A recent ATO article highlights the fact that it is increasingly trying to bring more modern techniques of money-making into its tax net . . . ‘Side hustles’ have really grown over the past few years — everything from the gig economy and drop shippers, to content creators and influencers. The ATO recognises that it can be hard to know how to treat income when earning money from side hustles, especially when an individual has several, so the ATO has prepared some tips. First, the individual needs to know if they are 'in business'. If so, they may need to think about registration and tax obligations. If they are not in business, but are looking to start one, they should know how to "set themselves up for success". Also, if a side hustle means the individual is now a director of a company, they must make sure they apply for a director ID (which is free). ATO ride sourcing data-matching program The ATO will acquire ride sourcing data relating to approximately 200,000 individuals to identify individuals that may be engaged in providing ride sourcing services during the 2022/23 financial year. The data items include: identification details (driver identifier, ABN, driver name, birth date, mobile phone number, email address and address); and transaction details (bank account details, aggregated payment details, gross fares, net amount paid to driver, and all other income to which GST may or may not apply) of all payments received in the relevant period. The data will be used to identify and inform ride sourcing providers of their tax obligations as part of information and education campaigns. The intelligence obtained will increase the ATO’s understanding of the behaviours and compliance profiles of individuals and businesses that provide ride sourcing services, and may also be used as part of the methodologies by which the ATO selects taxpayers for compliance activities. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Last chance to claim deductions under temporary full expensing Deductions under ‘temporary full expensing’ are only available in the 2021, 2022 and 2023 income years, and are expected to come to an end on 30 June 2023. Editor: Under temporary full expensing, businesses with an aggregated turnover of less than $5 billion can generally claim a deduction for the full cost of eligible new assets first held, used or installed ready for use between 6 October 2020 and 30 June 2023, as well as (in some circumstances) costs of improvements to those assets and also the cost of eligible second-hand assets. Taxpayers can choose to opt out of temporary full expensing for an income year for some or all of their assets, and claim a deduction using other depreciation rules, by notifying the ATO in their tax return that they have chosen not to apply temporary full expensing to those assets. Residential investment property loan data-matching program The ATO has advised that it will acquire residential investment property loan data from authorised financial institutions for the 2021/22 through to 2025/26 financial years, including: client identification details (names, addresses, phone numbers, dates of birth, etc); account details (account numbers, BSBs, balances, commencement and end dates, etc); transaction details (transaction date, transaction amount, etc); and property details (addresses, etc). The ATO estimates that records relating to approximately 1.7 million individuals will be obtained each financial year. The principal uses of the data include “education and online services” and “data analytics and insights”, as well as to help the ATO “identify relevant cases for administrative action, including compliance activities”. The ATO has a dedicated webpage dealing with its data-matching protocols (currently 24 in total). It states on this webpage that: “Matching external data with our own helps us to ensure that people and businesses comply with their tax and super obligations. It also helps us to detect fraud against the Commonwealth.” Electric vehicle home charging rates: cents per km The ATO recently released draft guidelines setting out a methodology for calculating the cost of electricity when an electric vehicle ('EV') is charged at an employee's or individual's home. The draft guidelines may be relied on by employers and individuals who satisfy the required criteria for FBT and income tax purposes respectively, as set out in the draft guidelines. The employer or individual can choose if they want to use the methodology outlined in the draft guidelines, or if they would like to determine the cost of the electricity by determining its actual cost. The choice is per vehicle and applies for the whole income or FBT year. However, it can be changed by the employer or individual from year to year. Cents-per-kilometre rate The rate for the FBT tax year or income year commencing on or after 1 April 2022 is 4.2 cents per km (the "EV home charging rate"), which is multiplied by the total number of relevant kilometres travelled by the electric vehicle in the relevant income year or FBT year. However, if electric vehicle charging costs are incurred at a commercial charging station, a choice has to be made: The EV home charging rate can be used, but only if the commercial charging station cost is disregarded. If the commercial charging station cost is used, the EV home charging methodology cannot be applied. Further, all necessary records (such as receipts) must be kept to substantiate the claim, as per normal record-keeping rules. Record keeping If a taxpayer wishes to rely on the EV home charging rate to calculate their electricity charging expenses, they will need to keep a record of the distance travelled by the car (i.e., generally odometer records) in either the applicable FBT year to 31 March or the income year to 30 June. Also, if an employer chooses to apply the draft guidelines and the EV home charging rate for FBT purposes, a valid logbook must be maintained if the operating cost method is used. If an individual chooses to apply the draft guidelines and the EV home charging rate for income tax purposes, to satisfy the recordkeeping requirements, they must have: a valid logbook to use the logbook method of calculating work-related car expenses (and it is recommended that a logbook is maintained to demonstrate work-related use of vehicles, regardless); and one electricity bill for the residential premises in the applicable income year to show that electricity costs have been incurred. Application It should be noted that the draft guidelines can only be relied on in relation to zero emissions vehicles. The draft guidelines cannot be relied on, and the EV home charging rate cannot be used, if, for example, the vehicle is a plug-in hybrid which has an internal combustion engine. Once finalised, the draft guidelines will apply from: 1 April 2022 for FBT purposes; or 1 July 2022 for income tax purposes. Taxpayers not carrying on an agistment business The Administrative Appeals Tribunal (‘AAT’) has held that two taxpayers were not carrying on a business of providing services to a company (which they owned) and consequently were not entitled to various deductions. The taxpayers had claimed those deductions on the basis that they were carrying on a business of providing agistment and full care animal husbandry and veterinary services to their company. The AAT concluded that, on balance, the agistment arrangements did not constitute a ‘business’. The AAT noted in this regard that there was a degree of systematic, business-like behaviour. However, the AAT was of the view that the absence of a profit-making purpose, the uncommercial nature of the transactions and similar considerations nevertheless led to the conclusion that a business was not being carried on. Know the rules for accessing superannuation The ATO has reminded SMSF trustees that their SMSF must be operated for the sole purpose of providing retirement benefits for its members. This means SMSF trustees can’t use funds from their SMSF to pay for personal or business expenses. This is known as 'illegal early access' of superannuation, and severe penalties apply. The ATO also reminds SMSF trustees that there are rules regarding what they can invest in when dealing with a related party. The ATO has recently released a factsheet to help SMSF trustees understand the rules on accessing their superannuation, and make sure they (and their business, if any) comply with the rules surrounding SMSFs. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. As the end of the financial year (EOFY) approaches, it's important for business owners to start preparing their finances and tax obligations to avoid any last-minute hassles. By taking a proactive approach and getting organised before the EOFY, you can ensure that your business is compliant with tax regulations and maximise your tax deductions. Here are some things to consider when preparing for EOFY:
By taking the time to prepare for EOFY, you can ensure that your business is in good financial health and minimize your tax liabilities. Don't wait until the last minute – start preparing now to make the most of the opportunities available to you. For more information or to schedule a consultation with one of our experienced accountants, contact us today. New 15% super tax to apply from 1 July 2025 The Government recently announced it will be imposing a 15% additional tax on individuals that have more than $3 million in superannuation. The new measure is expected to commence from 1 July 2025 (i.e., the start of the 2026 income year). The main takeaways from the information provided thus far include the following: The additional 15% tax will broadly apply to the annual movement in the value of an individual’s superannuation balance, adjusted for withdrawals and contributions. These ‘earnings’ are further adjusted to ensure only the proportion corresponding to the balance above $3 million will be subject to the new tax. There will be no limit imposed on the size of superannuation account balances. Individuals will have the choice of paying the tax liability personally or from their super fund. In current terms, the Government expects that the new tax will apply to 0.5% of people with money in superannuation (around 80,000 people). However, the proposal does not currently allow for indexation of the $3 million threshold, so more individuals may be impacted in the future. The Government will consult on the implementation of this proposed measure, so expect to hear much more about it before 2025! Start thinking about your FBT obligations The 2023 FBT year ended on 31 March, so it is now time for employers to get ready to lodge their 2023 FBT returns, where they have provided benefits to their employees (or their associates) between 1 April 2022 and 31 March 2023. If you have provided fringe benefits to employees during the year, we are able to assist you with satisfying the following requirements: self-assessing your FBT liability for the FBT year; lodge an FBT return (if you have an FBT liability or paid FBT instalments through your activity statements); pay the FBT you owe by the due date; and calculate the reportable fringe benefits amount to be included on each employee’sincome statement or payment summary (if the total taxable value is more than $2,000). Employers that have an FBT liability for the year ended 31 March 2023 are generally required to lodge their FBT return and pay their FBT liability by 26 June 2023, where they lodge their FBT return electronically through a registered tax agent (noting the usual due date of 25 June falls on a weekend this year). Employers that are not included on a registered tax agent’s FBT client list must generally lodge an FBT return by 22 May 2023. Employers do not need to lodge an FBT return if they are not liable to pay FBT for the year and have not paid FBT instalments during the year. If you are registered for FBT but do not think you need to lodge a 2023 FBT return, please contact our office so that we can confirm and let the ATO know before the due date, to ensure the ATO will not seek a return at a later date. Please contact our office to ensure you are ready for FBT season and confirm what information we will need from you to lodge your 2023 FBT return by the due date FBT exemption for electric cars Until recently, the FBT consequences for providing electric cars to employees were effectively the same as any other car. However, from 1 July 2022, FBT is no longer payable on benefits provided for eligible electric cars and associated expenses. Practically, this exemption will be relevant for the first time in the 2023 FBT year. Broadly, benefits provided for electric cars will be exempt from FBT where the following criteria are met: the car is a zero- or low-emissions vehicle; the first time the car is both held and used is on or after 1 July 2022; the car is used by a current employee or their associate(s) (e.g., a family member); and luxury car tax has never been payable on the importation or sale of the car. Registration, insurance, repairs, maintenance and fuel expenses provided for eligible electric cars are also exempt from FBT. Note that, while the benefit is exempt from FBT, the taxable value of the benefit must still be determined when working out whether an employee has a reportable fringe benefits amount to be included on their income statement or payment summary. Please contact our office if you have any queries about this new exemption and how it may affect your obligations for the 2023 FBT year. Tips to reduce study and training loan balances If you have a study and training loan balance (e.g., a HELP debt), it may be worthwhile to consider methods of reducing the balance to ensure you are not left with a large tax bill when your 2023 income tax return is lodged. While there is no interest charged on study and training loans, indexation is added to these debts on 1 June each year, based upon the consumer price index (‘CPI’). Given the current rate of inflation, individuals with study and training loan balances should expect a larger than normal adjustment this year. If you have a study and training loan balance, it is worth checking your loan balance and considering the following tips: Let your employer know if you have started studying or have a study loan. Check the amount your employer is withholding. If there has not been enough withheld to cover your compulsory repayment, you can ask your employer to increase the withholding amount. Make a voluntary repayment to reduce your total loan amount. Indexation on the loan is applied on 1 June, so a voluntary repayment prior to this date will reduce the balance that indexation is applied to. Note that it may take a few business days for the ATO to receive and process the payment. Indexation will not apply to a study and training loan on 1 June if the balance is nil. Any loan debt over 11 months old will be subject to indexation. The compulsory repayment threshold for the 2023 financial year is $48,361. If you earn over this amount, the compulsory repayment is worked out when your tax return is lodged, and it will be included on your notice of assessment. Reminder of March 2023 Quarter Superannuation Guarantee (‘SG’) Employers are reminded that the SG obligation for the 1 January 2023 to 31 March 2023 quarter is due by 28 April 2023. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. As a reminder, from 1 July 2022, the compulsory SG rate increased to 10.5% (previously 10%). The compulsory SG rate will increase again to 11% for the period 1 July 2023 to 30 June 2024. So now might be a good time to ensure your payroll systems are updated by the start of the next income year. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Partnering with a great accountant can be a game-changer for any business. A good accountant can help you to navigate the complex world of taxes, regulations, and financial management, and provide valuable advice to help you achieve your business goals. Here are some reasons why it is important to have the right accountant for your business:
· Compliance: A good accountant will ensure that your business is compliant with all relevant tax laws and regulations. This can help to minimize the risk of fines, penalties, and legal action. They can keep you updated with the latest tax regulations and ensure that you are paying the right amount of tax. · Tax planning: A good accountant will work with you to develop a tax plan that effectively manages your tax liability. This can help to save you money and keep more of your profits. They can help you to identify tax-saving opportunities and provide strategies to reduce your tax bill. · Business advice: A good accountant can provide valuable advice to help you make informed business decisions. This includes things like budgeting, cash flow management, and financial forecasting. They can help you to understand your financials and provide insights on how to improve your bottom line. · Record keeping: A good accountant will ensure that your financial records are accurate and up-to-date. This includes things like invoicing, payroll, and bookkeeping. They can help you to keep track of your financial transactions, and provide reports that give you a clear picture of your financial position. · Business strategy: A good accountant will understand your business and industry, and can help you to develop a strategy that aligns with your goals and objectives. This includes things like cost reduction, growth strategies, and exit planning. They can provide insights on how to improve your business performance and help you to plan for the future. · Time-saving: A good accountant will save you time by handling all of your financial and tax-related tasks, allowing you to focus on running your business. They can take care of your financials and provide you with the information you need to make informed decisions. In conclusion, partnering with a great accountant can bring numerous benefits to your business. A good accountant can help you to stay compliant, minimize your tax liability, provide valuable financial advice, keep your records accurate, develop a sound business strategy, and save you time. By working with a great accountant, you can feel confident that your financials are in good hands and focus on growing your business. Accountancy is the process of measuring, processing, and communicating financial information about an organisation. This includes things like maintaining and analyzing financial records and preparing financial statements and cash flow projections. Accountancy is a critical function for any organisation, as it helps to provide insight into the financial health and performance of a business.
There are different types of accountancy, such as financial accounting, management accounting, and tax accounting. Financial accounting focuses on providing financial information to external stakeholders, such as investors and creditors. Management accounting focuses on providing financial information to internal stakeholders, such as management and employees, to help them make informed decisions. Tax accounting focuses on ensuring compliance with tax laws and regulations and effectively managing a business's tax liability. The field of accountancy is also regulated, and there are different professional qualifications, such as a Certified Public Accountant (CPA) or a Chartered Accountant (CA), that are awarded to those who pass rigorous exams and meet experience requirements. CPAs and CAs must comply with the professional standards issued by the Accounting Professional & Ethical Standards Board (APESB). Overall, accountancy is the process of measuring, processing and communicating financial information about an organisation, it encompasses different types of accountancy, such as financial accounting, management accounting and tax accounting, and it is a regulated field with different professional qualifications. It is a critical function for any organization as it helps to provide insight into the financial health and performance of the business. When it comes to running a business, one of the most important decisions you will make is choosing an accountant. A good accountant can help you grow your business and ensure that your finances are in order, while a not so good accountant can cause more harm than good. That's why it's crucial to find an accountant who is not only experienced and knowledgeable but also someone you can work with as part of a team.
At S.H Tait & Co, we understand the importance of having a strong relationship between a business owner and their accountant. We believe that the key to success is building a partnership based on trust and communication. Our team of experienced accountants work closely with our clients to provide tailored solutions that meet their specific needs and goals. Here are some key factors to consider when choosing an accountant to help you grow your business: Experience and Qualifications The first thing to consider is the experience and qualifications of the accountant. You want to find someone who has the expertise and knowledge to help you navigate the complexities of tax and finance. Make sure to ask about their experience working with businesses similar to yours, and check if they have relevant certifications such as being a registered tax agent. Communication and Availability Another important factor to consider is communication and availability. You want an accountant who is responsive and available to answer your questions and provide guidance when you need it. A good accountant should be able to explain complex financial information in a way that is easy to understand. Teamwork and Collaboration Lastly, it's important to find an accountant who is willing to work with you as part of a team. This means collaborating with you to develop a strategy that aligns with your business goals. Your accountant should be able to provide insights and advice to help you make informed decisions, and be willing to work closely with other members of your team, such as lawyers or financial planners. In conclusion, finding the right accountant is crucial to the success of your business. At S.H Tait & Co, we believe that building a strong relationship based on trust and communication is essential to achieving this success. Our experienced team of accountants is here to help you grow your business and achieve your financial goals. Contact us today to learn more about how we can help you! Significant change to claiming working from home expenses Before 1 July 2022, an individual taxpayer that incurred additional deductible expenses as a result of working from home, had a choice of three methods to claim these expenses. These choices were: The shortcut method – which was available from 1 March 2020 to 30 June 2022; The fixed-rate method – which was available from 1 July 1998 to 30 June 2022; or Actual expenses, that is calculating the actual expenses incurred as a result of working from home (Editor: This method can be burdensome to apply in practice) From 1 July 2022, as a result of the release of PCG 2023/1 by the ATO, the shortcut method and the fixed-rate method have been abolished. A replacement method that can be used instead of the actual expenses method (which has not been abolished) is the revised fixed-rate method. Under the revised fixed-rate method, a deduction can be claimed of 67 cents per hour for energy expenses (electricity and gas), internet expenses, mobile and home phone expenses, and stationery and computer consumables. Other expenses associated with working from home, such as depreciation of home office furniture and a personally owned computer used at home for work purposes, will need to be calculated on an actual basis when using the revised fixed-rate method. To claim a deduction under the new fixed-rate method, an individual needs to meet three criteria, which are: The individual is working from home while carrying out their employment duties or carrying on their business on or after 1 July 2022; They are incurring additional running expenses of the kind outlined in the above discussion as to what the 67 cents per hour amount reflects, as a result of working from home; They keep and retain relevant records in respect of the time they spend working from home and for the additional running expenses (covered by the rate per hour) they are incurring. There are strict record keeping requirements associated with this new method. For the year ending 30 June 2023, a taxpayer using this new method will need to keep a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023. The taxpayer will also need to keep a record of the total number of actual hours they worked from home for the period 1 March 2023 to 30 June 2023. The record of the actual hours worked from home could be maintained by timesheets, rosters, timetracking apps, logs of time spent accessing employer systems or online business systems, or a diary kept contemporaneously. For the year ending 30 June 2024 and later income years, a taxpayer using this method must also keep a record of actual hours worked from home for the entire year. Under both the short-cut method and the previous fixed-rate method, there was no need for detailed record keeping of the actual hours worked from home. Estimates were acceptable. This is a significant change and increases the record keeping burden on taxpayers. Another significant change, which results in an increase in record keeping obligations under the revised fixed-rate method, is that in relation to running costs such as energy costs, phone and internet costs, a taxpayer needs to maintain at least one monthly or quarterly bill. This is because the ATO now requires proof that the individual has incurred the running costs represented by the 67 cents per hour deduction. Transfer balance cap indexation An individual’s transfer balance cap (‘TBC’) determines the maximum amount they can commit to a retirement phase interest in their super fund, such as an account-based pension, without being subject to penal taxation. When the TBC concept was introduced with effect from 1 July 2017, it was initially $1,600,000. It was increased by $100,000 as of 1 July 2021 to $1,700,000. The TBC increases in $100,000 increments (or multiples of $100,000) in line with the Consumer Price Index (‘CPI’). As a result of a substantial increase in the CPI, the TBC is due to increase on 1 July 2023 by $200,000. Accordingly, an increase in the TBC is seen as a good thing, as it potentially means an individual can have more of their superannuation interest supporting a tax-free pension. Individuals who start their first retirement phase income stream (otherwise known as a pension) on or after 1 July 2023 will have a TBC of $1.9 million. From 1 July 2023 individuals will have a TBC between $1.6 million and $1.9 million. An individual who already had a transfer balance account and at any time met or exceeded their personal TBC will not be entitled to indexation, and their personal TBC will remain the same. For example, an individual who started their first retirement phase income stream, an account based pension, on 1 January 2022 with a value of $1,700,000 at the time of commencement, would have fully utilised their then TBC of $1,700,000. Such an individual, having already fully utilised their TBC, will not gain any benefit from the increase in the TBC due to indexation. Where an individual has partially utilised their TBC before 1 July 2023, instead of benefiting from the full $200,000 increase in the TBC, they will have access to a proportional indexation of their TBC based on the unused cap percentage of their transfer balance account. ATO and Australian Federal Police crackdown on GST-fraud promoters A raft of enforcement activity has been undertaken across the country by the ATO-led Serious Financial Crime Taskforce, including the execution of search warrants and issuing of warning letters. At 31 December 2022, the ATO took compliance action on more than 53,000 clients and stopped approximately $2.5 billion in fraudulent GST refunds from being paid to individuals seeking to defraud the system. Two individuals have been sentenced to jail time for their crimes so far, following their arrest in 2022. This follows 87 earlier arrests across the country, with many more to come. The ATO has commenced writing to more than 20,000 individuals involved in the fraud, warning them of the serious consequences coming their way unless they come forward and repay the money they have defrauded. The fraud was first detected in early 2022 and involved offenders inventing fake businesses and Australian business number (ABN) applications, then submitting fictitious Business Activity Statements in an attempt to gain a false GST refund. Promoters of the fraud use social media and other channels to recruit participants. The ATO has been issuing warnings to the community to be on the lookout for fraud schemes that are being promoted through social media and other channels. For those who may be tempted by the promise of big gains, the ATO has sophisticated risk models and works with banks, law enforcement agencies, and other organisations to share information and detect fraud. It also has access to intelligence through community tip offs, social media platforms, and other information sources. Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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