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COLUMNIST ARTICLES
High Income Earners – Beware of One-off Income Earning Events
ACCOUNTANT
By Warren Strybosch
If you are a high-income earner, especially someone who is now earning close to $250,000 this financial year, you need to understand how Division 293 applies so you do not get a surprise at tax time.
Division 293 tax is the additional 15% tax on concessional contributions for high income earners. The tax applies when a client’s combined income and nonexcessive concessional contributions for the year are greater than $250,000.
One-off events can result in clients having to pay Division 293 tax when normally their annual income is well below the $250,000 threshold.
Division 293 income definition
The definition of ‘income’ used for Division 293 provisions is the total of:
• taxable income (excluding any
FHSSS* released amount and any assessable super lump sum benefits where the low-rate cap applies for those under 60) • amounts subject to family trust distribution tax • reportable fringe benefits • total net investment losses • low tax contributions * First Home
Super Saver Scheme
What are low tax contributions?
Low tax contributions generally refer to all concessional contributions made in a year less any excess concessional contributions (as the excess amount is already picked up as part of taxable income).
Concessional contributions made to defined benefit schemes (both taxed and untaxed funds) and amounts allocated from reserves to the extent that they count towards the client’s concessional cap, may also be included as low tax contributions although the contributions are modified for defined benefit interests, State higher level office holders and Commonwealth justices and judges.
Transfers from foreign superannuation funds that are taxed in the receiving fund and rollovers of taxable component (untaxed element) from untaxed public sector funds are not included as low tax contributions as these amounts don’t count towards a client’s concessional cap.
Payment process
After a client submits their tax return and the super funds have reported all contributions for the year, the ATO will determine if a Division 293 tax liability has arisen. The client has a choice of:
• paying the tax liability personally, or • having the tax deducted from their super fund (via a release authority provided by the ATO).
To make this choice, the client can complete an election form on myGov. If this election is not made within the 60day timeframe provided, the ATO will issue a release authority directly to the super fund for payment.
Trap - beware of one-off events
Income (for Division 293 purposes) can increase suddenly in a particular financial year due to a one-off event resulting in an additional 15% tax on nonexcessive concessional contributions made in that year including concessional contributions made using the carry forward of unused cap rules.
Some of the common events that can arise to dramatically increase taxable income and therefore the requirement to pay Division 293 tax include:
• Employment termination payments and leave entitlements that are added to taxable income as a result of redundancy (ie the amount over the tax free portion). • The sale of an asset resulting in a capital gain. • Receiving a taxable super death benefit as a non-dependent beneficiary (eg adult child).
Example:
Rory is 50 years of age with a salary of $200,000 p.a. In the 2021-22 year, he plans to maximise his concessional contributions and will contribute $27,500. His father Jon has an account-based pension valued at $300,000 (all taxable component) and Rory is the sole beneficiary under a binding nomination.
In January 2022, Jon dies, and Rory receives the death benefit resulting in taxable income for the year of $500,000 (noting that the maximum tax rate that will apply to the $300,000 death benefit is 15% plus Medicare).
As Rory’s income exceeds $250,000 for 2021-22, he will receive (possibly unexpectedly) a Division 293 tax liability notice from the ATO for $4,125 ($27,500 x 15%).
Important note:
It is not the responsibility of the employer or the receiving super fund to deduct this additional 15% tax on concessional contributions. The onus to meet this liability is on the client.
At Find Accountant, we provide SMSF tax advice. Our senior accountant is also an award-winning financial advisor. If you require SMSF advice or are considering whether or not to wind up your SMSF, then speak to Warren Strybosch at Find Accountant Pty Ltd.
Warren Strybosch
You can call them on 1300 88 38 30 or email info@findaccountant.com.au www.findaccountant.com.au
WARREN STRYBOSCH
Find Group
The founder of the Find Group of companies draws on his diverse background, which ranges from teaching, to serving in the army, to taxation and accounting, to coach and help clients live their best financial lives. A multi-award winner, Warrens’s innovative approach in business means he was a champion of virtual financial advise long before the pandemic. Warren established the Find Foundation, which owns and operates acroos Victoria.
TOP 50 MOST INFLUENTIAL FINANCIAL ADVISER IN AUSTRALIA
The financial advisers featured in this guide are a diverse group: some specialise in responsible investment advice, some provide financial advise to specific professions, and some focus on addressing market gaps, mwith several finding themselves on the list for the very first time. But they all have one thing in common: they all wield influence that can create the blueprint for the future of financial advice in Australia. Not all of them are faniliar names but just because they are not making a lot of noise doesn’t mean they are not making waves. Meet our Power 50.
Additional aged care support will now be available at an estimated 80 locations across Australia. The face-to-face service will be provided at Services Australia Service Centres and will assist older Australians with:
• information on the different types of aged care services available
• help to organise an aged care assessment
• help with the appointment of a representative for My Aged Care
• providing financial information about the various aged care services on offer
• finding contacts to local support services
Appointments can be booked with a specialist by calling the Aged Care line – 1800 227 475.
More face-to-face Aged Care Specialist Officer services being offered
For Financial Planning advice related to Aged Care; the costs involved in moving into aged care facility, how this will have an impact on your age pension, and what the implications will be when considering leaving something to your children, speak to a specialist aged care financial planner.
If there is not a financial planner in your area than continue to revisit this website as more financial planners will be listing soon.
You can search for a specialist financial planner at https://findagedcareaccommodation.com.au/find-advisers/
“For some who may have had contraindications or reactions with regards to other vaccines, this will provide an additional opportunity for them, as well as those who for whatever reason have not taken up the program so far,” he said.
“But I do want to encourage everyone, unless there’s a contraindication, please continue to come forward and take the existing vaccines.”
ATAGI says the vaccine can be taken by those who have had COVID-19, while severely immunocompromised people should take three doses. It can also be taken by pregnant and breastfeeding women.
It also has noted Novavax to be “highly effective” in preventing symptomatic COVID in adults. warned practices needed extra support.
“We are under enormous pressure … GPs and their teams will carry on and get as many doses into arms as possible, but we need more help and that needs to happen right now,” president Karen Price said.
“GPs are still reporting doses not arriving on time or insufficient stock being delivered. Practices are also struggling to absorb the cost of taking part in the rollout.”
Dr Price, who noted practices were given an additional $10 per booster shot since late last year, called for greater assistance now given “the scale of the task has only grown”.
She said additional funding could see more after-hours and weekend vaccinations.
Novavax to roll out from late February
Alex Mitchell (Australian Associated Press)
Novavax vaccines will be rolled out from February 21, becoming the fourth type of COVID-19 jab available in Australia.
Health Minister Greg Hunt said the Australian Technical Advisory Group on Immunisation had given the new COVID-19 vaccine the green light.
Novavax, which will be available for those aged 18 and older, will be a twodose course with a minimum three-week gap between first and second doses.
Mr Hunt said Australia would now receive its first shipment of the vaccine and the Therapeutic Goods Administration would go through a detailed batch testing process. Presuming the regulator deems it safe, it will then be rolled out.
He said the protein-based vaccine expanded Australia’s COVID coverage, with 51 million doses having been purchased.
Cyber : Increase your insurability.
GENERAL INSURANCE
By Craig Anderson
Insurers will look for some key indicators when deciding to offer cover, or if declining to quote to insure your business. One question they will definitely ask is whether there have been any claims, or if there are any known circumstances which may lead to a claim. The answer gives underwriters a clear indication as to whether you are a good risk or not, and this will likely affect their willingness to insure. If you have not suffered a loss, this may still occur, so insurers will ask a lot more questions to gauge their exposure to losses due to activities you undertake, or deficiencies within the business. One area of cover where we are all exposed to risk but few of us are really prepared for is Cyber. As more than 50% of small businesses will fail within 6 months of a cyber-attack this is an area where being prepared, and insured, is of critical importance.
“Cyber insurance helps safeguard your business against online risks such as accidental data breaches, business interruption, computer hacking, ransomware, IT repair solutions, legal claims and remediating any losses suffered by your customers or clients. A cyber-attack or data breach may cost your business more than just money; it could cause damage to the reputation of your company and put your customers’ personal details at risk” (FTA Insurance).
So how do you get your business to the point where an insurer will offer cover? Before any claims occur, there are things than can be done to make your business resilient, and more desirable to insure from an underwriter’s perspective. Identifying and removing weaknesses in cyber security, internal encryption and storage of files, and staff training, needs to be undertaken. The most efficient way to achieve this is to engage an IT Consultant who is ISO27001:2013 accredited to audit your whole IT system, who will find and fix the problems. (ISO 27001:2013 is the International Information Security Standard) The consultant will be able to put in place the necessary changes, which will protect the business from preventable losses, and reputational damage. When the process is completed, you will be considered by insurers to be a good risk. However as we know from experience, there is still a good chance the insurance will be “worth its weight in gold”, in the not too distant future.
For a “health check” of your business insurance, contact Small Business Insurance Brokers via email sales@ smallbusinessinsurancebrokers.com.au
Any advice in this article has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on the above advice, you should consider its appropriateness (having regard to your objectives, needs and financial situation).
Craig Anderson
GENERAL INSURANCE Small Business Insurance Brokers www. heightsafetyinsurancebrokers.com.au 0418 300 096
CRAIG ANDERSON
GENERAL INSURANCE
Height Safety Insurance Brokers
Trust the insurance experts in covering your business against risks and losses. Let us create a specialised program for you to ensure any overlooked issues are covered. If you’d like us to handle insurance renewal get in touch with our friendly team. We also offer free assessments of your current program so you can make an informed decision for your business’ wellbeing.
www.heightsafetyinsurancebrokers.com.au 0418 300 096 | sales@heightsafetyinsurancebrokers.com.au
Small Business Insurance Broker is a registered business name for the Trustee for The Anderson Kerr Family Trust, (Height Safety Insurance Brokers Pty Ltd, a Corporate Authorised Representative (AFS Representative Number 0012482300) of Focus Insurance Brokers AFSL 426797. ABN: 26689211803
SME loan guarantee scheme extended
The Treasurer has announced that the SME Loan Guarantee Scheme will be extended by six months. It was otherwise due to finish on 31 December 2021, ie it will now operate to 30 June 2022.
The scheme has been operating since 23 March 2020 and has been "rolled over" a number of times. This extension keeps the same terms and conditions as currently operate, with the exception that the Government will reduce its loan guarantee from 80% to 50%.
SME Loan Guarantee Scheme Extended
The ATO has issued a draft effective life proposal for e-bicycles and e-scooters. It suggests a five year effective life for bikes and two years for the scooters.
Comments are due by 25 February 2022.
By Georgie Moore (Australian Associated Press)
Scott Morrison says he empathises with the travel sector seeking to reopen Australia’s international border, but does not yet have the advice he needs to do so.
The Australian Tourism Export Council said on Wednesday maintaining international border closures “was no longer a viable or sensible approach” to contain COVID-19 and was damaging the tourism, hospitality and farming sectors.
The prime minister told reporters in Sydney an initial opening up to backpackers and some visa holders had been successful.
“The key issue that I’ve tasked our health officials to advise me on in opening up the border to international arrivals is what impact that might have on the hospital system and the pressures that could come from additional people coming into the country at this time,” Mr Morrison said.
Mr Morrison said he empathised with industry leaders such as Qantas boss Alan Joyce. “He knows my very strong commitment to getting to that point as quickly and as safely as we possibly can, so I’m looking forward to making
PM ‘optimistic’ about international travel
progress on that issue,” the prime minister said.
“I’m optimistic about that, but cautiously optimistic, as you’d expect me to be.”
ATEC managing director Peter Shelley said Australia now had a higher COVID infection rate than the UK or US. there simply is no greater health risk which would result from reopening our international borders – rather it would provide a huge relief to an already burdened and struggling tourism sector,” Mr Shelley said.
“The hermit kingdom approach to protecting our borders is no longer viable and we need urgent clarity from the government on when we can welcome international visitors.”
