ANZCA Bulletin June 2012 - final.pdf - Australian and New Zealand ...

In Australia, superannuation presents abig tax opportunity. If you are self-employedand earn less than 10 per cent of your totalincome as an employee, you can claimyour after-tax super contributions as a taxdeduction. This not only boosts your super,but also your tax position. If you are underage 50, you can claim a deduction of thistype of up to $A25,000 per financial year.A contribution of up to $A25,000 wouldbe taxed at 15 per cent. Until now, if youwere aged 50 or over, you could claim upto $A50,000 and have that taxed at15 per cent.However, Australia’s recent FederalBudget changed that. Under the budget,people aged 50 years and older will beallowed a maximum $A25,000 contributionfor their super fund. That will be taxed at 15per cent. The government has halved theprevious caps for people aged over 50.So what happens if the contributionis above $A25,000? It will be taxed at46.5 per cent. For example, you mightmake a contribution of $A30,000. Thatmeans $A25,000 of that will be taxedat 15 per cent but the extra $A5000 willbe taxed at 46.5 per cent. The move willdisproportionately affect people who arenow entering their 50s.These changes kick in from July 1. Inother words, 2011-12 is the last financialyear before the standard cap for concessioncontributions by members over 50 is halvedfrom $A50,000 to the indexed $A25,000that applies to other fund members. Theyneed to act now – it could give them a lotof money. A $A50,000 deduction for aconcessional contribution could be worthas much $A15,750. At the same time, it’sincreasing the amount the person has setaside for their retirement.Tony Greco says anaesthetists seekingto minimise their tax with a $A50,000contribution into their superannuation shouldact well before the end of June.“They only have until the end of June toget that in order,’’ he says. “Bear in mindthat June 30 is a Saturday and a lot ofpeople think that electronic transfers workon a Saturday, but you can’t do it,’’ Grecosays. “It has to physically hit the super fundaccounts on a business day before June 30.I wouldn’t leave it too late. I wouldn’t leaveit until the Friday.”One of the big changes for small businessthat came in with the new AustralianMinerals Resource Rent Tax is how muchsomeone can claim for small assets.92 ANZCA Bulletin June 2012Until now, small business entities witha turnover of less than $A2 million wereeligible for a range of tax benefits, includingsimplified depreciation, capital gains taxconcessions and exemptions and simplifieddepreciation rules allowing an immediatetax deduction for assets costing less than$A1000.But under changes that come in this July,cash flow will be enhanced with more taxwrite offs. From 2012-13, the value of assetsthat small businesses can instantly writeoff will rise from $A1000 to $A6500. Smallbusinesses also will be able to claim anaccelerated initial deduction of $A5000 formotor vehicles acquired from July 2012.Greco says this means it would beworthwhile deferring the purchase of assetsuntil July. “If you’re in small businessyou could only spend $1000 and get animmediate write off,’’ he says. “Now that’sin place for the current year, but on July 1,it bumps up to $6500.“So if it costs less than $1000, yougo to Officeworks and buy that printerfor under $1000.“But if it costs more than $1000, youshould wait until July 1 because the write-offgoes from $1000 to $6500 if you are asmall business. If you buy it before June 30,you would depreciate that and write it offover its useful life. But come July 1, you canget a 100 per cent tax deduction straightaway.“With a car, you will get a $5000deduction up front. With cars, you depreciate15 per cent in the first year and 30 per centthereafter. But come July 1, you knock fivegrand straight off and then get 15 per centon the balance, which means faster cashflow.”It is best to keep record of every expenseno matter how trivial it might seem. Withan orderly record keeping system, you aremore likely to find tax savings you neverknew existed.Leon Gettler is a former Fairfax seniorbusiness journalist. He is now a freelancebusiness writer.$200.00 +$28.46 +$45.68 +$798.15 +$239.00 +$145.78 +$895.00 +$45.68 +$798.15 +$239.00 +$145.78 +$895.00 +$45.68 +$798.15 +$239.00 +$145.78 +$895.00 +$239.00 +$145.78 +$895.00 +$45.68 ++$$798.15 +$239.00 +$145.78 +$895.00 +$45.68 +“It is best to keep record of everyexpense no matter how trivial it mightseem. With an orderly record keepingsystem, you are more likely to findtax savings you never knew existed.”