2018-19 Personal Income Tax Changes
From 1 July 2018, the 32.5% income tax bracket ceiling increases from $87,000 to $90,000. All other thresholds remain the same. By 2024, the Government plans to have removed the 32.5% tax bracket complete.
The Government has introduced a new Low and Middle Income Tax Offset of up to $530 from 1 July 2018 which will be refunded to individuals when they submit their 2019 income tax returns. It is calculated as follows:
| Income | Offset |
|---|---|
| Up to $37,000 | $200 |
| $37,001 to $48,000 | $200 plus 3c for each dollar over $37,000 |
| $48,001 to $90,000 | $530 |
| $90,001 to $125,333 | $530 less 1.5 cents for each dollar over $90,000 |
The minimum HECS-HELP repayment threshold has been changed. From 1 July 2018, those earning between $51,957 and $57,729 will have a minimum repayment of 2%, with payments increasing up to 8% as taxable income increases.
The concessional contributions of $25,000 remains the same, as does the non-concessional contributions cap of $100,000.
For further information on any changes, please contact our office.
Change to SMSF auditing procedures
We wish to ensure all of our SMSF Trustees are aware that we have decided to engage an external SMSF auditor to enable us to focus on SMSF strategy, as well as providing the financial statements faster and providing better service to our clients.
As such, there may be a few extra documents which we request from you for the 2018 financial year. If it has been several years since you got your rental property valued, please arrange a new valuation as soon as possible. If you manage your own permanent file (or SMSF register), please ensure your trust deeds and amendments are signed, that your ATO member application and trustee declaration forms are signed and easily accessible. SMSF Trustees must also have a fund investment strategy in place and minutes showing that you have reviewed it regularly (at least annually) and revised the strategy if required.
If you have any questions or concerns please don’t hesitate to contact our office.
Holiday Travel
If you are one of our SMSF clients and you’re heading away on holidays for more than 2 weeks, please call or email our office to let us know.
We are working on the 2018 -2019 SMSF accounts and if we know that you will be away for a certain amount of time during the year, it will be easier to plan around your leave if we have advance notice.
Common Tax Time Mistakes
The ATO has recently released the top 5 mistakes that people make when lodging their individual tax returns. These are:
- Leaving out some income – from a temporary/short-term job or from Airbnb or Uber which the ATO now data match
- Not keeping receipts or records for your expenses
- Claiming deductions for personal expenses like home to work travel, personal phone calls or normal clothing
- Claiming personal expenses for rental property you are using yourself, or interest on loans for personal assets
- Claiming deductions for items that you never paid for – there is no such thing as a “standard deduction”
If you are unsure about whether you can claim a deduction or should report some extra income, please call our office and speak to one of our accountants.
Event Based Reporting for SMSFs
From 1 July 2018, all SMSFs are required to report specific events to the ATO via a new report called the Transfer Balance Account Report (TBAR).
If all members of the fund have less than $1million then this report can be lodged with the annual tax return, otherwise these must be lodged within 28 days after the end of the quarter in which the event occurred.
Events that must be reported include details of any new pensions commenced, any commutations of pensions, any personal injury contributions and some limited recourse borrowing arrangements. SMSFs do not need to report pension payments, investment earnings or losses, when a pension ceases because it has a zero balance or the death of a member.
Veritas Wealth Solutions has already submitted the required reports advising the ATO of the opening balance of all pensions at 1 July 2017 and we will be working hard to ensure that we assist the Trustees of all full service clients to comply with the new reporting requirements.
If you are not a full service client and you require any assistance in fulfilling your reporting obligations, please contact our office.
Register your business name by October 31
By 31st October 2018 all businesses will need to register all trading names as a business name with ASIC in order to continue operating with it. ABN Lookup will only display business names registered with ASIC from this date.
Most businesses will need to apply for a registered business name with the Australian Securities & Investments Commission (ASIC).
You can carry on a business in your own name without registering a business name if you don’t change or add anything to your name. For example, John Smith doesn’t have to register a name to trade as J Smith or John Smith, but he does to trade as John Smith Landscaping.
To apply for a registered business name you will need to have applied for or have an ABN.
2018 Tax Time
Now that the 2018 financial year has come to a close it’s time to start thinking about lodging your tax returns. Our firm not only specialises in Self-Managed Super Funds, but we also prepare personal tax returns, business returns, unit/family trusts, and can lodge Business Activity Statement’s. We have found that for most of our SMSF clients, it is simpler and less complex for you if we prepare your personal tax returns at the same time that we prepare your SMSF accounts. If you would like us to prepare any of your returns, or would like a quote for our services, please contact the office on 02 6162 1522. We are more than happy to help with any of your tax requirements and can provide you with personalised tax advice when requested.