Question:
Division 293 assessment notices: Government gouges new 15% super tax
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
In pursuit of its “class warfare”, the Gillard/Swan Labor Government introduced a complicated new 15% super tax on so-called “high income earners” and people will start receiving new assessments very shortly.
Broadly, the new tax applies to people earning more than $300,000 and is calculated as a percentage of deductible super contributions.
A high income threshold has been fixed at $300,000 and the new tax applies where your adjusted income for surcharge purposes exceeds this amount.
This income amount (adjusted income for surcharge purposes) is calculated as follows:
- Your taxable income
- Plus reportable fringe benefits
- Plus total net investment losses
- Plus concessional super contributions up to $25,000
- Minus taxable lump sum super benefits where a tax offset applies (if any)
Low tax contributions are defined as employer contributions or deductible personal contributions up to the $25,000 concessional contributions limit. These contributions are described as “low tax” because, prior to this new impost, they were taxed at the concession rate of 15% within the superannuation fund.
The new super tax applies if your adjusted income for surcharge purposes exceeds $300,000 and is calculated at 15% of your low tax contributions. However, the tax cannot exceed 15% of the excess of your adjusted income for surcharge purposes above $300,000.
The new high income super tax does not apply to excess concessional contributions, (employer or deductible personal contributions that were in excess of the $25,000 limit). Those excess concessional contributions are already taxed at the top marginal rate.
This new high income super tax is imposed on the individual rather than the superannuation fund and you will be personally liable to pay the new tax. However, the Tax Office will provide you with a release authority and you can choose to pay the tax yourself or give the release authority to your super fund and the super fund will then be required to pay the Tax Office within 30 days for you.
Generally, the super fund must pay the Tax Office directly, however as there may be a shorter deadline of 21 days imposed on the individual, there are some circumstances where the super fund can reimburse you if you have already paid the tax yourself.
The Tax Office says that it will start issuing new assessments in January 2014.
The maximum amount of the new super tax is 15% x $25,000 = $3,750, for the 2012-13 income year.
So that you know where you stand, we suggest that you have your tax return prepared early and let your accountant know about the extent of superannuation contributions that have been made during the 2013 income year.
WTB 36/1586, ATH 39-315, 19-780
