Staff and Office Updates
We have finally settled in our new offices in The Boeing Building, 55 Blackall Street, Barton ACT. With the move came some changes, we have consolidated Jodie Dickson Accounting and Superannuation with Veritas Wealth Solutions with an exciting new Logo.
We are pleased to announce that Allison has welcomed the arrival of a beautiful baby boy named Jared, a brother for Liam.The family are doing well.
On the other hand we are excited to announce that Jessica is pregnant and will be going on maternity leave sometime in November. Please keep in mind that any email queries normally directed to Jessica can be sent to admin@veritassolution.com.au and they will be passed on to the most appropriate person.
As most of you are aware Ken Wild has decided to retire at the end of the year. To say he will be sorely missed is an understatement. We would like to thank Ken for all he has done over the years and we wish him luck in the future.
We are sorry to announce the departure of Roshini and wish her the best for her new venture.
However we are pleased to introduce to you our latest member Snow who has hit the ground running as she started just as lockdown hit. She is already is proving to be a valuable asset and we are very happy to have her as a part of the team.
15 Year Business Rollover Rule
Another way to deposit money in to your super fund is through the sale of your existing business and depositing the proceeds in to your super fund. This money can be tax-free, however, there are rules surrounding the process. The super fund deposit goes against the CGT lifetime cap, as opposed to your concessional or non-concessional caps. The rules are as follows:
- You need to be over 55 and retiring or permanently incapacitated – for the act to be considered retirement, you must demonstrate a significant reduction in the number of hours you work, or a significant change in the nature of your present activities. It doesn’t need to be permanent and everlasting.
- The business/company must have been continuously owned for the last 15 years prior to the CGT event, and it needs to have been active for at least 7.5 years.
- Net assets must be under $6 million.
- The contribution to the super fund must be made within 30 days of receiving the proceeds.
- If contributed to your super fund, you must complete the capital gains tax cap election form prior to the contribution.
- The CGT lifetime cap is currently $1.445 million, indexed annually.
- The contribution will count towards your total superannuation balance and, if in pension phase, your transfer balance cap.
If you believe you may be eligible for this type of contribution, please seek advice from one of our financial advisers to make sure it is right for you.
Minimum Pension Percentages
As you know, for the 2019-20 and 2020-21 financial years, the ATO reduced the minimum pension withdrawal requirement from superannuation to half of its usual rate to assist in the economic recovery from COVID-19.
It was recently announced that this reduction has been extended and will apply until 30 June 2022.
The rates form 1 July 2021 to 30June 2022 are as follows
- Aged under 65 – 2%
- Aged 65 to 74 – 2.5%
- Aged 75 to 79 – 3%
- Aged 80 to 84 – 3.5%
- Aged 85 to 89 – 94.5%
- Aged 90 to 94 – 5.5%
- Aged 95 or over – 7%
If you have any questions about your minimum pension requirements for the 2021-22 financial year, please contact our office.
Changes to Superannuation Contributions
Work test removal for voluntary contributions Individuals aged 67 to 74 have had to meet the work test of working 40 hours in a consecutive 30-day period to be eligible to make a voluntary contribution into superannuation
Under the proposal, these individuals will no longer have to meet the work test in respect to making non-concessional contributions (including any bring forward contributions) or receiving salary sacrificed amounts into super. Note the current bring forward rule is proposed to extend to members aged less than 67 only (currently awaiting royal assent). We will need to await details of the Bill to see whether bring forward non-concessional contributions are further extended to age 75. This measure does not include personal concessional contributions, so a work test will still need to be met in respect to these contributions. Existing contribution caps will continue to apply. This proposal will simplify the current contribution rules and have a significant benefit for older individuals for greater flexibility and opportunity in being able to make contributions into super. Status: Not yet law. Proposed commencement date of 1 July 2022.
Downsizer contributions
Reduction in eligibility age The downsizer contribution allows for a one-off tax-free contribution into super of up to $300,000 from the proceeds from selling the family home. Presently the eligibility age (amongst other criteria) for being eligible to make a downsizer contribution into super is age 65. It is proposed to reduce eligibility to age 60; with all other criteria remaining the same. The Government’s intention in doing this is to free up the quantity of larger homes for younger families. A popular strategy of recent years, it has had a significant take up. Reduction in eligibility age will allow greater flexibility for individuals to top up their superannuation. Important note: This could lead to preservation issues and restrictions on accessing it for members if not retired, until age 65.
Legacy pension conversions Capped defined benefit income streams (complying life expectancy)
Complying lifetime and market linked income streams) cannot be commuted and are very inflexible, especially on death of the member. These pensions can only be commuted into other types of defined benefit pensions (usually, market linked income streams). Reserves are generally attached to such pensions that can only be drip fed out at less than 5% of their value or an amount of less than the member’s concessional contribution cap (to avoid excess contribution charges). It has been proposed to allow members to exit these legacy pension products (including their associated reserves) during an amnesty period of 2 years via a full commutation. Applies to pensions initially commenced prior to 20 September 2007 (even if commuted to a market linked income stream post this date). There is no proposed requirement for these commuted legacy products to be to be put into an account-based pension; they may remain in accumulation or withdrawn as a lump sum, providing full flexibility with respect to such benefits.
First Home Super Saver Scheme the FHSSS is designed to assist first home buyers in saving for their deposit to purchase their first home. The proposal will increase the maximum releasable amount of voluntary contributions from $30,000 to $50,000 (gross of contribution tax). Voluntary contributions could be made from 1 July 2017 of up to $15,000 per year. These amounts contributed previously will count towards total amounts that can be released under this measure. Status: Not yet law. Proposed commencement date of 1 July 2022.
Contribution of COVID-19 early release amounts Until 31 December 2020
Individuals could withdraw amounts from their superannuation fund under the temporary COVID-19 early release provision of up to $10,000 (where authority had been obtained from the ATO). Where this had occurred, the Government has announced an incentive to re-build individual’s superannuation benefits. A re-contribution of COVID19 early release amount can be made back into the fund. The amount of the contribution cannot be greater than the amount release under COVID19 early release and the amount must have been released in financial years 2019-20 and 2020-21. What’s New 8 Such contributions are excluded from the non-concessional contribution cap and an election must be made to do this (ATO form currently being developed). The individual cannot claim a personal tax deduction for this contribution