Update on the government’s superannuation program

Now that the government has been re-elected, it seems they are committed to proceeding with their superannuation policy, including the controversial measure to impose a ‘lifetime cap’ of $500,000 on the amount of non-concessional (i.e., undeducted) contributions that can be made into superannuation (calculated from all contributions made since 1 July 2007).

The Treasurer Scott Morrison has also indicated that transitional relief provisions will be introduced in relation to the lifetime non-concessional contributions cap of $500,000.

It is proposed that transitional provisions will allow for non-concessional contributions to be made under the rules and limits that existed prior to Budget Night where a superannuation fund has entered into a contract before 3 May 2016 to acquire an asset, and the contract settles after 3 May 2016.

Furthermore, there will be transitional relief for self-managed superannuation funds (SMSFs) that had a Limited Recourse Borrowing Arrangement in place before 3 May 2016, and additional non-concessional contributions are to be made up to 31 January 2017 (so that the borrowing will comply with the ATO’s new guidelines).

There have also been reports that the government may also allow ‘carve-outs’ for extraordinary ‘life events’ (e.g., divorce).

The government is apparently going to release draft legislation for their superannuation changes some time in August 2016.

 

The ‘sharing economy’ in the ATO’s sights

The ATO is concerned that those earning money from the ‘sharing economy’ may not realise they have to declare these amounts on their tax return.

In the sharing economy, buyers and sellers are connected through a facilitator who usually operates an app or website.

Assistant Commissioner Graham Whyte said:

“If you earn money from doing odd jobs or providing a service like task sharing, transporting passengers through things like ride-sourcing, or renting out a room or house, you need to declare it because it counts as assessable income.  If you are running a business through the sharing economy you also need to declare this income.

“It’s a bit different if the goods you provide or the activity you complete through a sharing economy website or platform is done as a hobby or recreational activity.  The amount you are paid may not be assessable income.” 

Mr Whyte said ATO technology was keeping up with the sharing economy, and, thanks to their data collection and data matching activities, the ATO would know if taxpayers have left out a significant amount of income.

In addition, some taxpayers may need to register for, and pay, GST (especially those earning an income from carrying on an enterprise of ride-sourcing services, regardless of how much money they earn).

 

For more information please contact your Account Manager on 02 9406 5900.