In the recent Federal Budget the $20,000 immediate asset write-off has been extended for 12 months to 30 June 2019.

Therefore, if you were looking to get a new asset before the end of the year, you are not restricted by making sure it was “ready-for-use” before 30 June this year. This may include getting a new motor vehicle or machinery built by this date.

The $20,000 immediate asset write-off means that a small business can claim a complete deduction for assets costing less than $20,000. In the past, assets of this size need to be written off over a number of years as depreciation.

Also, another year of the $20,000 write-off may mean that your business pool can be written off from 1 July 2018. The entire balance of the pool can be deducted in an income year when the balance before the calculation of depreciation is less than $20,000.

If you are in this position at 1 July 2018, an additional $20,000 write-off may be available to your business.

If you would like to go through the matter with us further, please do not hesitate to contact us.

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

By making a personal super contribution and claiming the amount as a tax deduction, you may be able to pay less tax and invest more in super.

How does the strategy work?

If you make a personal super contribution, you may be able to claim the contribution as a tax deduction and reduce your assessable income. The contribution will generally be taxed in the fund at the concessional rate of up to 15%¹, instead of your marginal tax rate which could be up to 47%². Depending on your circumstances, this strategy could result in a tax saving of up to 32% and enable you to increase your super.

Note: From 1 July 2017, most people will be able to claim a tax deduction for personal super contributions, regardless of their employment status.

How do you claim the deduction?

To be eligible to claim the super contribution as a tax deduction, you need to submit a valid ‘Notice of Intent’ form. You will also need to receive an acknowledgement from the super fund before you complete your tax return, start a pension or withdraw or rollover money from the fund to which you made your personal contribution.

Other key considerations

• Personal deductible contributions count towards the ‘concessional contribution’ cap (which is $25,000 in the 2017/18 financial year) and tax penalties apply if you exceed the cap.
• You can’t access super until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au.
• If you are an employee, another way you may be able to grow your super tax effectively is to make salary sacrifice contributions (see opposite page).
• From 1 July 2018, if certain eligibility criteria are met, you may be able to carry forward unused concessional cap amounts. This may enable you to make concessional contributions in excess of the annual cap in a future year.

Make sure you can utilise the deduction

It is generally not tax-effective to claim a tax deduction for an amount that reduces your assessable income below the threshold at which the 19% marginal tax rate is payable. This is because you would end up paying more tax on the super contribution than you would save from claiming the deduction.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies.

Notes

1. Individuals with income above $250,000 in 2017/18 will pay an additional 15% tax on personal deductible and other concessional super contributions.

2. Includes Medicare levy

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Contributing some of your pre-tax salary, wages or a bonus into super could help you to reduce your tax and invest more into super for your retirement.

How does the strategy work?

With this strategy, known as salary sacrifice, you need to arrange for your employer to contribute some of your pre‑tax salary, wages or bonus directly into your super fund.

The amount you contribute will generally be taxed at the concessional rate of 15%¹, not your marginal rate which could be up to 47%².

Depending on your circumstances, this strategy could reduce the tax you pay on your salary, wages or bonus by up to 32%.

Also, by paying less tax, you can make a larger after-tax investment for your retirement, as the case study on the opposite page illustrates.

What income can be salary sacrificed?

You can only sacrifice income that relates to future employment and entitlements that have not been accrued.

With salary and wages, the arrangement needs to be in place before you perform the work that entitles you to the salary or wages.

With a bonus, the arrangement needs to be made before the bonus entitlement is determined.

The arrangement, which should be documented and signed by you and your employer, should include details such as the amount to be sacrificed into super and the frequency of the contributions.

Other key considerations

• Salary sacrifice contributions count towards the ‘concessional contribution’ cap (which is $25,000 in the 2017/18 financial year) and tax penalties apply if you exceed the cap.
• You can’t access super until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au
• Salary sacrificing may reduce other benefits such as leave loading, holiday pay and Superannuation Guarantee contributions.
• Another way you may be able to grow your super tax-effectively is to make personal deductible contributions (see opposite page).
• From 1 July 2018, if certain eligibility criteria are met, you may be able to carry forward unused concessional cap amounts. This may enable you to make concessional contributions in excess of the annual cap in a future year.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies.

Notes

1 Individuals with income above $250,000 in 2017/18 will pay an additional 15% tax on personal deductible and other concessional super contributions.

2 Includes Medicare levy

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

If your income is under a certain threshold, then making personal after-tax super contributions could enable you to qualify for a Government co-contribution and take advantage of the low tax rate payable in super on investment earnings.

How does the strategy work?

If you earn¹ less than $51,813 pa (of which at least 10% is from eligible employment or carrying on a business) and you make personal after-tax super contributions, the Government may also contribute into your super account.

This additional super contribution, which is known as a co-contribution, could make a significant difference to the value of your retirement savings over time.

To qualify for a co-contribution, you will need to meet a range of conditions, but as a general rule:

• The maximum co-contribution of $500 is available if you contribute $1,000 and earn $36,813 or less.
• A reduced amount may be received if you contribute less than $1,000 and/or earn between $36,814 and $51,812.
• You will not be eligible for a co-contribution if you earn $51,813 or more.

The Australian Taxation Office (ATO) will determine whether you qualify based on the data received from your super fund (usually by 31 October each year for the preceding financial year) and the information contained in your tax return.

As a result, there can be a time lag between when you make your personal after-tax super contribution and when the Government pays the co-contribution.

If you’re eligible for the co-contribution, you can nominate which fund you would like to receive the payment.

Alternatively, if you don’t make a nomination and you have more than one account, the ATO will pay the money into one of your funds based on set criteria.

Note: Some funds or superannuation interests may not be able to receive co-contributions. This includes unfunded public sector schemes, defined benefit interests, traditional policies (such as endowment or whole of life) and insurance only superannuation interests.

Other key considerations

• You can’t access super until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au
  
• You may want to consider other ways to contribute to super, such as salary sacrifice or personal deductible contributions.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies.

Notes

1 . Includes assessable income, reportable fringe benefits and reportable employer super contributions, less business deductions. Other conditions apply.

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Making an after-tax contribution into your spouse’s super could benefit you both – by increasing your spouse’s super and potentially reducing your tax.

How does the strategy work?

If you make an after-tax contribution into your spouse’s super account and they earn less than $40,000 pa, you may be eligible for a tax offset of up to $540.

This strategy could be a great way to grow your super as a couple. Not only could you boost your spouse’s super, the tax offset could help reduce your income tax.

To qualify for the full offset of $540 in 2017/18, you need to contribute $3,000 or more into your spouse’s super and your spouse must earn¹ $37,000 pa or less.

A lower tax offset may be available if you contribute less than $3,000 or your spouse earns more than $37,000 pa but less than $40,000 pa.

Can you make spouse contributions?

To be able to make a spouse contribution, you must be either legally married or in a de facto relationship.

You and your spouse/partner must be Australian residents at the time the contribution is made.

Other key considerations

• To use this strategy, the spouse who receives the contribution must:
  • be under age 65, or if between 65 and 69 they meet a ‘work test’
  • have a ‘total super balance’ of less than $1.6 million on 30 June of the previous financial year, and
  • not exceed their ‘non-concessional contribution cap’, which in 2017/18 is generally $100,000, or up to $300,000 in certain circumstances

• Super can’t be accessed until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au

Other strategy ideas

There are other strategies you may consider if you want to boost your spouse’s super. These include:

Co-contributions

Your spouse may want to make an after-tax contribution into their own super account. By doing this, the Government may add up to $500 to their super. It’s called a ‘co-contribution’.

To be eligible for the full co-contribution in 2017/18, your spouse needs to contribute $1,000 or more into their super and earn¹ $36,813 or less.

They may receive a lower amount if they contribute less than $1,000 and/or earn between $36,814 and $51,812.

Contribution splitting

Another option is to use a strategy known as ‘contribution splitting’.

This is where you arrange with your super fund to split up to 85% of your previous financial year’s concessional contributions into your spouse’s super account.

Concessional contributions include superannuation guarantee, salary sacrifice and personal deductible contributions, as well as certain other amounts.

You must meet other eligibility criteria to qualify for the Government co-contribution or contribution splitting. We can help you determine whether either of these strategies suit your needs and circumstances.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies

Notes

1 – Includes assessable income, reportable fringe benefits and reportable employer super

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.