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Super Co-Contributions Boost On Behalf of A Spouse

Posted by Anthony

Marriage and de facto relationships come with a number of perks – but did you know that if your partner earns less than you or is not currently working, you could contribute to their super fund savings? Many households in Australia, either as a result of unemployment, maternity/paternity leave or by choice, have single income households. As a result, the retirement savings held in super for one member of these households may not be increasing as exponentially fast as the working member. The good news is that, when in a relationship, a spouse can boost their non-working partner’s super fund with their own contributions. The best part? It could be a tax write-off for the working spouse. Under Australian superannuation law, a spouse can be a legally married partner with whom you live or your de facto partner. That gives additional benefits to those in de facto relationships, who can choose (if one member of the relationship isn’t working or earns less) to boost their partner’s super fund. A spouse must also be younger than their preservation age or between 65 and their preservation age and not retired. There are two ways that someone can help their partner’s superannuation grow: […]

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Interest On Your Home Loan Could Be Tax-Deductible

Posted by Anthony

It’s a simple, step-by-step process used by many Australians to increase their income. Borrow money from a financial institution, invest in a second property and pay off the loan with the profit accrued from the investment property (ie. rent from tenants). But did you know that the interest on a home loan for the purchase of an investment property can be claimed as tax-deductible? To clarify – claiming a tax deduction on the interest of a loan can only be used on the loan that was used to purchase the investment property. It also must be used to earn income, because a property that is solely residential isn’t eligible for any tax deductions (except in certain situations where the residence may be used to produce income, like home business or office). Here are a few examples of when tax deduction claims on your property are not allowed: If the secured property is being used for living as a primary residence, and no income is made from it. Refinancing your investment loan for some other purpose (like buying another property). Using the loan for a private purchase, other than the purchase of a home. If the investment property is a holiday […]

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What to do with your Lost Super

Posted by Anthony

After COVID 19’s impact on the world, an influx of employees who had lost their jobs fell into the job market. Many of these came from companies that couldn’t afford to continue their employment. As a result, many individuals had to seek alternative employment, or draw from their super. Some individuals took on multiple jobs to pay bills, and others drew from the super that they had accumulated in the government’s early release scheme specifically for coronavirus related income loss. Super is held by superannuation funds, and accumulates as a result of how much super an employer pays to the employees’ funds. Many Australians may find that they actually possess multiple super accounts as a result of having “lost” their super accounts during changeovers. It can also happen as a result of changing names, moving addresses, living overseas or changing jobs. Australians can use the ATO’s online tools to: View details of all of their super accounts, including lost or unclaimed amounts Consolidate eligible multiple accounts (including any super held by the ATO) Withdraw your super held by the ATO when certain conditions are met. As superannuation funds often have fees associated with their upkeep, as well as insurances that […]

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Easy ways for your Small Business to Stay ahead at Tax Time.

Posted by Anthony

As an employee in a business, often there are perks that can come with the job. A company car, fuel money, perhaps some technology to help make things easier. Small business owners however have to be a lot more mindful of how they use the money from their business. Any money or assets that a business has earned or possesses, is solely the property of that business. That means that there are numerous issues that can arise from dipping into these company funds. As a business owner, it’s important to keep records and correctly report transactions if using company money or assets (e.g, company car). These can include instances such as taking money out of your company for yourself or your family receiving money from it (for example, as a director, shareholder or an associate) using your company’s assets for private purposes. For small businesses, this can be easily done through: Salary, wages or director’s fees Repayments of a loan you have previously made to the company A fringe benefit, such as an employee using a company car Dividends (formal distribution of the profits) A loan from the company If a business does not report correctly or keep appropriate records […]

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Pros and cons of home reversion

Posted by Anthony

Super (AU): Pros and cons of home reversion Home reversion is when you sell a share of the future value of your home whilst still living there. You receive a lump sum payment and continue to own the remaining share of your home equity. Pros You are able to continue living in your home after you sell the share You can conduct renovations or maintenance that your home may need with the lump sum payment you receive You can use the lump sum for any urgent needs such as medical treatments The lump sum could help you secure accommodation till your home sells Cons You will own the lower share of the equity in your home Transactions and costs can get complicated and it may be hard to navigate that Your eligibility for Age Pension might also be influenced Your ability to afford aged care could be affected You might end up eating into money that you need for the future – such as for medicare You might be locked into fewer options if your circumstances change If you are the sole owner and someone else lives with you, they may no longer be able to live in the house […]

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What you need to know about luxury car tax

Posted by Anthony

Luxury car tax or LCT is a 33% tax on cars that have a value (including GST) above the set threshold. However, the tax is only on the value which is above the threshold. Businesses and individuals that sell or import luxury cars are required to pay LCT. You can make LCT payments in instalments or annually. If you choose to report your payments in instalments, they will be included in your GST instalments. If you choose to pay GST annually, then you don’t need to worry about reporting monthly or your quarterly BAS. You may be able to defer paying LCT by quoting your ABN. You are able to do this if you are only going to be using your car to: Hold it for trading stock (doesn’t include holding it for hire or lease) Carry out research and development for the car’s manufacturer Export it GST-free If and once you stop using your car for the above purposes, then you will need to start paying LCT.

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What is the transfer balance cap?

Posted by Anthony

The transfer cap refers to the amount of money that can be transferred from your superannuation account to your tax-free ‘retirement phase’ account. At the moment, the transfer balance cap is $1.6 million and all individuals have a personal transfer balance cap of $1.6 million. Exceeding the personal transfer balance cap means that you have to: Commute the excess from one or more retirement phase income streams. Pay tax on the notional earnings related to that excess The amount in your retirement phase account may grow over time, due to investment earnings. Although this may grow beyond the personal transfer cap, you will not exceed the cap. However, if you have already used all your personal cap, and then your retirement phase account goes down, you cannot ‘top it up’. The rules applied to capped defined benefit income streams are different from other income streams – this is because you can’t usually transfer or commute excess amounts from other streams.

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Records you need to keep on rental properties

Posted by Anthony

When you own a rental property, keeping records is important. These will help you meet tax obligations. Generally, only individuals with their name on the title deed declare income and claim expenses. Remember that the records must be kept in English or should be easily translatable into English, and kept for a minimum period of 5 years. The records you need to keep include: Dates and costs of buying the property: These will help work out any capital gain or loss when the property is disposed of – the date entered into the contact is the purchase date, not the settlement date. Any rent and rent-related income: This will be required to report tax return. Expenses associated with the property: These are important to claim deductions you may be entitled to. These records should include the name of the supplier, the amount of the expense, nature of the goods or services, the date the expense was incurred, date of the document Significant changes: These include repairs or improvements or partial or all sale of the property – the cost of repairs and improvements should be kept separate from depreciation costs so that deductions and capital gains and losses can be […]

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Choosing investment options in your super

Posted by Anthony

Many Australians ignore the decision of choosing investments for their super and often end up in the ‘default’ option as they make no effort to choose otherwise. Default options that aim for ‘balanced’ or ‘growth’ investments tend to have 60-80% of funds invested in shares and property. This approach for investment is based on the best-suited strategy for a large number of members across the years they will be investing. However, the default options may not be the best for your financial circumstances and risk profile. Understanding different investment options and how risk assessments work will help you choose better investment options. Further, aim to change investment options over time rather than sticking to the same one. For example, you could consider changing options once you begin receiving a pension.

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The amounts you don’t need to include as income

Posted by Anthony

Amounts which are not classified as income are split into 3 categories. Exempt income This is income that you do not pay tax on, although, some exempt income may be taken into account when determining: Tax losses of earlier income years that you can deduct Adjusted taxable income of dependants Some examples include certain Government pensions, certain Government allowances, certain overseas pay, some scholarships, etc. Non-assessable, non-exempt income This is also income that you don’t pay tax on – it does not affect your tax losses. Some examples include the tax-free component of an employment termination payment (ETP), genuine redundancy payments, super co-contributions, etc. Other amounts There are also other amounts that are not taxable. Some examples include: Rewards or gifts received on special occasions, prizes won in ordinary lotteries, child support and spouse maintenance payments, etc.

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