ACCOUNT BASED PENSIONS - ENSURE THE MINIMUM PAYMENT REQUIREMENT IS MET

Once an account-based pension commences, there is an ongoing requirement for the trustee of a complying super fund to ensure the pension standards in the super laws are satisfied. This includes meeting the minimum pension payment requirements.

Minimum pension payment requirements are calculated by applying age based percentages to member account balances. They need to be re-calculated every year.

If a fund fails to meet the minimum pension payment requirements in an income year the pension income stream will be taken to have ceased at the start of that income year for income tax purposes and the fund will not be entitled to treat income or capital gains as exempt current pension income (ECPI )for the year. This usually results in the fund paying income tax of 15% on earnings of the fund.

With 30 June 2017 just around the corner, trustees of SMSFs paying pension income streams should review now to ensure minimum pension payments will be met. 

Further information can be found at:

https://www.ato.gov.au/super/self-managed-super-funds/in-detail/smsf-resources/smsf-technical/smsfs--minimum-pension-payment-requirements---frequently-asked-questions/

 Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.
We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.  

 

 

SMALL BUSINESS - INSTANT ASSET WRITEOFF

If you are operating a Small Business and thinking about purchasing new assets then now is an ideal time to start thinking about what your business will need to purchase before the end of the financial year. To take advantage of the immediate write off in the current financial year you will need to ensure the asset is first used or installed ready for use by 30 June 2017. Also note that the write-off threshold is on an individual asset basis so if you have multiple small business assets that are less than the threshold they can be immediately written off. Another point to be aware of is that both new and second hand assets qualify for the immediate write off. 

***The Federal Budget on 9 May 2017 has announced a proposed reprieve for the $20,000 immediate asset write off for another year until 30 June 2018, enabling small businesses to take advantage of this again next year. 

Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

 We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.  

THE VICTORIAN STATE BUDGET

The Victorian State Budget for the 2017/2018 financial year has been released.

Of particular interest to our clients is the increase in the payroll tax free threshold from $575,000 to $650,000 effective 1 July 2018.

There have also been announced a number of changes to property taxes starting 1 July 2017 including the abolishment of stamp duty for first home buyers up to a house value of $600,000 and cuts to stamp duty for first home house values up to $750,000.

For further information regarding the Victorian State Budget see the below link to the State Government website

https://www.budget.vic.gov.au/

We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.  

TAX DEADLINES ARE APPROACHING

The 15 May Tax agent Lodgement Extension is fast approaching.

Please contact us to discuss your outstanding 2016 income tax returns.

See below link to ATO website for more information on 15 May deadlines:

https://www.ato.gov.au/Tax-professionals/Prepare-and-lodge/Due-dates/May-2017/

Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.

 We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.  

DEFINED BENEFIT PENSIONS & $1.6M SUPERANNUATION TRANSFER BALANCE CAP

With all of the talk around the $1.6m superannuation transfer balance cap, something that hasn’t been discussed a great deal in the media is around the treatment of defined benefit pensions in relation to the cap. The application of the cap differs depending on whether the pension is sourced from taxed funds (generally private sector funds and some public sector ones) or from untaxed sources (some public sector funds). If you are unclear if your pension account fits one of these descriptions contact your superannuation fund and they can confirm.  You can establish if a defined benefit pension will be valued at over the transfer balance cap limits by multiplying the amount received annually by 16. Therefore if you receive a pension from a defined benefit fund at or over $100,000 you will be considered as using up all of your cap.   The taxation treatment is therefore as follows:   Untaxed Defined Benefit Pensions – 100% of pension amounts over $100,000 will be included in the taxpayers assessable income taxed at marginal rates, and the 10% offset available will be capped at $10,000.   Taxed Defined Benefit Pensions – 50% of pension amounts over the current cap of $100,000 will be included in the taxpayers assessable income at marginal rates, no offset is available. Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further. We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.

HAPPY EASTER FROM THE TEAM AT LANGLEY McKIMMIE

 

DOES THE $1.6 MILLION SUPER PENSION CAP AFFECT YOU?

From 1 July 2017 members with superannuation in pension phase are subject to a $1.6 million transfer balance cap. This means that:      The maximum amount a member can have in pension phase is $1.6 million (across all super accounts).   Amounts above $1.6 million need to be withdrawn from the fund or commuted back to accumulation phase.     If funds greater than $1.6 million are left in pension phase, additional tax will be levied on the excess amount.   Earnings on amounts in pension phase remain tax free, whilst those in accumulation phase are taxed at 15%.     Example:    John has $1.8 million in pension phase in super split between two funds, $1.4 million in fund A and $400,000 in fund B.   To comply with the changes, John applies to fund B to commute $200,000 back to accumulation phase before 1 July 2017.    This ensures that John’s remaining pension balance across both funds of $1.6 million is tax free and that no excess transfer tax is levied.    Please note special rules apply to defined benefit pensions.   Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further. We provide accounting and wealth management services to clients in Woodend, Gisborne and Macedon Ranges areas within Victoria Australia.