Super Contributions - Too much can mean Extra Tax

Caps apply to contributions made to your super fund for a financial year. Any super contributed over the cap amount is subject to extra tax. The cap amount and how much extra tax you pay once you exceed it, depends upon whether the contributions are:

• concessional - which are generally made to a super fund for or by you in a financial year and are included in the assessable income of the super fund (for example super guarantee, salary sacrificed amounts and any amount you are allowed as a personal super deduction in your income tax return).
• non-concessional - which are generally made to a super fund by or for you in a financial year and are not included in the super fund’s assessable income (for example, personal contributions you make from your after-tax income).

Summary of contribution caps

	Concessional cap *	Transitional concessional cap*	Non-concessional cap
2009-10 financial year	$25,000	$50,000	$150,000
2008-09 and 2007-08 financial year	$50,000	$100,000	$150,000
Tax on amounts over the cap	31.5% (in addition to the 15% paid by the super fund)	31.5% (in addition to the 15% paid by the super fund)	46.5%
Other information	Any concessional contributions in excess of the cap will also count towards the non-concessional contributions cap	Any concessional contributions in excess of the cap will also count towards the non-concessional contributions cap	If you are under age 65 at any time during the financial year the contribution is made, you can bring forward two years of contributions, effectively allowing you to contribute up to three times the cap at once, or at any time during the three financial years.

*The $25,000 concessional cap will be indexed annually from 2010-11 onwards to average weekly ordinary time earnings (AWOTE) and rounded down to the nearest multiple of $5,000.
*The transitional concessional contributions cap is for those aged 50 years or older and is available until 30 June 2012.

If you are considering making extra contributions to super, ensure you understand all the implications by reading this document.

(Source ATO)

Self Managed Superannuation Funds (SMSF) Services

Self Managed Superannuation Funds (SMSF) services is expected to increase markedly over the next several years.

Christian Tapia, financial advisor with RBS Morgans, says "Over the next several years baby boomers will be retiring. We find that people will often start planning for their retirement about ten years earlier. In doing so, they are looking for more than just investment options. That is where SMSF's raise the bar, by adding the additional wealth creation instrument - tax minimisation. Compounded tax savings, combined with sound investment advice, provides the ability to optimize both savings to date and future funds growth."

After the financial planner has done his bit, My Tax Zone steps in to provide a full administration service. Alternatively, the client may specify which services they require us to perform.

Our Standard Services include:

• Preparation and maintenance of the Fund
  
  • financial statements
  • contribution reporting
  • member statements
  • member contribution details
    
• Preparation of minutes of meetings
• Preparation and lodgement of statutory returns with ATO
• Conversion of funds from accumulation to pensions
• Provision of responses to general enquiries from Trustees regarding the operation, administration and legislative requirements
• Liaison with the Trustees’ financial advisors
• Arranging the audit and actuarial certification
• Attention to all compliance matters 

For more information on optimising your retirement fun, contact David Maynard or David Fong of My Tax Zone on 07 3208 3888.

Taxation of Expatriate "Expat" Foreign Income

Hidden away in the small print of the 2009 Budget papers was the removal of the 90 day income exemption rules. The changes will apply from 1 July 2009. The Changes will have a signifcant impact on expatriate "expat" Australians earning foreign income.

While exemptions from the changes will apply to government workers, charity workers, military and police personnel, the implications of the change will be significant:

• When tax in the country where the income is earned is lower than Australia, affected taxpayers will pay more tax, in many cases receiving a bill at the end of the year.
• Taxpayers will be required to record and maintain details of income earnings and relevant deductions while traveling overseas in order to prepare their Australian tax returns correctly and obtain maximum refunds.
• ALL affected taxpayers will face extra compliance costs to lodge tax returns in Australia and claiming foreign income tax offsets.
• Some taxpayers may be tax more than previously, depending on where they work
• Affected taxpayers, many of whom will be backpackers earning extra income to support their travel, will need to seek assistance from tax professionals to complete their income tax returns
• In some countries, like Saudi Arabia, where it is not easy to qualify as a resident, taxpayers who might otherwise stretch their overseas contracts to two years to avoid Australian tax, could be stung with a large tax bill.

It is important to note that not all expats will be effected. For those who are "non-resident" for "tax purposes", or who are happy to be considered so, will not be affected as there is no requirement for lodgement of an income tax return. The basic test for "non-resident" status is 181 day over seas.

Those expat Australian's affected by the changes will need to consider more sophisticated tax planning options. Recommendations we often make to clients in this category include:

• Negative gearing and investment property - while there are significant tax savings associated with negative gearing, investment properties registered with the National Rental Affordability Scheme (NRAS) offer the additional benefit of $8000 tax credits per year - for ten years
• Superannuation (either SMSF, retail or platform), even with some of the shine removed by the 2009 Budget, superannuation still offers tremendous scope for investment opportunities and tax savings.

My Tax Zone, in association with our affiliate partners in property and financial planning, are able to provide sound taxation advice and effective investment opportunities to taxpayers affected by the changes.
For further information contact David Maynard or David Fong on 07 3208 3888 or email dmaynard@mytaxzone.com.au.

Super for Same Sex Couples

The meaning of 'spouse' has been redefined and this affects other aspects of super as detailed below.

For super laws your 'spouse' now includes:

• someone you are married to
• a person you are in a relationship with and that relationship is registered under certain state or territory laws (including registered same-sex relationships)
• a person of either sex living with you in a relationship as a couple (generally known as a 'de facto' spouse).

The changes to the law mean same-sex partners can now have their relationship recognised by their superannuation fund. The changes amend tax and super laws affecting super death benefits, death benefit termination payments, making contributions for your spouse and other aspects of the super system.

The result is that:

• the definitions of 'spouse', 'child' and 'relative' in the super laws include same-sex partners and their children
• the definitions of 'dependant' and 'spouse' in the income tax laws include same-sex partners and their children
• same-sex partners and their children under 18 years are treated as dependants for the purposes of taxing super death benefits and death benefit termination payments.

(Source: ATO)