Tax and Super November 2022 Newsletter
Are you across the 25 October federal Budget and how it may impact you, your business and your superannuation affairs? In this special edition, we canvass the important measures contained in the first federal Labor budget in almost a decade. On the taxation front, the adoption of the Stage 3 tax cuts, the scrapping of a tax offset for low and middle-income earners were the big-ticket items. On superannuation, maintaining the current contribution rules, and the ruling out of a three-year audit cycle for SMSFs were both welcome announcements.
With the housing crises in full swing, quite a number of people have welcomed relatives and friends into their homes (and rental properties) until they can find permanent accommodation of their own. A recent Administrative Appeals Tribunal (AAT) case has confirmed that where rent paid in this circumstance is not at commercial levels, this may limit the deductions that the homeowner/landlord can claim. It will though depend on the circumstances at hand.
Meanwhile, choosing the right business structure and knowing what your obligations are can be complex. This is particularly the case around superannuation and whether you are obligated to pay it to yourself as a business owner. This will principally depend on the vehicle through which you operate your business.
Federal budget – business and individual taxation: It was a somewhat quiet budget on the business front, with it being notable for the burning issues that it did not address such as Division 7A reform, the taxation of trusts, the future of the loss carry back rules and current depreciation rules for business (both expiring in 2023). On the individual level though, lucrative future year tax cuts were confirmed.
Federal budget - superannuation: The retention of the existing contribution caps, leaving indexation undisturbed, reducing the downsizer contribution age to 55 (down from 60), and the delay in the SMSF residency rule changes were just some of the announcements on the super front.
Rental deductions curbed: Where you let out your home to family or friends or otherwise on a non-commercial basis, a recent AAT decision reminds us that, in doing so, this may limit your deduction claim to the amount of rent charged.
Director ID’s – new campaign launched: The federal government has launched a last-ditch awareness campaign reminding those who are directors to obtain their ID by the 30 November deadline. How? Who? Why? We answer these questions.
Do I have to pay myself super as a business owner?: The answer depends on a range of factors, principally your trading structure. Different rules apply for sole traders, companies, partnerships and businesses operated through a trust structure.
Business versus hobby: When do otherwise private activities cross over from a hobby to a business? This matters from a tax perspective particularly around the declaring of payments received, claiming deductions, record-keeping…and more!
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