Tag: contributions

payroll

Small Business Superannuation Clearing House Changes

Posted on | by Allan Hall

Actionable Update to SMSF Bank Account Validation

ATO update introduces SMSF bank account validation aimed at improving the precision and security of superannuation contributions

Given the proximity of the next SG contribution deadline on 28 April 2024, it is important to take action ahead of this date to prevent potential compliance issues.

Key points

  • The ATO implemented a pivotal update within the Small Business Superannuation Clearing House (SBSCH) on 15 March 2024
  • This new system feature affects all small employers who use the SBSCH to pay superannuation to employee SMSFs
  • The ATO’s validation process requires small employers using the SBSCH to ensure perfect alignment between their employees’ SMSF bank account details and the corresponding fund bank account details recorded by the ATO
  • The validation focuses on the BSB and account number as registered under the SMSF’s Superannuation Role within ATO systems. For any employee where there is no exact match, the SBSCH will not process their superannuation payment.

Action Required: Review Employee Records

The ATO is contacting small employers likely to be impacted by the new SBSCH SMSF bank account validation process.

However, with SG obligations for the March 2024 quarter due no later than 28 April 2024, it is important for small businesses to act proactively.

If you are a small business using the SBSCH, it is important that you contact your employees to confirm that the SMSF bank account they pay superannuation contributions to, is the same as the SMSF bank account registered against the superannuation role with the ATO.

Where employees are unsure how to check if the bank account their employer makes super contributions to is the same as the one registered with the ATO, please contact Allan Hall for assistance on 02 9981 2300.

Should there be a need for an employee to amend SMSF bank details held by the ATO, it is crucial to communicate these changes to all fund members as the ATO will issue email or text alerts to ensure all fund members are informed.

Small employers delaying the review and update of their employees’ SMSF bank records risk facing SG shortfalls and potential penalties as there may be insufficient time to rectify a discrepancy.

CONTACT ALLAN HALL ACCOUNTANTS & BUSINESS ADVISORS

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July

Super contribution caps increase from July

Posted on | by Allan Hall

Contribution caps to increase from 1 July 2024

Following the release of the latest Average Weekly Ordinary Time Earnings (AWOTE) index, the expected increase to the contribution caps from 1 July 2024 has been confirmed.

As a result, from 1 July 2024:

  • The standard Concessional contribution cap will increase from $27,500 to $30,0001.
  • The Non-concessional contribution cap, which is expressed as 4 times the standard concessional contribution cap, will increase from $110,000 to $120,0002.
  • The maximum Non-concessional cap available, under the Non-concessional contribution bring-forward provisions, will increase from $330,000 to $360,0003.
  • The Total Superannuation Balance Thresholds, used to determine the maximum amount of bring-forward Non-concessional contributions available to an individual, will also be adjusted.

The Non-concessional contribution caps and thresholds are summarised in the table below:

TSB at 30 June 2024Maximum available NCC CapMaximum available NCC Period
< $1.66 Million$360,0003 Years
$1.66 – < $1.78 Million$240,0002 Years
$1.78 – < $1.9 Million$120,0001 Year
$1.9 Million (and above)$0N/A
Non-concessional contribution caps and thresholds

In addition to the adjusted contribution caps and thresholds outlined above, several other thresholds will also be impacted including:

  • the eligibility thresholds for the Superannuation Government Co-Contribution
  • the CGT Contribution cap (which applies following the sale of eligible small business assets)
  • the Low-Rate Cap (which applies to the tax treatment of superannuation withdrawals)
  • Redundancy tax-free thresholds, and
  • The Superannuation Guarantee maximum contribution base.

The General Transfer Balance Cap, which is indexed according to movements in the Consumer Price Index (CPI), had already been confirmed as remaining set to $1.9 Million for the 2024-25 financial year.

CONTACT ALLAN HALL SUPERANNUATION

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checklist

Superannuation health check

Posted on | by Allan Hall

Use this checklist to review the health of your super in 5 easy steps

Getting started

  • The best way to perform these checks is either on ATO online services through myGov or by contacting your super advisor directly
  • You need a myGov account linked to the ATO
  • Once you link your myGov account, you can also use the ATO app.

Check 1: Check your contact details

Check your contact details, tax file number (TFN) and bank account are up to date with the ATO and your super fund. This helps prevent lost super and assists us in matching any unclaimed super to you.

Log on to ATO online services through myGov. In the top menu, select My profile. From the drop-down options, select either:

  • Personal details to update your name, contact number, email and home address
  • Financial institution details to update your bank account and
    • under the Account heading, you will see Income Tax and Superannuation
    • select either Add or Update.
     

To update your contact details, bank account and TFN with your super fund, see their website or contact them directly.

Check 2: Check your super balance and employer contributions

It’s important to check your super balance each year to see how much you have and keep track of your employer contributions. You can do this anytime on ATO online services or through your super fund.

Your employer should pay your super at least every 3 months. They may choose to do it more frequently, such as your regular pay cycle. From 1 July 2022 to 30 June 2023, your employer should pay at least 10.5% of your salary into your super. From 1 July 2023 to 30 June 2024, the rate increases to 11%. If you’re under 18, you need to work more than 30 hours a week to be eligible for super.

Funds report account balances to us at certain times of the year. Balances shown in ATO online services may be different to your actual current balances.

Log on to ATO online services through myGov. From the top menu, select Super and then either:

  • Fund Details to see all your super accounts and balances (including those held in funds or with us) and the most recent date reported by your fund
  • Information then Employer contributions to see the total year-to-date employer contributions in a selected year – select Transactions to see each contribution separately.

For help calculating the amount of super your employer should be paying, use the ATO’s Estimate my super tool. If you do not receive super contributions or the amounts are incorrect:

  • contact your employer and request an update
  • report it.

Check 3: Check for lost and unclaimed super

You may have lost track of some of your super when you changed your name, address or job, for example. This is why it’s important to ensure your fund has your current details.

Lost super is when your fund has lost touch with you, or your account is inactive. This money is held by your fund. Unclaimed super is when your fund transfers lost super to the ATO.

All your super accounts including lost and ATO-held super are displayed on ATO online services.

Log on to ATO online services through myGov. From the top menu, select Super. Then select either:

  • Fund details to check for lost super – if you want to keep your super with the same fund, contact them directly to update your details
  • Manage and then Transfer super to transfer this lost super to an eligible super account – or ask your fund to complete the transfer for you
  • Manage and then Transfer super to transfer ATO-held super to an eligible super account
  • Manage then Withdraw ATO-held super to have your super paid directly to you if the amount is less than $200 or you are over 65.

Check 4: Check if you have multiple super accounts and consider consolidating

If you’ve had more than one job, you may have more than one super account. It’s important to know how many super accounts you have. Combing your super may reduce fees and make it easier to manage.

If you decide to consolidate your super, it’s important to choose the fund that’s right for you. You should check that it provides better value, and the insurance cover suits your needs, which may change throughout your life. To see which fund is the best option for you, visit MoneySmart. If you are unsure of what to do, contact your super fund or seek independent financial advice.

Log on to ATO online services through myGov. From the top menu, select Super then either:

  • Fund details to see all your super accounts and balances
  • Manage and then Transfer super to consolidate your accounts, then
    • select the fund you want to close (transfer)
    • select the fund you want your money transferred to from the accounts listed
    • confirm your selection and submit request.
     

Check 5: Check your nominated beneficiary

Take time to ensure you have a valid death beneficiary nomination in place in your super fund as this isn’t covered by your will. This means your loved ones will not be put through unnecessary difficulties to finalise your estate.

Most binding nominations expire every three years. Some super funds have an option where nominations do not expire and remain in place until they are revoked.

If you don’t nominate a beneficiary, your fund may not know who your benefit should be paid to. In these cases, they will follow the law. This usually means they pay it to one or more of your dependents or your legal personal representative.

To check or nominate your death beneficiary:

  • Refer to your super fund’s website or contact them to check if you already have a valid nomination in place
  • To update it, complete the form from your super fund, sign and date in the presence of two witnesses
  • If you are unsure, contact your super fund or seek independent financial or legal advice from a qualified advisor

Why you should review your super

Your super is one of the biggest assets you’ll accumulate in your lifetime.

However, many Australians think they don’t need to worry about their super until retirement. Some don’t think about it at all.

It’s never too early to think about your super and the earlier you get on top of it, the better. It’s a good idea to regularly review and manage your super. At the very least, make sure you:

  • are getting the super you are entitled to from your employer
  • know where it is.

Small decisions you make today can have big impacts on your final super outcomes. For instance, missing out on some employer contributions today, could have a huge impact on your super balance in retirement due to the compounding effect of earnings. The same can happen if you have lost or unclaimed super.

Benefits of a super health check

A super health check consists of 5 simple and important things you can do to get on top of your super. It will help you:

  • manage your super
  • understand your entitlements
  • make better choices for when you retire.

You can check on your super at any time. However, we suggest you get into the habit of doing a health check each year when you prepare your tax return.

CONTACT ALLAN HALL SUPERANNUATION

Disclaimer: This article contains general advice only and has been prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. The information provided in this newsletter is objectively ascertainable and therefore does not constitute financial product advice.  If you require personal advice, please contact us to arrange an appointment with one of our licensed SMSF advisors. Source: ATO

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window with a view of a tree

Further eligibility age change for downsizer contributions

Posted on | by Allan Hall

The reduced eligibility age to make a downsizer contribution from age 55 is now law

This further reduces the downsizer eligibility age, which changed from 65 to 60 from 1 July 2022.

What does this mean?

From 1 January 2023, eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. There are no changes to the remaining eligibility criteria.

Key dates for downsizer contributions

  • Eligible individuals aged 55 years or older can make a downsizer contribution from 1 January 2023
  • For any downsizer contributions made between 1 July 2022 and 31 December 2022, eligible individuals must be aged 60 years or older at the time of making their contribution
  • Prior to 1 July 2022, the eligibility age was 65 years and over.

Other important information to consider for 55-59 year olds

  • Individuals have 90 days from receiving the sale proceeds of their home to make a downsizer contribution. This means if an individual receives the proceeds of sale prior to 1 January 2023, they can make their contribution from 1 January 2023, as long as they are still making it within 90 days of receiving the proceeds
  • If 1 January 2023 falls outside of their 90-day window to make a downsizer contribution, they will not be eligible. It is unlikely the ATO would grant an extension of time in these circumstances.

To find out more about downsizer contributions, including details of full eligibility criteria, the Allan Hall Superannuation team can help.

CONTACT ALLAN HALL SUPERANNUATION

Be in control of your retirement

Be in control of your retirement

Posted on | by Allan Hall

Are you approaching retirement?

Then chances are the funding of your lifestyle in retirement may be on your mind.

Take steps now to avoid getting caught short on retirement income and live the retirement lifestyle you want.

The qualifying age is increasing by six months every two years until it reaches 67 in July 2023. The Age Pension age increased to 66 and a half on 1 July 2021.

If for example, you are planning to retire at 60 you will need to wait until you’re 67 before you can apply for the Age Pension. You’ll have to rely on your own savings and super in the interim, making it crucial to ensure you have enough money put away for later years. But the good news is that there’s still time to grow your retirement savings.

Boost your super

Contributing more to your super can be a reliable route to bolstering your retirement fund. By making extra contributions through salary sacrifice, you can grow your super and at the same time reduce the amount of income tax you pay. The government will tax your salary sacrificed contributions, within the allowable concessional contribution cap, at 15 per cent, which may be much lower than your marginal tax rate.

Making non-concessional or after-tax super contributions is another option. Generally, you can contribute up to $110,000 each financial year if your total super balance is less than $1.7 million at 30 June of the last financial year. To understand how these contributions work, it’s wise to get professional advice.

Beef up your savings

Your personal savings outside of super can supplement your super payments in retirement. But are they growing enough now to provide you with some level of income when you retire?

To build up your savings, you may have to invest part of it and make sure it’s growing faster than the rate of inflation over the long term. You should seek professional advice to see what investments are appropriate for you.

Know your entitlements

Besides the Age Pension, you may be eligible for other government benefits and concessions. For example, you may be eligible for a concession card such as the Pensioner Concession Card (if you are receiving the Age Pension), Commonwealth Seniors Health Card or the state-based Seniors Card. Concession cards like these may entitle you to discounts on some commercial and public services. Concessions that allow you to buy prescription medicine at a discount may also be available.

But keep in mind that these benefits have strict eligibility rules. There’s also no guarantee that these entitlements will still be available by the time you retire. So, take charge of your retirement.

Working with your financial adviser, you can develop a strategy that helps ensure you’ll be well provided for regardless of changes to pension policies.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

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ACT NOW Super Contributions for YE 30 June 2022

Posted on | by Allan Hall

Employer Contributions

Employers please note: if you intend to claim a tax deduction in 2021/22 for your employees’ June 2022 quarter super contributions, please ensure you make the payment as soon as possible so as to allow enough time for the contributions to be processed through the superannuation clearing house and allocated to your employee’s super accounts.  

Otherwise please ensure the contributions are made by mid-July to ensure you meet the due date deadline of 28 July 2022.

Please note: Employers should turn their attention to managing the superannuation guarantee (SG) increase which comes into effect 1 July. Read more » 

Personal Contributions

If you are seeking to maximise your personal contributions in 2021/22, please carefully review the limits and information provided below. 

Financial YearConcessional CapNon-concessional Cap1
 (Employer / Salary Sacrifice Personal Deductible)(Personal After Tax & Subject to Total Super Balance <$1.7m)
2021/22$27,500$110,000
   

Your contributions must be received in your Fund on or before 30 June 2022 — the reasons are twofold to ensure that:

  • you are eligible to claim a deduction in 2021/22 for any personal concessional contributions made;
  • the contribution is counted against your limit for the correct year.  

We suggest you make your contributions as soon as possible to allow enough time for the contributions to be processed and allocated to your account, particularly as super fund administrators are extremely busy at this time of year.  

Be sure to check the amount of actual contributions already received / due to be received in your super fund before making any top-up contributions.

If making tax deductible personal contributions, please ensure you submit a Notice of Intention to Claim a Deduction for Super Contributions form to your fund as soon as possible and check to ensure they issue you with an Acknowledgement of Receipt notice.  You cannot claim a tax deduction without this receipt from your fund.

(1) Regarding the non-concessional cap, you may be eligible to ‘bring forward’ up to 3 years of contributions in 2021/22 if you were under age 67 on 1 July 2021 and meet certain criteria:

Total Super Balance as at 30 June 2021Age <67 on 1 July 2021Age 67-74
Maximum contribution allowable
Your total super balance is the combined total of all balances in super funds of which you are a memberNo work test required for a person aged <67 at time of making the contributionWork test is required
Less than $1.48m$330,000$110,000
Greater than $1.48m but less than $1.59m$220,000$110,000
Greater than $1.59m but less than $1.7m$110,000$110,000
Greater than $1.7m$0$0

Please note for planning purposes that changes will take effect for the 2022/23 financial year whereby the work test will be abolished for non-concessional contributions and any person under the age of 75 will be able to make non-concessional contributions and make use of the bring forward thresholds noted in the above table.     

For anyone under age 67 wanting to optimise their super contributions, they may choose to contribute only $110,000 in 2021/22 to enable them to contribute $330,000 in 2022/23, provided all eligibility criteria is met.   

Work Test Changes from 1 July 2022

If you are aged 67 to 74 years, you must satisfy a work test in order to be eligible to contribute to super for 2021/22. To satisfy the work test, you must have worked at least 40 hours in a consecutive 30-day period in the 2021/22 financial year before the super fund is eligible to accept your contribution.   

The work test shall be abolished from 1 July 2022 for those aged 67 to 74 making non-concessional or CGT retirement exemption contributions.   It still must be met however for those making personal contributions for which they intend to claim a personal tax deduction.

If you are aged 75 or over, your super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) on your behalf.

Government Co-contributions

If you are a low or middle-income earner, less than age 71 on 30 June 22 and make a non-concessional contribution of at least $1,000 to your super fund, the Government may also make a co-contribution up to a maximum of $500.   If your total income is equal to or less than the lower threshold of $41,112 for 2021/22 and you make a non-concessional contribution of $1,000, you will receive the maximum co-contribution of $500.  You will not receive any co-contribution if your income is equal to or greater than the higher threshold of $56,112 for 2021/22.  If your total income is between those thresholds, the payment will be pro-rated.   The ATO calculates your total income by adding:

  • assessable income
  • reportable fringe benefits total
  • total reportable super contributions reduced (but not below zero) by any excess concessional contributions

minus:    

  • assessable first home super saver released amount
  • allowable business deductions.

‘Catch Up’ Contributions

A reminder that these rules commenced on 1 July 2018, therefore we are into the fourth year of ‘catch up’ contributions whereby a person with a super balance of less than $500,000 as at 30 June 2021 is able to make a personal concessional contribution in 2021/22 equal to the unused amount of the $25,000 limit from 2018/19, 2019/20 & 2020/21. 

For example, John had employer contributions of $15,000 for each of 2018/19, 2019/20 & 2020/21.   His total superannuation balance at 30 June 2021 was $380,000.  If John has higher than normal taxable income in 2021/22, due to say, a capital gain then, in addition to his 2021/22 contributions he can contribute an extra $30,000 as a personal concessional contribution before 30 June 2022 to reduce his taxable income.   The extra $30,000 comprises $10,000 in unused contributions from 2018/19, 2019/20 & 2020/21.   

Minimum Pension Withdrawals

If you are in pension phase, please check to ensure you have withdrawn your minimum pension for this financial year before 30 June 2022.  Where these requirements have not been met your fund will be subject to 15% tax on its pension asset investment earnings, rather than being tax-free.

Please note, in March 2020 the Government halved the minimum annual payment required for a number of superannuation income streams, including account based pensions for the 2019/20 and 2020/21 financial years.  The Government since extended the 50% reduction on pension minimum withdrawals for the 2021/22  and 2022/23 financial years as well.

For our SMSF clients, please contact us if you are not sure of your minimum pension requirement for 2021/22.

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Related reading

Super changes from 1 July 2022

Disclaimer: This article contains general advice only and has been prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. The information provided in this newsletter is objectively ascertainable and therefore does not constitute financial product advice.  If you require personal advice, please contact us to arrange an appointment with one of our licensed SMSF advisors.

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July

July changes for super guarantee

Posted on | by Allan Hall

Get ready for changes to super guarantee

From 1 July 2022, two important super guarantee (SG) changes will apply to your business. These are:

  • the rate of SG is increasing from 10% to 10.5%
  • the $450 per month eligibility threshold for when SG is paid is being removed.

3 things you need to do

  1. Check that your software is updated to correctly calculate your employees’ SG entitlement from 1 July 2022.
  2. If the removal of the $450 threshold means you’ll be paying SG for one or more employees for the first time, you’ll need to give them a Standard Choice Form.
  3. If your employee does not provide you with a choice of super fund, review the Stapled Super Fund information on our website for guidance on what you need to do next.  A stapled super fund is an existing super account linked to an individual employee.

What this means for you

These changes mean that from 1 July 2022:

  • you’ll need to make SG contributions at the new rate of 10.5%
  • employees can be eligible for SG, regardless of how much they earn. You may have to pay SG for the first time for some or all of your employees.

The ATO is working with digital service providers (DSPs) to make sure payroll software is updated in time. Their updated online tools and calculators will be available to help from 1 July 2022.

If you use a tax agent, we are also aware of these changes and able to assist you.

CONTACT ALLAN HALL

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First Home Super Saver Scheme banner

First Home Super Saver scheme – how does it work?

Posted on | by Allan Hall

From 1 July 2022, if you’re a first home buyer you can release up to $50,000 (up from $30,000) from your voluntary super contributions to help you buy your first home.

Under the scheme, voluntary concessional and non-concessional contributions made on or after 1 July 2017 may be released from super to help you purchase your first home. 

Currently, you can release up to $15,000 of voluntary contributions from any one financial year, up to a total of $30,000 in contributions across all financial years, plus earnings on those voluntary contributions. Under the new rules, from 1 July 2022, you will be able to release up to $15,000 of voluntary contributions from any one financial year, up to a total of $50,000 contributions across all financial years, plus earnings.

To be eligible to participate in the FHSS scheme an individual must:

  • be 18 or over
  • have never owned property in Australia
  • not previously requested a release of super money under the FHSS scheme.

The FHSS scheme can only be used to buy a residential home in Australia however it cannot be used to buy a mobile home. If vacant land is purchased, a contract to build a home on it must be signed within 12 months although a 12-month automatic extension will be granted. You must also intend to live in the home, the scheme can’t be used to buy a residential investment property.

There are certain details around the withdrawal amount, associated earnings, tax on withdrawal and the release of the funds. To discuss your options, speak to a financial adviser.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Superannuation contributions

Changes to work test requirements for non-concessional contributions

Posted on | by Allan Hall

Changes to the work test requirements for superannuation contributions

Soon older Australians will no longer have to meet the work test to make non-concessional contributions.

From 1 July 2022, members under 75 years of age will be able to make or receive non-concessional contributions without meeting the work test, subject to existing contribution cap limits. They may also be able use the bring forward rule.

Fund Trustees will no longer have to administer the work test at the time they accept the contribution.

Removing the requirement to meet the work test when making non-concessional contributions will simplify the rules governing superannuation contributions and increase flexibility for older Australians to save for their retirement through superannuation.

However, those aged 67 to 74 will need to meet the work test if they wish to make a personal concessional contribution for which they intend to claim a personal superannuation deduction.

For those individuals there is no change to the way they lodge their notice of intent to claim or vary a personal super contribution deduction.

The only change is that now the ATO will be checking to see if they meet the work test at the time they lodge their income tax return. The work test must be met during the financial year in which the contribution is claimed.

CONTACT ALLAN HALL