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Term Deposits explained

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How do term deposits work?

Term deposits are a way to invest your money and earn a fixed rate of interest.

 

Your money is locked away in an account, for the time that you choose (the term), usually between one month and five years. You need a minimum amount to open a term deposit, for example, $5,000.

Advantages of term deposits

Higher interest rates

Term deposits offer a higher interest rate than most transaction and saving accounts. Generally, the more money you put in, or the longer you invest, the higher the interest rate. Currently, interest rates on term deposits are high in Australia.

Protected by the Australian Government Financial Claims Scheme

The financial claims scheme (FCS) protects deposits made with Australian banks, building societies and credit unions. This guarantees to pay you up to $250,000 to replace deposits in the unlikely event your bank, credit union or building society fails. The safety net only applies to authorised deposit taking institutions regulated by APRA.

The Financial Claims Scheme (FCS) applies to a wide range of deposit accounts held with banks, building societies and credit unions (also known as authorised deposit-taking institutions or ADIs) that are incorporated in Australia, but only applies to deposit accounts with funds in Australian dollars. Under the FCS, deposits are protected up to a limit of $250,000 per account holder per ADI.

The list of banks, building societies and credit unions covered by the FCS is available here.

Under the FCS an account holder can be:

  • an individual
  • a body corporate (including companies)
  • a body politic
  • a partnership
  • any other unincorporated association or body of persons
  • the trustee(s) of a trust
  • the trustee(s) of a superannuation fund (including a self-managed superannuation fund)
  • the trustee(s) of an approved deposit fund.

An account holder can be an Australian resident/citizen or non-resident/non-citizen. In other words, the citizenship or residency status of an account holder does not have an impact on whether a deposit account is covered under the FCS. A group of individual trustees of a trust, superannuation fund or approved deposit fund are treated as a single account holder.

In the case of superannuation, an ADI deposit account held by the trustee of a superannuation fund on behalf of fund members is covered under the FCS up to the limit of $250,000. However, in most cases the $250,000 FCS limit would be applied to the whole fund, not each individual member.

The FCS applies to the following types of deposit accounts:

  1. savings accounts
  2. call accounts
  3. term deposits
  4. current accounts
  5. cheque accounts
  6. debit card accounts
  7. transaction accounts
  8. personal basic accounts
  9. cash management accounts
  10. farm management deposit accounts
  11. pensioner deeming accounts
  12. mortgage offset accounts (either 100 per cent or partial offset) that are separate deposit accounts
  13. trustee accounts
  14. retirement savings accounts

The FCS does not apply to the following accounts:

  • accounts with funds that are not in Australian dollars
  • accounts kept at overseas branches of Australian banks
  • credit balances on credit card facilities or other loans
  • pre-paid card facilities or similar products
  • ‘nostro’ accounts and ‘vostro’ accounts of foreign corporations that carry on banking business or otherwise provide financial services in a foreign country

Compare the features of term deposits

Always shop around for the highest interest rate and best features before you choose a term deposit. Be sure to compare products across different financial institutions. It’s important to check:

Interest ratewhat is the interest rate?
when interest is paid — monthly, annually or at maturity?
Time framehow long you can invest for?
how will interest rates change with different investment time frames?
Amount investedhow much you need to open a term deposit?
how will the interest rate changes the more you invest?
Feesis there are any set-up or account fees?
how big the penalty fee is if you need your money early?

Early withdrawal penalties

To earn interest on your term deposit, your money is locked away for a chosen period of time. If you need your money before the term ends, you may have to pay a penalty fee. You may only receive a proportion of the interest earnt, or none at all.

What to do when your term deposit matures

Term deposits are not a ‘set and forget’ investment. When your term deposit matures, your provider will contact you. They’ll tell you how much interest you’ve earned and what your options are.

If you do nothing, your term deposit may roll over into a new term deposit. There may be a fee to get your money out of the new term deposit. It could also have a lower interest rate than before.

Review your term deposit a month before it matures. Compare it with other products to make sure you’re getting the best deal.

For detailed information regarding tax implications regarding your term deposits please contact us the de Kretser team –

T: +61 3 9550 6900

E:admin@dekretser.com.au

To stay informed and connected, follow us on LinkedIn


How to claim your homework.

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What’s changed?

The ATO stated that you always had to have a dedicated home office in order to claim any working from home expenses.

After 1 July 2022

Now the ATO have said that you no longer need a home office to claim deductions for working from home. Setting up the laptop on the kitchen table is now acceptable.

Fixed Rate method

This method involves using the hours actually worked from home to cover a variety of costs.

Pre 1 July 2022 – 52c/hour

The fixed rate covered:

  • electricity & gas
  • home office depreciation
  • cleaning of the dedicated home office

In addition to this, you could also claim the work use portion of your:

  • data & internet
  • mobile & home phone usage
  • computer consumables
  • stationery
  • depreciation of work related items such as computers

This was the method most accountants used, as it’s easier than calculating the home office electricity usage. You were required to keep a diary for 4 weeks of the year to prove how you came to your total hours.

After 1 July 2022 – 67c/hour

This method now includes:

  • data & internet
  • mobile & home phone usage
  • electricity & gas
  • computer consumables
  • stationery

In addition to this you can claim:

  • decline in assets such as computers and office furniture
  • repairs and maintenance of said assets
  • cleaning (if you have a dedicated office)

You are required, from 1 March 2023, to keep a diary all year to now substantiate the hours you claim.

Shortcut Method – 80c/hour

This was introduced in recognition of everyone working from home during COVID-19. It was available for use from March 2020 until 30 June 2022.

It covered everything! Which meant it wasn’t always the most tax effective – unless the boss was paying for your mobile phone bill and supplying your equipment and furniture.

  • data & internet
  • mobile & home phone usage
  • electricity & gas
  • computer consumables
  • stationery
  • decline in assets such as computers and office furniture
  • repairs and maintenance of said assets
  • cleaning (if you have a dedicated office)

Actual Method – always available

A lot more record keeping is required for this method – but it’s absolutely worth it.

This involves keeping a record of what actual hours you work from home. The ATO requires you keep a 4 week diary every year to substantiate your claim (they didn’t increase this to a whole year, unlike the fixed rate method from 1 March 2023). Using this, you can claim the business/work use of everything.

  • data & internet
  • mobile & home phone usage
  • electricity & gas
  • computer consumables
  • stationery
  • decline in assets such as computers and office furniture
  • repairs and maintenance of said assets
  • cleaning (if you have a dedicated office)

This is now the accountants preferred method as it results in the highest deduction. But if you don’t have good records, we will use the Fixed Rate Method – be warned!

Keeping Records

No matter what method you use, you have to be able to prove it. Keep a diary on you desk for 4 weeks of the year (or the whole year if you’re using fixed rate) and write down your start and finish times, go through your phone bill for a month and compare private vs business calls to determine your deductible percentage. Try and record your Facebook scrolling vs work research on your phone or home computer for internet deductible percentage. And last but not least, don’t be afraid to make a claim – if you’re actually using these things to generate an income, you can claim it!

Make use of the ATO myDeductions App to help you out with recording your expenses too, especially the big purchases like a computer or phone.

This only a short guide on how to maximise your homework – please contact us for a more tailored approach to your specific needs.

To stay and informed and connected, follow us on LinkedIn

Should you need assistance, please do not hesitate to contact us.
T: +61 3 9550 6900 E:admin@dekretser.com.au

BOOST TIME! Small business technology investment boost and skills and training boost.

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    Changes to the boost is now a Federal law – from June 2023

    On 29 March 2022, as part of the 2022–23 Budget, the then government announced it would support small business through these new measures. The measures became law on 23 June 2023. The technology investment boost and skills and training boost for small businesses are now operational and must be applied.

    Time to Boost!

    Small business technology investment boost

    Small businesses (with an aggregated annual turnover of less than $50 million) can deduct an additional 20% of the expenditure incurred for the purposes of business digital operations or digitising its operations on business expenses and depreciating assets such as portable payment devices, cyber security systems or subscriptions to cloud based services.

    This measure applies to expenditure incurred in the period commencing from 7:30 pm AEDT 29 March 2022 until 30 June 2023. An entity can claim the boost for expenditure on a depreciating asset only if the asset is first used, or installed ready for use, by 30 June 2023.

    An annual $100,000 cap on expenditure will apply to each qualifying income year. Businesses can continue to deduct expenditure over $100,000 under existing law.

    Eligible expenditure may include, but is not limited to, business expenditure on:

    • digital enabling items – computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks
    • digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design
    • e-commerce – goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth
    • cyber security – cyber security systems, backup management and monitoring services.

    Where the expense is partly for private purposes, the bonus deduction can only be applied to the business-related portion.

    You cannot claim the following expenses towards the boost:

    • salary and wages
    • capital works costs
    • financing costs
    • training or education costs (these may be eligible for the Small business skills and training boost)
    • expenses that form part of your trading stock costs.

    Small business skills and training boost

    Small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure that is incurred for the provision of eligible external training courses to their employees by registered providers in Australia. Businesses may continue to deduct expenditure that is ineligible for the bonus deduction in accordance with the existing tax law.

    The expenditure must be:

    • for the provision of training to employees of your business, either in-person in Australia, or online
    • charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours
    • already deductible for your business under taxation law
    • incurred within a specified period (between 7:30 pm AEDT or by legal time in the ACT on 29 March 2022 and 30 June 2024).

    The bonus deduction is available for expenditure for the provision of training to one or more employees of your business. The training provider must meet certain registration criteria for the bonus deduction.

    You can check for registered providers at:

    You cannot claim the following expenses towards the boost:

    • training of non-employee business owners such as sole traders, partners in a partnership or independent contractors
    • costs added on an invoice by an intermediary on top of the cost of training, such as commissions or fees, as they are not charged directly or indirectly by the registered training provider.

    If you have any questions regarding these coming changes – de Kretser is here for you.

    Need more information?
    If you need assistance understanding how the comparison information relates to your circumstances, we are here to help, so please contact us for further information.

    We look forward to working with you.

    T: +61 3 9550 6900

    E:admin@dekretser.com.au

    To stay informed and connected, please follow us on LinkedIn and Facebook


    Trusts – Are they still worth it?

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    The recent ATO crackdown on trusts will no doubt have some business owners (and even some advisors) asking themselves the question: Is this structure for business purposes still worth it?

    To recap, trust distributions have been under the ATO microscope in recent years. The latest ATO crackdown was in February 2022 when it updated its guidance around trust distributions especially those made to adult children, corporate beneficiaries and entities that are carrying losses. Depending on the structure of these arrangements, the ATO may potentially take an unfavourable view on what were previously understood to be legitimate distribution arrangements.

    The ATO is chiefly targeting arrangements under section 100A of the Tax Act; specifically, where trust distributions are made to a low-rate tax beneficiary but the real benefit of the distribution is transferred or paid to another beneficiary, usually with a higher tax rate.In this regard, the ATO’s Taxpayer Alert illustrates how section 100A can apply to the quite common scenario where a parent benefits from a trust distribution to their adult children. Despite this new ATO interpretation and the wider crackdown on trusts in recent years, the choice of a trust as a business structure still has a range of benefits including:

    ■Asset protection– Limited liability is possible if a corporate trustee is appointed. Usually, when a person owes money and cannot meet their payment requirements, the creditor can access the person’s personal assets to recoup the debt payable. However if a trust is in place, there is no access to beneficiary assets 50% CGT discount– A family trust receives a 50% discount on capital gains tax for profits made from selling any assets the trust has held for more than 12 months. This contrasts with a company structure. Companies cannot access the 50% CGT discount.

    ■Tax planning– Income that sits in the family trust that is not distributed by year-end is taxed at the highest income tax rate. However, any trust income distributed to the beneficiaries is taxed at the income tax rate of the beneficiary who receives the distribution. The way to definitely get around the ATO’s aforementioned section 100A crack down is to ensure the distributed money actually goes to the nominated beneficiary and is enjoyed by the beneficiary rather than another taxpayer

    ■Carry-forward losses– A trust does not distribute losses to beneficiaries. This means the beneficiaries will not be called upon to contribute money to the trust to meet any loss. Instead, losses from each year can be carried forward to the following year, subject to certain conditions being met.

    Common mistakes made by family trusts that will attract the ATO’s attention include:

    • Purported distributions to tax-advantaged organisations, such as charities, that are not beneficiaries;
    • The trustee failing to make year-end trust distributions until after June 30;
    • The trustee incorrectly calculating trust income, or mischaracterising income and gains; and
    • Family trust election not being made in time or failing to properly specify the beneficiary, resulting in tax benefits going outside the family group.

    This only a short guide to possible issues that may arise regarding Trust – please contact us for a more tailored approach to your specific needs.

    To stay and informed and connected, follow us on LinkedIn

    Should you need assistance, please do not hesitate to contact us.
    T: +61 3 9550 6900 E:admin@dekretser.com.au

    Maximise Your Rental Claims – A Quick Guide to Repairs, Maintenance and Capital Works

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    Repairs and maintenance


    The cost of repairs and maintenance may be deductible in full in the year you incur them if both –
    •the expense directly relates to wear and tear or other damage that occurred while renting out the property
    •the property either –
    – continues to be rented on an ongoing basis
    – remains available for rent, but there’s a short time when the property is unoccupied (for example, where unseasonable weather causes cancellations of bookings or all reasonable efforts to attract tenants were unsuccessful).

    Repairs
    Generally, repairs must relate directly to wear and tear or other damage that occurred while renting out the property and can be claimed in full in the same year you incurred the expense.
    Examples of repairs include:
    •replacing broken windows
    •repairing electrical appliances or machinery
    •replacing part of the guttering damaged in a storm
    •replacing part of a fence damaged by a falling tree branch.

    Maintenance
    Maintenance generally involves keeping your property in a tenantable condition. It includes work to prevent deterioration or to fix existing deterioration.
    Examples of maintenance include:
    •repainting faded or damaged interior walls
    •oiling, brushing or cleaning something that is otherwise in good working condition (for example, oiling a deck or cleaning a swimming pool)
    •maintaining plumbing.

    Capital expenditure that may be claimable over time.

    Capital allowances
    Depreciating assets are items that can be described as plant, which don’t form part of the premises. These items are usually:
    •separately identifiable
    •not likely to be permanent and expected to be replaced within a relatively short period
    •not part of the structure.


    When claiming a deduction for decline in value for each asset, you can choose to use either:
    •the effective life the Commissioner has determined for these types of assets
    •your own reasonable estimate of its effective life.

    Where you estimate an asset’s effective life, you must keep records to show how you worked it out.
    Examples of assets decline in value include:
    •floating timber flooring
    •carpets
    •curtains
    •appliances like a washing machine or fridge
    •furniture.

    Capital works
    Capital works describes certain kinds of construction expenditure used to produce income. The rate of deduction for these expenses is generally 2.5% per year for 40 years following construction.

    Capital works include:
    •building construction costs
    •the cost of altering a building
    •major renovations to a room
    •adding a fence
    •building extensions such as garages or patios
    •adding structural improvements like a driveway or retaining wall

    




    

    

    

    




    

    

    

    




    This only a short guide to possible gains – please contact us for a more tailored approach to your specific needs.
    




    To stay and informed and connected, follow us on LinkedIn
    




    Should you need assistance, please do not hesitate to contact us.
    T: +61 3 9550 6900 E:admin@dekretser.com.au
    




    
															
    
		
		
	
    


    

	
		

    

	
	
    

		
		
    
							
    
					
				
    
			
			
    Victorian Taxes to include when budgeting for your 23/24 Financial Year.
    

							
    
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      Changes to Victorian state taxes July 2023
      




      The State Taxation Acts Amendment Act 2023 received Royal Assent on 27 June 2023. The Act introduces measures announced in the 2023–24 Victorian Budget and makes amendments to various state taxation acts.
      




      2023–24 Budget measures:
      




      Business insurance duties
      




      These will be abolished over 10 years by reducing the rate of duty (currently 10%) by 1 percentage point each year from 1 July 2024. ‘Business insurance’ refers to policies taken out by businesses covering public and product liability, professional indemnity, employers’ liability, fire and industrial special risks, marine and aviation insurance.
      




      Special disability trust (SDT) duty exemption
      




      The Duties Act 2000 has been amended from 1 July 2023 to increase the property value threshold for this duty exemption from $500,000 to $1.5 million where the property will be used and occupied as the principal place of residence of the principal beneficiary of the SDT. If the value exceeds $1.5 million, duty will be assessed on the amount that exceeds the new threshold.
      




      New duty exemption for a transfer of land to a person with a disability
      




      The Duties Act 2000 has been amended from 1 July 2023 to introduce an exemption for a transfer of property from an immediate family member to a person with a disability who would be eligible to be a principal beneficiary of a SDT even if an SDT has not been established. The exemption is available from 1 July 2023 for properties valued up to $1.5 million.
      




      Pensioner and concession cardholder duty exemption and concession
      




      The Duties Act 2000 has been amended from 1 July 2023 to increase the property value thresholds to $600,000 for the exemption and $750,000 for the concession. The benefit applies against the full duty chargeable on the purchase. Additional eligibility criteria including a residence requirement has been introduced.
      




      ‘COVID debt’ repayment plan – land tax
      




      The Land Tax Act 2005 has been amended to introduce a temporary land tax surcharge from the 2024 land tax year, expiring after 10 years. Properties exempt from land tax will also be exempt from the surcharge.
      




      • For taxable landholdings between $50,000 and $100,000, a $500 flat surcharge will apply.
      • For taxable landholdings between $100,000 and $300,000 (or $250,000 for trusts), a $975 flat surcharge will apply.
      • For taxable landholdings over $300,000 (or $250,000 for trusts), a $975 flat surcharge will apply plus an increased rate of land tax by 0.10 percentage points.
      




      Absentee owner surcharge (AOS)
      




      The Land Tax Act 2005 has been amended to increase the AOS rate from 2% to 4% and reduce the tax‑free threshold for non-trust absentee owners from $300,000 to $50,000, from the 2024 land tax year.
      




      New land tax exemption for land owned by an immediate family member of a person with a disability
      




      The Land Tax Act 2005 has been amended to introduce an exemption for land owned by an immediate family member of a qualifying person with a disability, where that person would be eligible to be a principal beneficiary of an SDT. The property must be used and occupied as the qualifying person’s principal place of residence for no consideration.
      




      New land tax exemption for land protected by a conservation covenant with Trust for Nature (Victoria).
      




      The Land Tax Act 2005 has been amended to introduce an exemption for land protected by a conservation covenant with Trust for Nature (Victoria), from the 2024 land tax year.
      




      Land tax exemption for construction or renovation of a principal place of residence
      




      The Land Tax Act 2005 has been amended to provide the Commissioner with a discretion to extend the exemption for up to 2 additional years where additional time is required to complete construction due to builder insolvency. This commences from the 2024 land tax year.
      




      Workcover
      




      Businesses will pay an average of 1.8 per cent of remuneration under the scheme from July 1, up from 1.27 per cent. The WorkCover premium is 1.23 per cent in Queensland and 1.48 per cent in NSW.
      




      Eligibility for mental injury claims in Victoria will also be adjusted, with workers suffering stress and burnout no longer able to access weekly WorkCover benefits. They will instead be eligible for provisional payments for 13 weeks to cover medical treatment, along with access to enhanced psychosocial support services.
      




      ‘COVID debt’ repayment plan – payroll tax
      




      The Payroll Tax Act 2007introduces a temporary payroll tax surcharge to commence from 1 July 2023, expiring after 10 years. The surcharge applies to employers who pay Australia wide wages of $10 million or more for a financial year and will be payable on Victorian wages above the relevant threshold.
      




      • A surcharge of 0.5% will apply to businesses with national payrolls above $10 million.
      • Businesses with national payrolls above $100 million will pay an additional 0.5%.
      




      Annual payroll tax-free threshold
      




      The Payroll Tax Act 2007 is amended to increase the annual payroll tax-free threshold from $700,000 to $900,000 from 1 July 2024 and from $900,000 to $1 million from 1 July 2025. From 1 July 2024, the allowable deduction will also be phased out for employers with annual wages between $3 million and $5 million, with no allowable deduction once annual wages exceed $5 million.
      




      Payroll tax exemption for high-fee non-government schools
      




      The Payroll Tax Act 2007 is amended from 1 July 2024 to limit the application of the payroll tax exemption to schools that the Minister for Education, in consultation with the Treasurer, declares to be exempt. In determining which schools will be exempt, the Minister for Education will take into account the fees and charges imposed, financial contributions received and any other matter that the Minister for Education considers appropriate.
      




      The Minister for Education’s declaration dated 29 June 2023 is available online.
      




      Other amendments
      




      Corporate collective investment vehicles (CCIV)
      




      The Duties Act 2000, Land Tax Act 2005 and Payroll Tax Act 2007 are amended in response to the introduction of CCIVs under Australian Government reforms.
      




      • Each sub-fund of a CCIV will be deemed as equivalent to a separate unit trust scheme for duties and land tax purposes.
      • Consistent with Federal treatment, regulate and tax a CCIV as if it were a trustee, the property of each sub-fund will be treated as trust property and the members of each sub-fund will be treated as beneficiaries or unit holders of the trust for duties and land tax purposes.
      • Amounts paid or payable by a CCIV to its corporate director will be excluded as wages for payroll tax purposes.
      




      Fire services property levy – refunds and cancellation of assessments
      




      The Fire Services Property Levy Act 2012 is amended to clarify that the ability of collection agencies to refund or cancel fire services property levy payments for mistakes or errors does not apply if the error, or grounds on which a person believes they have made an overpayment, is covered by a ground of objection under the Valuation of Land Act 1960.
      




      Payroll tax rates
      




      The Payroll Tax Act 2007 is amended to ensure the payroll tax rates for 2021-22 year continue to apply for future tax years. The amendment will apply retrospectively from 1 July 2022 to confirm the annual payroll tax rates that apply for the 2022-23 financial year.
      




      Growth areas infrastructure contribution (GAIC)
      




      The Planning and Environment Act 1987 and the Subdivision Act 1988 are amended to:
      




      • Introduce a new GAIC event for a plan of subdivision that does not require a statement of compliance to be issued.
      • Exclude a dutiable transaction that arises because of the operation of the economic entitlement provisions under the Duties Act 2000 from being a GAIC event.
      • Abolish the GAIC Hardship Relief Board.
      • Update GAIC exemptions to reflect changes to exemptions in the Duties Act 2000.
      • Prevent GAIC from being apportioned from a parent lot to any child lot wholly outside the contribution area, where the parent lot is partly inside and outside the contribution area.
      




      Windfall gains tax (WGT) and valuation objections
      




      • The Taxation Administration Act 1997 and Valuation of Land Act 1960 are amended to clarify the scope of objections lodged to valuations of land used in an assessment of WGT.
      • The amendments require a taxpayer to object to both valuations of land used to calculate value uplift for the purposes of windfall gains tax, even if the grounds for the objection relate to only one of those valuations and provide councils discretion to adopt an amended valuation that results from a windfall gains tax objection.
      




      Statute law revisions
      




      Various statute law revisions are made to the Duties Act 2000, Land Tax Act 2005 and Payroll Tax Act 2007.
      




      If you have any questions regarding these coming changes – de Kretser is here for you. 
      




      Need more information?
      If you need assistance understanding how the comparison information relates to your circumstances, we are here to help, so please contact us for further information.
      




      We look forward to working with you.
      




      T: +61 3 9550 6900 
      




      E:admin@dekretser.com.au
      




      

      

      To stay informed and connected, please follow us on LinkedIn and Facebook
      





      

      

      




      
															
      
		
		
	
      


      

	
		

      

	
	
      

		
		
      
							
      
					
				
      
			
			
      New reporting arrangements for SMSFs from 1 July 2023
      

							
      
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        From 1 July 2023, trustees and directors of SMSFs must report certain events that affect their members transfer balance account quarterly.
        




        These events must be reported by lodging a ‘transfer balance account report’ (TBAR) no later than 28 days after the end of the quarter in which they occur. The purpose of this change is to streamline the reporting process and bring all SMSFs under a single reporting framework. This means there will no longer be an ‘annual reporter’ option.
        




        What is a transfer balance account and a TBAR event?
        




        The introduction of a transfer balance cap (TBC) from July 2017 introduced a limit on how much an individual could transfer from their superannuation accumulation account into a retirement phase pension. In order to track an individual’s use of their TBC, a ‘transfer balance account’ (TBA) is created to record necessary transactions from the time an individual first commences a retirement phase pension.
        




        Importantly, a TBAR is only required when a member has an event which affects their TBA. The most common reporting events include:
        




        ■Commencement of a pension
        




        ■Lump sum withdrawals from a pension account
        




        ■Commencement of a death benefit pension.
        




        For many SMSFs, the members will have only one or two TBAR events in their lifetime. Other events that do not affect a member’s TBA and therefore do not need to be reported include:
        




        ■Pension payments
        




        ■Investment earnings or losses
        




        ■When an income stream ceases because the capital has been depleted
        




        ■Death of a member.
        




        Changes from 1 July 2023 From 2023/24 onwards
        




        ■A member’s total superannuation balance will no longer be relevant in determining whether an SMSF reports on a quarterly or annual basis, and
        




        ■All SMSFs must lodge a TBAR within 28 days after the end of the quarter in which the TBC event has occurred (ie, by 28 January, 28 April, 28 July, and 28 October). 
        




        This means that SMSFs that have previously been permitted to lodge a TBAR on an annual basis will no longer be permitted to do so from 1 July 2023.
        




        However, the obligation for SMSFs to report earlier will remain in cases where a fund must respond to a pension excess transfer balance determination or a commutation authority from the ATO. 
        




        Action items for SMSF trustees
        




        For those SMSFs that already report on a quarterly basis, there will be no change to the reporting frequency for TBAR events. The changes impact SMSFs that are annual reporters only. 
        




        Note –  if you’re currently lodging your TBAR annually at the same time as your SMSF annual return, you will need to report all events that occurred in the 2023 financial year by 28 October 2023. Should you have any questions on your TBAR reporting obligations, please contact us today as we can help you prepare for these upcoming changes.
        




        If you have any questions regarding these coming changes – de Kretser is here for you. 
        




        Need more information?
        If you need help comparing your superannuation fund or need assistance understanding how the comparison information relates to your circumstances, we are here to help, so please contact us for further information.
        




        We look forward to working with you.
        




        T: +61 3 9550 6900 
        




        E:admin@dekretser.com.au
        




        

        

        To stay informed and connected, please follow us on LinkedIn and Facebook
        





        

        

        




        
															
        
		
		
	
        


        

	
		

        

	
	
        

		
		
        
							
        
					
				
        
			
			
        How to claim an early tax deduction on SG contributions
        

							
        
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          Are you an employer who needs to make superannuation guarantee (SG) contributions for your employees? If so, it may be worthwhile bringing forward these SG contributions to before 1 July to benefit from a tax deduction this financial year. However the timing of when SG contributions are deductible to an employer can be tricky if employers pay SG contributions for their employees via a superannuation clearing house (SCH).
          




          RECAP – WHAT IS A SCH?
          




          The ATO’s free Small Business Superannuation Clearing House (SBSCH) is the only ‘approved’ clearing house – none of the many commercial clearing houses have this status. The SBSCH is a free service that small businesses with 19 or fewer employees, or an annual aggregated turnover of less than $10 million, may use to make superannuation contributions to employees.The SBSCH aims to reduce compliance costs for small business employers by simplifying and streamlining the process of making employee superannuation contributions, by allowing employers to make a single lump payment of their contributions to the SBSCH each quarter. That lump sum payment is broken into individual payments by the SBSCH, and then contributed to each employee’s respective super fund or RSA superannuation account.
          




          




          TAX DEDUCTION AVAILABLE FOR EMPLOYERS
          




          Employers can claim income tax deductions for SG contributions made to a superannuation fund on behalf of their employees, subject to certain conditions being met. As the income tax deduction is available in the financial year the contribution is made, some employers may wish to improve their current year tax position by bringing forward the June quarter SG contributions to before 1 July, even though these SG contributions are not due until 28 July 2023.
          




          TAKE CARE IF YOU USE A SCH
          




          As mentioned above, SG contributions are tax deductible in the year in which they are made. That said, a contribution is not made until it is received by the fund, and when that happens depends on the way in which the contribution is made. This is clear cut where an employer pays SG contributions directly to an employee’s nominated superannuation fund. That is, the contribution will be made when it is received by the fund.
          




          However, the timing of the tax deduction and when the contribution counts towards the employee’s contribution cap is not as straightforward where SG contributions are made to a SCH for all employees. Here, the SCH electronically transfers SG contributions to employees’ funds on the employer’s behalf. In this situation, the contribution is not made at the time the clearing house is credited with the funds from the employer. Rather, the contribution is made and therefore deductible when the funds are credited to the respective employee’s superannuation fund (following an electronic transfer of money from the clearing house) and then allocated to the employee.
          




          BEWARE OF TIMING DELAYS
          




          The ATO is aware that there may be a period of time between an employer’s payment to the SBSCH and superannuation fund receiving the contribution. Further, the SBSCH may be unavailable over a weekend close to the end of the financial year for scheduled system maintenance. This means that payments made towards the end of a financial year may not be received by an employee’s superannuation fund in the same financial year. This may therefore impact when an employer is entitled to an income tax deduction for the SG contributions
          




          ACTION ITEMS FOR EMPLOYERS
          




          For those employers who do not use the SBSCH but instead use commercial clearing houses, for the contributions to be deductible in 2022/23, it is recommended that it be made up to 21 days before the end of the financial year.
          




          For employers who make contributions directly to their employees’ superannuation funds, the contributions should be made a few days before the end of the financial year to ensure they are received before 1 July and therefore deductible in the current financial year.
          




          If you have any questions regarding these coming changes – de Kretser is here for you. 
          




          Need more information? Please contact us quickly so that we can help you ensure all entitlements are finalised – and you do not miss out.
          




          We look forward to working with you.
          




          T: +61 3 9550 6900 
          




          E:admin@dekretser.com.au
          




          

          

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          Temporary Full Expensing: get in quick!
          

							
          
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            Temporary Full Expensing (TFE) encourages and supports businesses by allowing an immediate deduction for the business portion of the cost of a depreciating asset. 
            




            There is no cost threshold – the whole cost of the asset can be written off in the relevant year. However, cars can only be depreciated up to the car limit which is currently $64,741. The car limit does not, however, apply to vehicles fitted out for use by people with a disability. For background, a ‘car’ is defined as a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers (excluding motorcycles and similar). Therefore, for those vehicles, the car limit has no application, and full depreciation is available. 
            




            Benefits
            




            The principal benefit of TFE is cashflow. TFE enables businesses to bring forward their depreciation claims, and therefore their deductions upfront, into a single year rather than having them spread out over multiple future years. Ultimately, this assists cashflow which itself is one of the main challenges faced by businesses. 
            




            Eligibility
            




            The vast majority of businesses including sole traders, will be eligible for TFE as their aggregated, annual turnover will be less than $5 billion. Until 30 June, 2023, under TFE, businesses can claim both new and second-hand depreciating assets where those assets are used or installed ready for use for a taxable purpose. 
            




            From a timing standpoint, this means you will not be eligible for TFE in this financial year if you merely order or pay for an eligible asset before 1 July, 2023 – rather, the asset must be used or installed ready for use in your business before this date.
            




            Eligible assets
            




            • Computers, laptops and tablets, printers
            • Wireless routers and Wi-Fi mesh and extenders
            




            • Tools and equipment
            • Cash registers/POS systems
            




            • Machinery 
            • Security Systems
            




            • Office Furniture (free standing) and business equipment 
            








            There are however some ineligible assets as follows:
            




            ■ buildings and other capital works for which a deduction can be claimed under the capital works provisions in division 43 of the Income Tax Assessment Act 1997
            




            ■ trading stock
            




            ■ CGT assets
            




            ■ assets not used or located in Australia
            




            ■ where a balancing adjustment event occurs to the asset in the year of purchase (e.g. the asset is sold, lost or destroyed)
            




            ■ assets not used for the principal purpose of carrying on a business
            




            ■ assets that sit within a low-value pool or software development pool, and
            




            ■ certain primary production assets under the primary production depreciation rules (including facilities used to conserve or convey water, fencing assets, fodder storage assets, and horticultural plants (including grapevines)).
            




            Business plan
            




            Because under TFE you cannot claim any extra depreciation deductions than under the standard depreciation rules, you should stick to your business plan and only continue to buy assets that align with that plan and that you were contemplating buying anyway…and then enjoy the cashflow benefits of TFE.
            




            If you have any questions about TFE – especially around asset eligibility and timing leading up to 30 June please call us immediately – and we will help you to obtain your maximum amounts.
            




            de Kretser is here for you – your time is precious, we will make it count.
            




            T: +61 3 9550 6900 
            




            E: admin@dekretser.com.au
            




            

            

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            Working from Home – The New Fixed Method explained.
            

							
            
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              The Australian Taxation Office (ATO) has announced new updates on how one can claim expenses for working from home. From 1 July 2022 onwards, you can choose either to use the ‘actual cost’ method or a new ‘fixed rate’ method (67 cents per hour) based on what best matches your scenario. No matter what method you choose, you have to collect and maintain certain records to access the claim. 
              




              The ABS Characteristics of Employment provides information on whether people usually work from home. The concept of working from home stems from pre-pandemic times and includes people who did so: to catch up on work; as part of a flexible work arrangement; to reduce overheads/have a home office; or as part of their employment conditions. The proportion of people who usually work from home has increased from 30% in 2015 to 41% in 2021. It is expected that some of the recent increase could be explained by the COVID-19 pandemic. However, the estimates were generally trending upwards before this time.
              




              Data is released every two years and can be analysed by industry, based on a person’s main job (most hours worked per week). In August 2021, the five industries with the largest proportions of people who usually worked from home were:
              




              1. Financial and Insurance Services (77%)
              2. Professional, Scientific and Technical Services (70%)
              3. Information Media and Telecommunications (65%)
              4. Education and Training (61%)
              5. Rental, Hiring and Real Estate Services (61%).
              




              The first issue for claiming expenses is that there needs to be a link between the expenses you incurred –  and the method you make money. If an incurred expense doesn’t match your work or only half relates to your work, you won’t be able to claim the full expense as a deduction. 
              




              On the other hand, the second issue is that you have to incur expenses related to working from home. 
              




              The New ‘Fixed Rate’ Method
              




              Previously, there were two fixed-rate methods for the 2021-22 income year:
              




              • A cover-all 80 cents per hour rate for costs incurred when you work from home (it was valid from 1 March 2020). This Covid-19-related rate was likely to cover all additional overhead costs linked to working from home, or
              • If you had space for work but you were not running your business from home, you could access 52 cents per hour while you worked from home to cover the running expenses of your home. However, this rate doesn’t cover certain items, including depreciation of electronic devices that can be claimed separately. 
              




              From the 2022-23 financial year onwards, the Australian Taxation Office has merged these two fixed-rate methods to come up with one revised method that can be accessed by anyone working from home, irrespective of whether they are working at the kitchen table or have a dedicated space. 
              




              67 cents per hour is the newly announced rate and it covers your energy expenses (gas and electricity), phone usage (home and mobile), stationery, internet, and computer consumables. You are allowed to separately claim deductions of the expense of the decline in assets’ value such as computers, maintenance, and repairs for these assets, and on the other hand, if you have a dedicated home office, it will include the cost of cleaning the office. If more than one person is working from the same home, each person can claim using the fixed rate method if they meet eligibility criteria.
              




              What proof does the ATO need that you are working from home?
              




              The ATO requires A record of hours for the income year – this can be in any form, provided it is kept contemporaneously. For example, records may be kept in one of the following forms:
              




              • timesheets
              • rosters
              • logs of time the taxpayer spent accessing employer systems or online business systems
              • time-tracking apps
              • a diary or similar document kept contemporaneously.
              




              Furthermore, you also need to maintain a copy of at least one document for every expense you incurred during the year that is covered by the fixed rate method. 
              




              It could include bills, invoices, or credit card statements. 
              




              Keeping records of running expenses
              




              The taxpayer must also keep evidence for each of the additional running expenses that they incurred.
              




              For energy, mobile and home phone and internet expenses, the taxpayer must keep one monthly or quarterly bill. If the bill is not in the taxpayer’s name, they will also have to keep additional evidence showing they incurred the expenses, e.g. a joint credit card statement showing payment or a lease agreement showing they share the property, and therefore the expenses, with others.
              




              For stationery and computer consumables, which are occasional expenses, the taxpayer must keep one receipt for an item purchased.
              




              Each household member who contributes to the payment of an expense that is listed on a bill in the name of one person but the cost is split will be considered to have incurred it. You need to maintain these records so you can prove your claim. If you don’t have this proof at that time, you will not be able to claim deductions. 
              




              According to the ATO, you will no longer be able to give estimates or a sample diary over four weeks to claim work-from-home deductions. From 1 March 2023, you will have to show the actual hours you worked from home.
              




              Keeping records for decline in value
              




              As the decline in value of depreciating assets is not covered by the revised fixed-rate per hour, to claim a deduction for decline in value the taxpayer must keep the written evidence required by Div 900 or the ITAA 1997 
              




              An employee must keep, for each depreciating asset, a document which shows:
              




              • the name or business name of the supplier
              • the cost of the asset
              • the nature of the asset
              • the day the asset was acquired
              • the day the record was made out.
              




              The taxpayer must also keep records which demonstrate their work-related use of the depreciating asset. This can be evidenced by records of a representative four-week period that show personal and income-producing use of the depreciating assets.
              




              For depreciating assets used in carrying on a business, they must keep records that record and explain all transactions.
              




              




              




              




              If you have any questions regarding these changes – de Kretser is here for you. 
              




              Need more information?
              If you need help with consolidating your information to achieve maximum return – please contact us.
              




              We look forward to working with you.
              




              Your time is precious – we’ll make it count.
              




              T: +61 3 9550 6900 
              




              E:admin@dekretser.com.au
              




              

              

              To stay informed and connected, please follow us on LinkedIn and Facebook