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Welcome to the February Newsletter.
ATO takes closer look at self managed superannuation funds
Below is an extract from a speech given by Raelene Vivian, Deputy Commissioner of Taxation.
“Superannuation has grown to be the main retirement savings vehicle for most Australians. More and more people are becoming aware of, and interested in, superannuation. Self managed superannuation funds continue to attract Australians as a retirement savings option.
There have been a number of changes over the last decade.
Our regulatory role for self managed funds was announced in Sydney on 19 October 1999. The market has grown substantially since that time. We inherited 187,000 funds from APRA, and after only seven years, we have over 320,000 funds.
Our initial approach was mainly an educational one. We have developed many publications to help trustees to manage their fund in line with the requirements spelled out in the legislation.
In the last two years we have taken a stronger stance on compliance whilst still keeping our focus on education.
After many warnings and an education campaign we are now taking compliance action against illegal early access to superannuation.
With the announcements included in super simplification,
our regulatory role is about to undergo another ‘step up’.
Our compliance coverage of funds will more than double and our risk rating capability is moving to a much more advanced platform.”
Please note the comments in bold and contact us to ensure that your fund meets all requirements of law to maintain its status as your tax effective savings vehicle –
we are here to help
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Where will property go?
Many commentators have been discussing property prices in recent times which has led to clients asking whether property prices will increase over the 2007 calendar year. BIS Shrapnel have predicted that interest rates will not fall in 2007 which means that residential property activity would stay restricted. Sydney property prices are predicted to soften whilst Melbourne, Brisbane and Perth are more likely to be static.
The main drivers of property prices will be the level of affordability of rental accommodation and whether that forces potential tenants to become owners. The impact of the increasing number of “low doc” and “no doc” loans is also a factor. Apparently, arrears levels on mortgages have increased and the level of low doc and no doc loans have also increased. As these loans are made to persons that are unable to prove that the loan can be serviced, the risk of default could be expected to be higher on such a loan.
One issue for investors is whether the continued growth in the Australian share market will continue throughout 2007. Whilst some commentators suggest it will, a fall in property may assist the share market whilst a fall in the share market may assist the property market.
The above commentary indicates the need for appropriate balance in any investment portfolio you have.
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Personal Services Income – A garage is a place of business
In a recent case, the office component of a two storey garage with accommodation for three vehicles on the ground level and office space on the second level was held to be “separate business premises” for the purposes of the business premises test within the PSI rules. A sign at the front of the premises indicated that the garage constituted the business premises of a business conducted by a husband and wife that occupied a home adjacent to the garage. Initially, the AAT was satisfied that the garage was not incorporated into the private dwelling and the signage made the garage distinct from the family home. The Federal Court hearing an appeal from the AAT decision broadly continued with the same reasoning and held that the garage area used in the business was sufficiently physically separate to qualify as separate business premises.
Sell your business tax free
A range of incentives exist to enable you to sell your business and in some cases retain most or all of the proceeds free of capital gains tax. The incentives are numerous and complex. They also changed recently to expand their attractiveness. Proper structuring NOW i.e. well before the sale will help you maximise the opportunities to save large amounts of tax.
If you are thinking about selling, please get in touch so we can ensure you have the right structure for a sale in the future
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