Question:
New fix for super cap breaches
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
The Government has released a consultation paper proposing that where someone breaches their concessional contributions cap (deductable employer or self-employed super contributions) by up to $10,000 and for the first time, they can have the excess refunded to them and pay personal tax at their marginal tax rate on the excess.
When the previous coalition Government removed tax from super benefits paid to people over 60 years of age they also introduced the concessional contributions cap initially at $50,000 for people under the age of 50 and $100,000 for those over 50 (for the period from the 2008 to 2012 financial years). This effectively placed a limit on employer super contributions and also contributions made by self-employed people that are tax deductable.
The current Government reduced the contributions cap to $25,000 for people under 50 and $50,000 for those over 50 up until the 2012 financial year as part of their response to the Global Financial Crisis.
Since the reduction, many people have inadvertently breached the lower cap where, for example, they hold two jobs or salary sacrifice to boost their retirement savings.
Currently, if you breach the cap the excess contributions are taxed at 31.5% which is on top of the 15% contributions tax normally levied on the superfund.
Submissions on the consultation paper are due by 7 September.
Assistant Treasurer Media Release, No. 122, 17 August
