Have you breached the $1.6 million superannuation transfer balance cap?
On 1 July 2017, individuals were only allowed to have $1.6 million of assets in their member’s account in pension phase; any amount in excess of $1.6 million should have been transferred into accumulation phase or withdrawn from the super fund. Pension phase is when a superannuation fund member is in receipt of a pension except for a transition to retirement pension.
Amounts in pension phase exceeding the $1.6 million had to be transferred back to accumulation phase (where the income on such assets is taxed at 15%) by 30 June 2017 (if the excess at 1 July 2017 was more than $100,000) or after 6 months (i.e. by 31 December 2017 if the excess at 1 July 2017 was $100,000 or less).
To neutralise the benefits of having an excess in the tax-free retirement phase, notional earnings (worked out by the ATO by applying a daily accrual of general interest charge (GIC) on the excess) are subject to an excess transfer balance (ETB) tax of either 15% (for first breach of the cap) or 30% (for breaches of the cap from 1 July 2018 onwards).
The ATO has now started issuing ETB tax assessments to SMSF members – if payment is not made within 21 days after this assessment is issued, GIC will accrue on any outstanding payments.
Please speak to your Nexia representative to discuss ways of ensuring this liability is paid on time; this can be done by using assets outside of superannuation or by using superannuation assets to make a large one-off pension payment, make additional commutation of income steams or to take a lump sum of any accumulation interest.
Let us help you meet your motor vehicle tax obligations
Businesses should ensure they adequately meet their motor vehicle tax obligations (e.g. GST, FBT, luxury car tax, fuel schemes and income tax) because the ATO is embarking on a data matching program in conjunction with the different State and Territory motor vehicle registry authorities.
Under this ATO action, records of motor vehicles with a purchase price / market value of $10,000 or more in respect of the 2017, 2018 and 2019 income tax years will be scrutinised to identify and address taxpayers buying and selling motor vehicles who may not be meeting their obligations to register and lodge income tax returns or business activity statements. The ATO will also be ensuring that there is correct reporting of income and deductions and GST input tax credits are claimed correctly.
People claiming tax deductions for depreciation of motor vehicles should also maintain a log book for a continuous period of 12 weeks and record all kilometres travelled for business/income producing purposes.From the log book data, the business/income producing percentage is applied to total motor vehicle operating costs (e.g. depreciation, fuel, registration, insurance and servicing/repair costs) to calculate the correct deduction to be claimed.
We can assist you to maintain adequate documentation to assist with all your motor vehicle tax obligations.