NEWSLETTER – MAY 2022
- 50% reduction in super pension payments
Trustees of a superannuation fund have an ongoing requirement to ensure that pension drawings comply with the minimum and maximum pension limits as per the Superannuation Industry Supervision Act 1993 (SIS Act).
The Government has extended the temporary 50% reduction in minimum annual payments for pensions by a further year, to 30 June 2023. The 50% reduction was due to end on 30 June 2022. The minimum annual payment amount is worked out by multiplying the member’s pension account balance at the beginning of the year (1 July) by a percentage factor.
|Age of beneficiary (years)||Standard percentage factor (%)||Minimum drawdown for 2020 to 2023 income years (with 50% reduction)|
|95 and more||14||7|
The member’s age is determined at either:
- 1 July in the financial year in which the payment is made, or
- the commencement day of the pension, if that is the year in which it commences
Where the pension commences after 1 July, the minimum payment amount for the first year is calculated proportionately to the number of days remaining in the financial year, starting from the commencement day. If the pension commences on or after 1 June in a financial year, no minimum payment is required to be made for that financial year.
Minimum pensions are to be drawn from the superannuation fund’s bank account by 30 June 2022. We recommend that Trustees ensure minimum payments are drawn before 28 June 2022.
Transition to retirement pensions (TRIS) also have a maximum annual payment limit of 10% of the account balance at the start of the financial year.
All pensions that satisfy the minimum standards will generally be treated as super income stream benefits for income tax purposes. This means the fund may be able to claim an exemption for the income earned on pension assets, called an exempt current pension income (ECPI).
If the minimum pension standards are not met, the payments will not be treated as super income stream benefits.
Failing to meet the minimum pension payment standards for an income stream will mean that the fund loses the ECPI for the income year as well as transfer balance account consequences.
- Private Health Insurance (PHI) Rebate
The PHI rebate is an amount the Government contributes towards the cost of your private health insurance premiums for policies that provide hospital cover and hospital/extras cover. The rebate is income tested and eligibility depends on your income for surcharge purposes. Taxpayers with higher income over the threshold, may not be entitled to any rebate at all.
If you are eligible for the rebate, the rebate can be claimed either:
- through your private health insurance provider – your private health insurance provider will apply the rebate to reduce your private health insurance premiums
- when you lodge your tax return
The rebate percentage is adjusted on 1 April each year. However, the Government has announced that there will be no changes to the Private Health Insurance rebate on 1 April 2022.
The PHI rebate tiers for 1 April 2022 to 31 March 2023 are as follows:
|Age||Base Tier||Tier 1||Tier 2||Tier 3|
|70 and over||32.812%||24.608%||16.405%||0.00%|
Income thresholds for 2022-23 year:
|Family Status||Base Tier||Tier 1||Tier 2||Tier 3|
|Single||$90,000 or less||$90,001-$105,000||$105,001 – $140,000||$140,001 or more|
|Family||$180,000 or less||$180,001 – $210,000||$210,001 – $280,000||$280,001 or more|
The Tax Office will test your income for surcharge purposes against the income thresholds to determine the percentage of rebate the taxpayer is entitled to. Income for surcharge purposes is different to taxable income.
Income for surcharge purposes includes:
- your taxable income (including the net amount on which family trust distribution tax has been paid, and excluding any assessable First Home super saver released amount)
- your reportable fringe benefits (as reported on your income statement or payment summary)
- your total net investment losses (is the sum of your net financial investment losses and net rental property losses)
- your reportable super contributions (the sum of your reportable employer superannuation contributions and your deductible personal superannuation contributions)
If there was more than one adult on your private health insurance policy when the premiums were paid, you will be tested on your share of the policy. So, depending on how you claimed the rebate, and the percentage you claimed, this may result in a tax liability and/or a tax offset.
To be eligible for the private health insurance rebate, your income for surcharge purposes must be less than the Tier 3 income threshold. Tier 3 is the highest income threshold for both singles and families.
- Director Penalty notices
The Tax Office will begin contacting clients to inform them about their potential personal liability for company tax debts and obligations (PAYG withholding, SGC and GST) under the Director Penalty Notice (DPN) program. Company directors will be notified that the ATO is considering issuing a DPN notice for their company, which makes the director personally liable for debts of their business if the company.
The ATO will be providing directors with clear pathways to re-engage with the ATO regarding the outstanding debts and obligations. It is crucial that you engage with the ATO before the debts become unmanageable. The ATO’s website has payment plan estimator which clients can use to work out a manageable payment plan.
The ATO can report/disclose a taxpayer’s tax debts to credit reporting bureaus (CRB) if the following criteria are satisfied:
- The taxpayer has an ABN and is not an excluded entity
- The taxpayer has one of more tax debts and at least $100,000 is overdue by more than 90 days
- The taxpayer is not engaging with the ATO to manage their tax debts
- The taxpayer does not have an active complaint with the Inspector General of Taxation about the ATO’s intent to report its tax obligation
4. Super changes from 1 July
As the new financial year approaches, there are changes to who is eligible for super and how much employers need to pay.
From 1 July 2022:
- employees can be eligible for super guarantee regardless of how much they earn. The $450 per month eligibility threshold for when Super Guarantee (SG) is paid is being removed
- super only needs to be paid for workers under 18 when they work more than 30 hours in a week
- the SG rate will increase from 10% to 10.5% on 1 July 2022
The ATO has stated that the higher rate should apply for all payments from 1 July even if some or all of the pay period is for work done before that date.
Employers will need to make sure that their payroll and accounting systems are updated to reflect the new rate of 10.5%.
5. Excess Non-Concessional Contributions (NCC) Release Authorities
The ATO has started to issue requests to release ECC and other charges for clients who did not make an election on the tax treatment of their Excess NCC for prior financial years.
The ATO has advised that they are working through a backlog, as such, there may be a higher-than-normal number of release authorities issued in the coming months.
6. Excess Concessional Contributions (ECC) charge
Individuals who make contributions on or after 1 July 2021 that exceed their cap, will no longer be liable to pay the ECC charge.
The ECC charge is applied to the additional income tax liability that comes from including excess concessional contributions in your income tax return as taxable income.
The intent of the ECC charge is to acknowledge that the tax is collected later than normal income tax. The ECC charge is:
- payable for the year you make excess concessional contributions
- applies from the 2013–14 income year until the 2020-21 income year
7. Online services for business for SMSF Trustees
Online services for business the ATO’s our default online service, and it’s available for SMSF trustees to use now.
Trustees can connect with the ATO via Secure mail using Online services for business at any time on multiple devices. Trustees of SMSF can:
- lodge a SMSF regulatory contravention disclosure form
- request SMSF specific advice, and
- if you make a mistake on your SMSF annual return, lodge an amendment
In addition, Trustees can use the ‘Lodgements’ menu to lodge a range of forms and statements with the ATO including your transfer balance account report (TBAR). Trustees cannot lodge the SMSF annual return via Online services, but they can view and print the superfund’s lodgement history. The ‘Accounts and payments’ menu allows Trustees to access a range of functions including viewing accounts and making payment plans.
You need to sign in using my.gov ID to access Online services for business. If you’re new to our online services, you will have to set up your myGovID first, then link your SMSF’s ABN in Relationship Authorisation Manager.
8. Director ID numbers
Directors of a corporate trustee of a SMSF need to apply for and obtain a director identification number (director ID). For directors appointed on or after 5 April 2022, you must apply for your director ID before being appointed. There are different application deadlines for directors appointed prior to this date.
If you’re appointed under the Corporations Act 2001:
- for the first time on or after 5 April 2022, you must apply before being appointed
- from 1 November 2021 to 4 April 2022, you must apply within 28 days of being appointed
- before or on 31 October 2021, you must apply by 30 November 2022
From 1 July 2022, if you are less than 75 years old, you do not need to meet work test or work test exemption for your fund to accept a non-mandated contributions*.
Members under 75 years of age at any time in a financial year may be able to make non-concessional contributions of up to three times the annual non-concessional cap in that financial year (if your total super balance at 30 June 2022 is less than $1.7m). For members 75 years or older, your fund may only be able to accept employer contributions and downsizer contributions.
However, those aged 67 to 74 will need to meet the work test if they wish to claim a personal superannuation deduction for their contribution.
*Non-mandated contributions include:
- contributions made by employers over and above their super guarantee or award obligations (such as salary sacrifice contributions)
- member contributions being contributions made by or on behalf of a member, such as
- personal contributions
- eligible proceeds from primary residence disposal (downsizer contribution)
- super co-contributions
- eligible spouse contributions
- contributions made by a third party, such as an insurer
- re-contribution of COVID-19 early release superannuation amounts
Your fund can also accept a contribution if they determine it relates to a period when you were eligible (eg. government co-contribution can always be accepted because they relate to a period when member contributions could be made).
Superfund Trustees will no longer have to administer the work test at the time they accept the contribution. The ATO will now be checking to see if an individual meets the work test at the time they lodge their income tax return.
10. Important lodgement due dates
|25 June 2022||FBT returns for year ended 31 March 2022 due for lodgement (if lodged electronically) and payment.|
|14 July 2022||Payment summaries to be provided to employees.|
|14 July 2022||Lodgement of PAYG withholding payment summary annual report|
|28 July 2022||April – June 2022 super guarantee payment due date|
|28 July 2022||April – June 2022 quarter Business Activity Statement lodgement due date|
|28 July 2022||ASX Quarterly Reports due date|
11. Upcoming dividends
|Company||Date Paid||$||% Franked|
|BOQ||26 May 22||0.22||100%|
|ANZ Bank||1 Jul 22||0.72||100%|
|National Australia Bank||5 Jul 22||0.73||10%|
|Autosports Group||31 May 22||0.07||100%|
|Macquarie Group||4 Jul 22||3.50||40%|
|Westpac Bank||24 Jun 22||0.61||100%|
|Amcor||14 Jun 22||0.1668||0%|
|CSR||1 Jul 22||0.18||100%|
If you wish to discuss any of the above matters, please contact our office.