Dire consequences if minimum pension payments are not made by 30 June 2017
SMSF trustees with members in pension phase are reminded to make their minimum pension payments by 30 June 2017.
If a trustee fails to make these minimum pension payments by 30 June 2017, the pension account will no longer deemed to be in retirement phase for the whole of the 2017 income tax year – which means the income earned in the pension account will no longer be tax exempt for 2017 – a catastrophic result.
Flow-on effects from such a compliance oversight may also affect s fund’s ability to claim transitional CGT relief as well as impact the changes to the transition to retirement income streams (TRIS) rules commencing 1 July 2017.
Remember the following when claiming work-related expenses
When claiming work-related expenses, taxpayers should ensure that they have a good understanding of what deductions they can claim as well as the amount of deduction allowable:
- When claiming work-related expenses relating to a vehicle, travel, internet, self-education or a mobile phone, taxpayers should ensure that the amount claimed for these expenses are reasonable and verifiable because the ATO is using real-time data to compare deductions claimed by taxpayers in similar occupations and income brackets to identify higher-than-expected or unusual claims;
- When claiming deductions up to $300 (allowable without a receipt), taxpayers must still be able to substantiate the deductions claimed (if ever queried by the ATO);
- When claiming deductions for work uniforms, taxpayers should ensure that they only claim for uniforms that are unique and distinctive (e.g. those uniforms with the employer’s logo and specific to the taxpayer’s occupation) and not clothing for everyday use (e.g. plain suits worn by office workers).
More compliance for employers of working holiday visa holders / backpackers
As mentioned in a previous Top Tax Tips, working holiday visa holders / backpackers will be taxed at a flat rate of 15% (from the first dollar earned) on earnings up to $37,000 from 1 January 2017.
These changes mean that employers of such workers must:
- register with the ATO so that the employer can withhold tax at the new 15% rate – note, such an employer only needs to register once (i.e. they do not need to register each time they hire a new worker or for each income year);
- check each new and existing working holiday maker has the correct visa;
- issue two payment summaries for the 2017 income tax year (i.e. one for the period up to 31 December 2016 and another for the period from 1 January 2017 to 30 June 2017).
Please contact us if your business is currently employing or will employ backpackers / working visa holders.
We can ensure the business registers as an employer of working holiday visa holders and thereby ensure that the workers will not be subject to a 32.5% withholding rate (as opposed to only 15%) for earnings up to $37,000 and ensure penalties for failing to register are avoided.