1) Superannuation reform package bills
The previous edition of TaxWise Business covered the superannuation reform package extensively in detail. The reforms passed into law in December 2016.
In summary, the reforms include:
- Legislating the objective of superannuation;
- Introducing a $1.6 million superannuation transfer balance cap;
- Reforming the taxation of concessional superannuation contributions;
- Lowering the annual non–concessional contributions cap;
- Introducing the Low Income Superannuation Tax Offset (LISTO);
- Improving access to concessional contributions;
- Allowing catch–up concessional contributions;
- Extending the spouse tax offset;
- Removing barriers to innovation in retirement income stream products;
- Improving the integrity of transition to retirement income streams (TRIS);
- Abolishing the anti–detriment rule;
- Streamlining administrative processes.
The ATO has also begun issuing guidance to assist taxpayers to understand the new superannuation reforms. However, your tax agent will be able to assist you to understand the new reforms and what they might mean for you.
The Superannuation reforms announced in the May Budget to everyone’s horror finally passed through all stages of parliament late last year after being further bastardised through political process. What we have ended up with is hundreds of pages of new legislation and complexity applied to superannuation that dramatically reduce the ability of self-funded retirees to build large balances and for those with already large balances to continue to maintain amounts above $1.6m in a completely tax free environment. There are opportunities to be looked at prior to 30th June 2017 for contributions under the old rules. There will be a focus on using all available opportunities to benefit from lower concessional contribution caps from 1 July. Virtually every person with significant superannuation will need to review their strategy leading up to 30th June this year. Given the complexity and impact of these changes the industry is in the process of updating itself and coming to terms with how it will work. During February we will be consolidating our resources and subsequently reviewing affected clients.
2) Being super compliant is easy
If you are an employer, you must ensure you meet your super guarantee obligations. Some reminders of things you need to do are below:
- contribute at a rate of 9.5% of their employees' ordinary time earnings;
- make contributions by the quarterly due dates (28 January, 28 April, 28 July, 28 October) or more frequently;
- pay super for contractors if they are eligible, even if the contractor quotes an Australian Business Number;
- be SuperStream compliant; and
- keep accurate records to show they have met their obligations.
The ATO has a range of information, tools and calculators to help employers:
Although the ATO has developed lots of tools to help employers meet their superannuation obligations in relation to employees, employers should still consult their tax adviser for help and support to meet their superannuation obligations.
It is important to realise that some individuals “contracting” under ABNs are legally entitled to 9.5% super regardless of the terms of their contract. As soon as there is a disagreement on something, some will report super non-payment to the ATO despite knowing that super was already factored into their contract rate.
Always pay employee super on time (ensuring payment reaches the fund within 28 days of Quarter end. Otherwise it is very messy and costly to fix up. Where possible pay June Quarter superannuation before 30th June otherwise the tax deduction is deferred for a year.
3) Support your clients to make the switch to SuperStream
Previous editions of TaxWise Business have included information on SuperStream.
The deadline for all employers to be SuperStream compliant has now passed. All employers should be paying super and sending the corresponding data in an appropriate electronic format.
If you haven't made the switch to SuperStream, you should work with your tax adviser to help you become SuperStream compliant.
4) Superannuation for employees working overseas - certificate of coverage
Do you send employees to work temporarily overseas? If so, you still need to make super contributions in Australia for those employees.
Your employees may also have to pay super or social security in the foreign country. A certificate of coverage exempts them from those obligations in countries we have bilateral agreements with.
Your tax agent can use the automated form on the Tax Agent Portal to request a certificate of coverage on your client's behalf. However, you need to grant your tax agent access to your certificate of coverage account first. This can be done via Access Manager in the Business Portal.