Anyway Im also not going to try to detail and or comment on every part of the Budget as there are already enough commentators and politicians doing that.  I have however collated a good listing of other detailed budget commentary and breakdown which are listed below:-

Tax Banter Budget Summary

CCH Budget Night Report 2013

Deloitte Budget Brief

Thomson Reuters

Tax Institute 

If you have any specific questions or require advice regarding the budget please dont hesitate to contact us

One other change in respect of insurances within superannuation is summarized below:-

1. Restrictions on “own occupation’ TPD, trauma and income protection policies within superannuation

It has long been practice for many SMSFs for cashflow and other reasons to hold TPD trauma and income protection insurance policies for members.  Although there has always been an issue that the policies insured events may not have matched with a condition of release for superannuation purposes.  Therefore as an example if a member was to say have a heart attack & the insurer paid out on the trauma policy the SMSF would receive the insurance payment however the member may not have received payment as they hadnt yet met a condition of release for superannuation & hence couldnt draw from their superannuation members balance.

The introduction of Superannuation Legislation Amendment Regulation 2013 (reg4.07D) in March 2013 has inserted a very restrictive regulation on regulated superannuation funds (including SMSFs) for when they can provide non-core insurance benefits such as TPD Trauma etc

The new regulation (reg 4.07D) will take effect from 1st July, 2014 and states that superannuation funds can only provide insured benefits that are consistent with the following conditions of release:-

- death

- terminal medical conditions

- “any occupation” TPD (not ‘own occupation’ TPD) and

- temporary incapacity

Therefore most superannuation funds will be prohibited from providing any other forms of insurance from 1st July, 2014.  Although pre-existing insurance policies in place before 1st July, 2014 can continue indefinitely (grandfathering applies)

There is obviously planning and opportunities to be had between now and the 1st July, 2014 in respect of insurances.  Should you wish to discuss please contact our office

In the “old” days prior to commencement of the PPSR earlier in the year, it was common for the following asset protection strategy to be implemented and it would work to protect assets should the trading entity get into trouble and have a liquidator appointed.

Asset Purchased by Holding Company/Trust  ———— Asset Leased to Trading Entity————————  Trading Company/Trust

Perhaps a formal lease was put into place perhaps not.  But as ownership of the asset was held by the holding company/trust if the trading company/trust was put into administration the assets were protected.

Under the new & current regime now that the PPSR has commenced this structuring for asset protection doesnt not work UNLESS the holding company/trust has an effective registered security interest over the assets used by the trading company/trust.

This seems to be a sleeper and mis-understood by many business owners as well as professional advisors.  Getting the structure and associated paperwork is more than ever extremely important in order to protect assets in the event of insolvency.

Should you have further questions or require a detailed review of your current & future structuring please contact our office.

1. 1.    SuperStream Measures

These reforms will change the way members, trustees and advisors will interact with superannuation funds by introducing a raft of measures to enhance the “back office” efficiency of super funds by implementing new data & ecommerce standards, allow TFNs to be used as the primary locator of member accounts and allow APRA and the ATO to issue & enforce standards for superfunds and employers.  These measure will be funded via a $467M levy to be imposed on super funds over seven years with approx. 25% of this to be levied in the current tax year.

One of the new standards to be implemented from July 2013 will be that all member rollovers between super funds must be transferred within 3 working days via EFT.  So no more cheque rollovers and large industry funds wont be able to delay member roll overs for more than 3 days.  From a member & an advisors point of view this will be a great improvement as large funds can at the moment seem to drag out the rollover for a very long time

Employer contributions into super funds will also only be allowed via EFT into the future although there are transitional arrangements that mean that large employers have until July 2014 to stop using cheques and small employers have until July 2015.

Payslips issued by employers from July 2013 will need to not only detail superannuation payable for each employer but also document when the payments have been made. On the flip side super funds will from July 2013 also need to notify members if they haven’t received contributions on their.  This will effectively allow employees to actively monitor if their superannuation is being paid.

1. 2.    Specific Changes effecting SMSFs

SIS Regulation 4.09A now applies to SMSFs from 7 August 2012 and requires trustees to keep SMSF money and other assets separate from other assets held by the trustee.  Although this was always required the change is that it is a reportable audit issue as well as trustee can be liable for penalties if they breach this regulation.  As previously discussed and advised this is just another good reason along with others to have a specific corporate trustee for all SMSFs

SIS regulation 8.02B will apply to the 2012/13 income year and beyond and require financial statements of the superannuation fund to be prepared based on the market valuation of assets.  Previously SMSFs could choose either historical cost or market valuation for recording assets.  The ATO have released an information circular regarding valuing assets of an SMSF and it can be accessed here

SIS Regulation 4.09(2)(e) effective for the 2012/13 year requires SMSF trustees to consider whether the fund should hold life insurance cover for one or more fund members.  This requirement should be considered, reviewed and included in the funds investment strategy.  Again documenting & evidencing the trustees decisions regarding insurance should be done regularly.

The ban of off market transfers to SMSFs was originally expected to apply from 1^st July 2012 but has been deferred to July 2013.  Draft legislation has been issued for public comment and is expected to be law by July 2013.  Hence if anyone is considering transferring assets into an SMSF off market they need to do it before the end of this year.

1. 3.    Additional 15% contribution charge for high income earners.

Despite not having any legislation at this stage to work from the Budget announcement from May 2012 is expected to apply in this current tax year to tax super contributions at 30% for people earning over $300k per year.  It would seem it’s a case of back to the future in that this measure is to act in a similar way to the surcharge abolished by the previous government in 2005.

1. 4.    Concessional Contributions Caps for over 50s

Effective from July 2012 the concessional (tax deductible) contribution cap has been reduced for over 50s to $25k per year in line with all individuals and is no longer dependant on age.

The non-concessional (non deductible) contributions caps remain unchanged at $150k per year or $450k if you utilise the bring forward rule.

Should you have any further questions or need specific advice regarding these matters please don’t hesitate to contact my office

The October – December quarter superannuation guarantee payments for employees is due by the 28th January, 2013 and should employers not make this payment in full by the due date then a Super Guarantee Statement must be lodged with the ATO.  For more information regarding employer super obligations the ATO website has an employer guide here 

This new legislation has very strict compliance requirements and fixed dates to avoid directors becoming personally liable for unpaid PAYG and Superannuation.  This is a very real and looming issue that many directors if not aware of need to urgently consider and deal as soon as possible

For further information or assistance with  calculating and preparing a SGC Statement please contact our office

Although I did receive an email today from a client that I must admit I thought was a serious work related email as it was titled “2012 tax return”

Upon opening the email it contained a picture and I realised that it was a joke email which was actually pretty funny.  Below is the email:-

I finally  received my tax return for 2012 back from the ATO. It puzzles me!!!
They are questioning how many dependents I claimed.
I guess  it was because of my response to the question: “List all dependents.”
I replied: 1 million  illegal immigrants; 1 million crack heads; 4 million
people on Centrelink support, 1 million people in over 50 prisons;
and 5000  persons in the Australian Federal and State Parliaments, plus 1  useless
Prime  Minister.”
Evidently, this was  NOT an acceptable answer for the ATO

I KEEP  ASKING MYSELF, WHO DID I MISS?

Credit card payments for tax debts have  definitely been talked about and trialed by the ATO for a while but it hasnt been well advertised.  This is the link here to the ATO website which you can then click through to the RBA Government Easypay website.

Paying taxes on credit card makes sense and can assist with cashflow as it may provide you with an interest free period and potentially bonus reward points.  Although as with all credit cards this strategy only works when the card is paid off in full by the due date otherwise it can become a very expensive form of debt.

The RBA Government Easypay will charge a surcharge for a credit card payment but as explained here on the ATO website these fees should be tax deductible as long as the fees are incurred in connection with the generation of your taxable income or incurred in connection with your business.

As noted in a previous post the new legislation has very strict compliance requirements and fixed dates to avoid directors becoming personally liable for unpaid PAYG and Superannuation.  This is a very real and looming issue that many directors if not aware of need to urgently consider and deal as soon as possible

For further information or assistance with  calculating and preparing a SGC Statement please contact our office

- SIS Regulation 4.09(2)

effective from 1st July, 2012 trustees must not only formulate and give effect to an investment strategy but trustees must also regularly review the investment strategy.  The legislation does not give guidance on the timing of the reviews of the investment strategy.  But it does infer that changing circumstances of a fund and or its members would trigger a need for a review of the investment strategy.  It is therefore information for trustees to continually review and ensure the investment strategy is current and appropriate.  It is also recommended that trustees document & evidence any reviews and make necessary changes to the investment strategy if required.

- Inclusion of paragraph 4.09(2)(e)

This is a new paragraph in the regulations and requires trustees to consider whether the fund should hold life insurance cover for one or more fund members.  This requirement should be considered, reviewed and included in the funds investment strategy.  Again documenting & evidencing the trustees decisions regarding insurance should be done regularly.

- Inclusion of new regulation 4.09A

This regulation has been introduced as an operating standard and as such carried penalties if a trustee is found guilty of intentionally or recklessly contravening the standard.  Regulation requires trustees to keep money and assets of the super fund separately from money or assets they hold personally or by an employer sponsor.  This requirement has always been focused on by accountants and auditors however it was not previously a requirement that carried a penalty for a breach.  This change means that  trustees need to review all super fund assets and make sure they are all held and registered in the current names as well as ensureing cash/assets are not co-mingled with other assets.  Another good reason to have a corporate trustee of SMSFs

- Inclusion of new Regulation 8.02B

This regulation will apply to the 2012/13 income year and beyond.  The financial statements of the superannuation fund must under this regulation be prepared based on the market valuation of assets.  Previously SMSFs could choose either historical cost or market valuation for recording assets.  The ATO have released an information circular regarding valuing assets of an SMSF and it can be accessed here

Should you require further information regarding this changes or assistance with your superannuation fund, please contact our office here

The updated legislation was introduced in an attempt to combat illegal phoenix activity but has ramifications for all directors.

Basically the main points & issues to be aware of include:-

- company directors are now personally liable for unpaid company superannuation amounts in a similar way that directors are currently liable for unpaid PAYG Withholding Amounts

- the ATO can now not only estimate unpaid PAYG withholdings but issue director penalty notices for unpaid superannuation guarantee charge

- Directors are no longer able to extinguish personal liability by putting a company into administration or liquidation when issued with a DPN if the super & PAYGW is over 3 months old

- directors are automatically personally liable 3 months after the due date of the superannuation guarantee charge and or PAYG Withholding

- new directors will have extended period for they become liable for company debts

- the ATO now has increased ability to collect & or cancel PAYG withholding credits not actually paid by the company to directors and associates of directors

These changes although were introduced  to limit phoenix activity and crack down on dodgy directors, they will have significant impact on all directors.

The legislation as it is written is retrospective and could apply to unpaid amounts of PAYG and Super as of today which would mean company directors are already personally liable for unpaid debts and have no defence.

It would seem though to avoid the main thrust of these changes directors must report any unpaid PAYGW & super as they will only become automatically personally liable when the debts remain both unpaid and unreported.

Although this reporting must be managed as once you report the unpaid amounts the ATO may just issue a DPN.

As yet we haven’t heard or seen any practice statements or releases from the ATO on how they will enforce these new laws.  The ATO must provide some guidance on the retrospective nature of the changes at the very least.

For further information on these new changes contact our office