February 2024

27 Feb 2024
27 Feb 2024

Legislation implementing the Government's changes to the Stage 3 tax cuts has passed both houses of parliament without amendment and awaits royal assent.

 

The Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024, will give effect to the following changes to marginal tax rates from 1 July 2024:

-  reduce the current 19% tax rate to 16%

-  reduce the current 32.5% tax rate to 30%

-  increase the current threshold above which the 37% tax rate applies from $120,000 to $135,000

-  increase the current threshold above which the 45% tax rate applies from $180,000 to $190,000

 

The Treasury Laws Amendment (Cost of Living - Medicare Levy) Bill 2024  increases the Medicare levy low income thresholds from 2023/24.   For example, the threshold for single taxpayers (not eligible for SAPTO) increases from $24,276 to $26,000.

 

For more information see the FirstTech article Changes to stage 3 tax cuts pass parliament - advice implications

22 Feb 2024
22 Feb 2024

Following today’s release of the latest average wages data for the December 2023 quarter, the concessional and non-concessional contribution caps will increase on 1 July 2024 as follows:

 

  • Concessional contributions cap                 $30,000
  • Non-concessional contributions cap        $120,000

 

The increase in the annual non-concessional contributions (NCCs) cap also means a person’s NCC cap under the bring forward rules will increase to a maximum of $360,000 from 1 July 2024.

 

For further information including advice implications and the impact on other thresholds, see this FirstTech NewsFlash.

1 Feb 2024
1 Feb 2024

The Government has announced a new social security agreement has commenced between Australia and the Republic of Serbia on 1 February 2024, improving access to retirement benefits for eligible people who have moved between the two countries.

 

Under the agreement:

 

-  Former Australian residents living in Serbia can claim the Australian Age Pension without having to return to Australia to live, and former Serbian residents living in Australia will have better access to Serbian retirement pensions.

 

-  People can combine periods of residence in Australia with periods of insurance contributions in Serbia to satisfy the minimum requirements for an Australian or Serbian pension, meaning they can access their pension sooner.

 

-  Employers of workers temporarily seconded between Australia and Serbia no longer have to pay both compulsory superannuation contributions in Australia and insurance contributions in Serbia, removing the onus of double payments.

 

Minister for Social Services Amanda Rishworth and Foreign Minister Penny Wong said the new agreement will be welcomed by citizens of both Australia and Serbia and will further strengthen the relationship between the two countries.

 

In its first three years, the agreement is expected to result in around 1,000 additional people living in Australia and Serbia being able to access the Australian Age Pension.  

January 2024

31 Jan 2024
31 Jan 2024

Following the release today of the December 2023 quarter CPI figure, it is expected that the general transfer balance cap (TBC) will remain at $1.9 million for 2024-25.

 

The general TBC is indexed in line with increases in CPI but only increases in $100,000 increments.  The Dec 2023 quarter CPI figure of 136.1 was not high enough to trigger an increase in 2024-25.

 

Likely impact on non-concessional cap thresholds

 

Eligibility to make non-concessional contributions (NCC) is based on a client's total super balance (TSB) on 30 June of the previous financial year.  As the general TBC is expected to remain at $1.9 million in 2024-25, a client will be able to make a standard NCC if TSB is below $1.9 million at 30 June 2024.

 

However, the ability to make NCC under the bring forward rule is also impacted by the standard NCC cap.  As both the concessional and non-concessional caps are expected to increase in 2024-25 to $30,000 and $120,000 respectively, this will likely impact total super balance thresholds.

 

Strangely, if the standard NCC threshold increases to $120,000, it will cause the TSB thresholds for the NCC bring forward rule to reduce as the thresholds are calculated by subtracting the NCC cap from the general transfer balance cap.  This is demonstrated in the following tables:

 

 

Total super balance thresholds for NCC - 2023/24

TSB at 30 June 2023

NCC cap including bring-forward rule

Less than $1.68m

3 year bring-forward period ($330,000 cap)

$1.68m to less than $1.79m

2 year bring-forward period ($220,000 cap)

$1.79m to less than $1.9m

No bring-forward (standard $110,000 cap applies)

$1.9m or more

Non-concessional cap is Nil

 

Total super balance thresholds for NCC - 2024/25

Assuming the standard non-concessional cap increases to $120,000

 

TSB at 30 June 2024

NCC cap including bring-forward rule

Less than $1.66m

3 year bring-forward period ($360,000 cap)

$1.66m to less than $1.78m

2 year bring-forward period ($240,000 cap)

$1.78m to less than $1.9m

No bring-forward (standard $120,000 cap applies)

$1.9m or more

Non-concessional cap is Nil

 

As the NCC cap is indexed to AWOTE, and the NCC cap is 4 x the concessional cap, we need to wait for the Dec quarter AWOTE figure to be released in late February 2024 to confirm.  However, clients considering triggering either a two or three year bring-forward period in 2024-25 may need to be aware of the lower TSB thresholds that may apply.

 

25 Jan 2024
25 Jan 2024

The Government has proposed changes to the already legislated stage 3 tax cuts commencing on 1 July 2024.

 

In a media release, the Government stated that these changes are “designed to provide bigger tax cuts for middle Australia to help with cost-of-living, while making our tax system fairer.” 

 

The proposed changes, effective from 1 July 2024 if legislated, will:

-  reduce the current 19% tax rate to 16%

-  reduce the current 32.5% tax rate to 30%

-  increase the current threshold above which the 37% tax rate applies from $120,000 to $135,000

-  increase the current threshold above which the 45% tax rate applies from $180,000 to $190,000

For more information on the proposed changes including advice implications, see the FirstTech Newsflash Proposed changes to the stage 3 tax cuts.

December 2023

14 Dec 2023
14 Dec 2023

On 14 December 2023, the Department of Health & Aged Care released an exposure draft of the new Aged Care Bill 2023 for public consultation. Members of the public and interested organisations can provide their feedback, with submissions open until 16 February 2024.

 

The exposure draft includes the parts of the Bill that incorporate the most significant changes in response to the Royal Commission into Aged Care Quality and Safety. 

 

The new Act aims to improve the ways services are delivered to older people in:

-    their homes

-    community settings

-    approved residential aged care homes.

 

It will:

-    outline the rights of older people who are seeking and accessing aged care services

-    create a single-entry point, with clear eligibility requirements to make access to the aged care system for older people easier

-    include a fair, culturally safe single assessment framework

-    support the delivery of aged care services

-    establish new system oversight and accountability arrangements

-    increase provider accountability through a new regulatory model

-    strengthen the powers of the regulator, the Aged Care Quality and Safety Commission, to manage risk, ensure integrity and support aged care.

 

It is expected that the new Aged Care Act will include changes to funding arrangements including means testing.  Chapter 4 of the exposure draft which deals with ‘Fees, Payments and Subsidies’ is not yet available. The Government has established The Aged Care Taskforce (Taskforce) to ‘review funding arrangements for aged care and develop options for a system that is fair and equitable for everyone in Australia’.  It is expected that the final report and the Goverment's reponse will be available end of Janaury 2024.

 

Subject to being passed in Parliament, the new Act is planned to start on 1 July 2024. It will replace existing legislation, including the current Aged Care Act and the Aged Care Quality and Safety Commission Act 2018.

13 Dec 2023
13 Dec 2023

The Government has released the Mid-Year Economic and Fiscal Outlook (MYEFO) for 2023–24.

 

This release includes a number of proposed changes to superannuation and tax law, including:

 

-  Providing a clear legal basis for superannuation trustees to pay advice fees agreed between a member and their financial adviser from the member’s superannuation account and prescribe that such fees are a tax-deductible expense of the fund retrospectively from 2019–20.

 

-  Increasing the foreign resident capital gains withholding tax rate from 12.5% to 15% and reducing the withholding threshold from $750,000 to $0 (this would apply to real property disposals with contracts entered into from 1 January 2025).

 

-  Amending legislation to ensure the superannuation transfer balance cap of individuals with capped defined benefit income streams are not adversely impacted in the event of a merger or successor fund transfer between superannuation funds.

 

-  Denying tax-deductions for the general interest charge (GIC) and shortfall interest charge (SIC) incurred in income years starting on or after 1 July 2025.

13 Dec 2023
13 Dec 2023

The ATO has released Draft Tax Determination TD 2023/D4  Income tax: deductions for financial advice fees paid by individuals who are not carrying on a business.

 

This draft Taxation Determination is being published to assist in confirming the requirements that need to be satisfied for an individual who is not carrying on a business to be eligible to claim a deduction for financial advice fees.

 

The Draft Taxation Determination will replace TD 95/60 released in 1995. The draft Taxation Determination does not change the view expressed in TD 95/60. However, it does include new content on the deductibility of financial advice fees as tax-related expenses under section 25-5 of the Income Tax Assessment Act 1997.

13 Dec 2023
4 Dec 2023
4 Dec 2023

The Government has released a discussion paper seeking input on policy and regulatory changes to improve the outcomes for superannuation fund members in retirement. 

 

The paper identifies that Australians need better access to information, advice, and well-rounded retirement income products to help them navigate these challenges in retirement.

 

The paper focuses on three key areas:

 

-    Supporting members to navigate the retirement income system,

-    Supporting funds to deliver better retirement income products and services, and

-    Making lifetime income products more accessible.

 

The Government welcomes views from all interested parties, with submissions open until 9 February 2024.

November 2023

30 November 2023
30 November 2023

The Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 have been introduced to the House of Representatives on 30 November 2023.

 

For each income year from 2025-26, the Commissioner of Taxation will calculate a Division 296 tax liability and notify individuals of their tax liability for a given income year.

 

Division 296 tax will be levied at a rate of 15 per cent on a percentage of the individual’s superannuation earnings equal to the percentage of their TSB above $3 million.

 

This adjustment will apply prospectively and does not impose a limit on the size of superannuation account balances. 

 

The Bill is currently before the House of Representatives and is subject to potential amendments before it passes both houses.

28 November 2023
28 November 2023

The Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 passed both houses of parliament and received royal assent on 28 November 2023.

 

Under the new legislation:

 

-    From 1 January 2024 , the temporary enhancements to the Work Bonus that were scheduled to end on 31 December 2023 will be made permanent. Under the permanent enhancements, new pension entrants over Age Pension age and eligible Veterans will have a starting Work Bonus income bank balance of $4,000, and pensioners will retain the current elevated maximum Work Bonus balance limit of $11,800 rather than $7,800.

 

The Bill also includes provisions to allow eligible Work Bonus recipients on or after 1 July 2024 to receive a ‘top-up’ to their Income Bank to a maximum of $4,000 once every two years in limited circumstances.

 

-    From 1 July 2024, the employment income nil rate period will be doubled from 12 weeks to 24 weeks, to reduce barriers for income support recipients to take up work by allowing them to retain concession cards and other supplementary benefits for a longer period. This change will apply to recipients of JobSeeker, Youth Allowance, Austudy, ABSTUDY, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.

23 November 2023
23 November 2023

To combat against rising levels of identity fraud in Australia, the Government has announced new fraud controls aimed at making it safer for Australians to protect and access their myGov information.

 

The Minister states that from now on, individuals who use their myGovID to login to their ATO account will need to use that myGovID for future logins. It will not be possible to access an ATO account without it (eg via an email/username and password).

 

These measures are aimed at countering illicit access of ATO accounts by people using stolen personal information obtained from the dark web. 

16 November 2023
16 November 2023

The Government has introduced the Superannuation (Objective) Bill 2023 which will enshrine the objective of superannuation in legislation, requiring policy-makers to demonstrate how any future changes to superannuation law are consistent with the legislated objective.

 

The objective is "to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way".

 

The draft legislation has not yet passed parliament.

2 November 2023
2 November 2023

The FirstTech Social Security Guide and the FirstTech Aged Care Guide have been updated for legislative changes, rates and thresholds as at 20 September 2023.

2 November 2023
2 November 2023

From late October 2023, Services Australia will review residential aged care and home care fees on a monthly basis. Previously it was reviewed quarterly.

 

The monthly reviews will apply changes to care recipient fees closer to when changes happen. The reviews will also calculate any applicable refund amounts as part of the next monthly claim process.

 

This means care recipients may receive more regular letters advising of fee changes or refunds.

 

For more information see Important update: More regular reviews of aged care fees

October 2023

26 October 2023
26 October 2023

The Minister for Financial Services, Stephen Jones has issued a media release announcing the Government’s intention to amend the transfer balance cap legislation.

 

The proposed changes are aimed at ensuring that members with a capped defined benefit income stream are not adversely impacted by a merger or successor fund transfer between superannuation funds.

 

Under current legislation, a member’s transfer balance cap may be unintentionally impacted due to the original income stream being treated as ceasing and a new one beginning.

 

This means a new valuation of the capped defined benefit income stream is required which can result in a higher valuation for the transfer balance cap and lead to adverse outcomes for some members.

 

The media release states the ‘Government will ensure that members receiving an income stream prior to a merger or successor fund transfer will continue to receive their income stream without unintentionally impacting the transfer balance cap.’

 

The amendments are proposed to apply retrospectively from 1 July 2017. 

18 October 2023
18 October 2023

Last month, the government announced several changes to the social security Work Bonus and Employment income nil rate period.

 

The Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 has been introduced today to implement these changes.

 

Under the proposed legislation:

•  From 1 January 2024 , the temporary enhancements to the Work Bonus that were scheduled to end on 31 December 2023 will be made permanent. Under the permanent enhancements, new pension entrants over Age Pension age and eligible Veterans will have a starting Work Bonus income bank balance of $4,000, and pensioners will retain the current elevated maximum Work Bonus balance limit of $11,800 rather than $7,800.
The Bill also includes provisions to allow eligible Work Bonus recipients on or after 1 July 2024 to receive a ‘top-up’ to their Income Bank to a maximum of $4,000 once every two years in limited circumstances.

  From 1 July 2024, the employment income nil rate period will be doubled from 12 weeks to 24 weeks, to reduce barriers for income support recipients to take up work by allowing them to retain concession cards and other supplementary benefits for a longer period. This change will apply to recipients of JobSeeker, Youth Allowance, Austudy, ABSTUDY, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.

9 October 2023
9 October 2023

The government released a consultation paper on the framework to pay superannuation guarantee (SG) at the same time as salary and wages. This initiative was part of the Securing Australians’ Superannuation package, which was originally announced at the 2023-24 Federal Budget.

 

The payday super initiative aims to strengthen Australia’s superannuation system by making improvements and changes in different areas, including:

  Increasing the payment frequency of the SG

  Investing in SG compliance, and

  Improving SG recovery measures

 

The consultation paper is seeking input from industry and stakeholders on the policy and legislative design of the Securing Australians’ Superannuation package. Consultation closes on 3 November 2023.

 

For further information see the Treasurer’s media release here.

3 October 2023
3 October 2023

Further to an announcement by the Treasurer in February 2023, Treasury has released draft legislation regarding the Government’s proposal to apply an additional 15% tax on superannuation earnings corresponding to a client’s total superannuation balance over $3 million from 2025–26 (Division 296 tax).

 

The Bill largely reflects the initial proposal regarding how this tax will be calculated and levied: 

  A member’s superannuation earnings for a financial year are generally calculated as their total superannuation balance at the end of the year (adjusted for withdrawals and contributions made during the year) less their total superannuation balance at the end of the previous year (negative earnings can be carried forward to offset future earnings) 

  The portion of a member’s superannuation earnings subject to Division 296 tax in a financial year is calculated by multiplying those earnings by the proportion of their total superannuation balance at the end of the year that is above $3 million.

  Division 296 tax is levied on the individual member and due 84 days after a notice of assessment is issued. The member can choose to pay the tax personally or have it released from one or more eligible superannuation interests. Debt deferral arrangements will apply for defined benefit interests.

 

Members who have ever made structured settlement contributions or who die during the year will not have to pay Division 296 tax for a year.

 

The Bills also propose to modify the definition of total superannuation balance in a way that removes the link between a member’s transfer balance account and calculation of their total superannuation balance. Regulations will be needed to clarify how some interests will be valued (e.g. defined benefit pensions). This change would apply from immediately before 1 July 2025 and apply for all purposes which total superannuation balance is relevant (e.g. determining non-concessional cap). A member’s total superannuation balance would still be reduced by structured settlement contributions made. Certain LRBA amounts are not included in a member’s total superannuation balance for Division 296 purposes, but will remain included for other purposes.

 

This draft legislation has not been introduced into Parliament and is not yet law.

September 2023

27 September 2023
27 September 2023

The ATO has released Draft Tax Ruling TR 2013/5DC1, which proposes changes to TR 2013/5 Income tax: when a superannuation income stream commences and ceases.

 

The proposed changes reflect legislative amendments, clarify how the general principles in the Ruling apply to successor fund transfers, and remove practical compliance approaches that were related to historical periods and are no longer relevant.

27 September 2023
27 September 2023

The ATO has released updated PCG 2022/2 which sets out how the ATO assesses risk for a range of trust arrangements to which section 100A of the Income Tax Assessment Act 1936 might apply. 

 

The Guideline provides examples of how the Commissioner will dedicate compliance resources for arrangements that are low risk (green zone) or high risk (red zone).

 

The updated Guideline includes minor amendments at paragraph 32 to clarify some features of arrangements that are excluded from the green zone.

25 September 2023
25 September 2023

As part of the release of the Employment White Paper, the Government has announced two key changes for pension and income support recipients.

 

Pending the passage of legislation:

  From 1 January 2024 , the temporary enhancements to the Work Bonus that were scheduled to end on 31 December 2023 will be made permanent. Under the permanent enhancements, new pension entrants over Age Pension age and eligible Veterans will have a starting Work Bonus income bank balance of $4,000, and pensioners will retain the current elevated maximum Work Bonus balance limit of $11,800 rather than $7,800.

  From 1 July 2024, the employment income nil rate period will be doubled to 12 fortnights (six months) to reduce barriers for income support recipients to take up work by allowing them to retain concession cards and other supplementary benefits for a longer period. This change will apply to recipients of JobSeeker, Youth Allowance, Austudy, ABSTUDY, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.

 

Further information can be found in the Treasury media release here.

19 September 2023
19 September 2023

The ATO has reminded SMSFs that they must report certain events that affect members transfer balance accounts quarterly using transfer balance account reporting (TBAR). These events must be reported even if the member's total superannuation balance is less than $1 million. SMSFs must report and lodge within 28 days after the end of the quarter in which the event occurs. They are not required to lodge if no TBA event occurred during the quarter. SMSFs who were currently lodging the TBAR annually at the same time as the SMSF annual return, will need to report all events that occurred in the 2023 income year by 28 October 2023.

14 September 2023
14 September 2023

The Social Security Amendment (Australian Government Disaster Recovery Payment) Bill 2023 passed both houses on 14 Sep 2023 and now awaits royal assent.

 

The bill will amend the Social Security Act 1991 to include an alternative objective qualification criteria to provide greater certainty in supporting automation processes and ensure the timely payment of claims for the Australian Government Disaster Recovery Payment (AGDRP).

 

The AGDRP is a one-off payment to eligible persons who are adversely affected by a major disaster. More information on the payment can be found on the Social Services website in this link.

13 September 2023
13 September 2023

The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 was introduced in the House of Representatives on 13 Sep 2023. It implements several previously announced measures from the 2023-24 Federal budget, which includes: 

  20K instant asset write-off – to increase the instant asset write-off threshold from $1,000 to $20,000, which is only available to small businesses with an aggregated annual turnover of less than $10 million. It applies to eligible depreciating assets first used or first installed ready for use for a taxable purpose in the period from 1 July 2023 until 30 June 2024.

  Small business energy incentive – to provide small and medium businesses with an aggregated annual turnover of less than $50 million access to a bonus deduction equal to 20% of the cost of eligible assets or improvements to existing assets that support electrification or more efficient energy use. It applies to eligible assets first used or first installed ready for use, and eligible improvement costs incurred, from 1 July 2023 until 30 June 2024.

  Super fund non-arm's length expenses – proposes changes to the rules for non-arm's length expenses (NALE) for superannuation entities as follows:

  Large APRA-regulated funds including exempt public sector superannuation funds would be exempt from the rules related to non-arm's length expenses, although these funds are still subject to rules for income derived on a non-arm's length basis.

  For SMSF and small APRA fund general fund expenses that are NALE, the amount of non-arm’s length income would be calculated as twice the difference between the amount that would have been expected to have been incurred had the parties been dealing at arm’s length, and the amount actually incurred, with no deductions applying against that amount. However, the fund’s total non-arm’s length component cannot exceed the fund’s assessable income minus deductions, excluding assessable contributions and deductions against them.

  The Bill does not propose any changes to the treatment of specific expenses (those relating to gaining or producing income from a particular asset or assets of the fund). Previous treatment continues to apply where the amount of income that is taxed as non-arm’s length income is the amount of income derived from the scheme in which the parties were not dealing at arm’s length.

  Expenses incurred or expected to have been incurred before 1 July 2018 cannot result in the application of the NALE rules.

  The amendments will apply in relation to income derived in the 2018-19 income year and following income years.

8 September 2023
8 September 2023

The Assistant Treasurer, Stephen Jones issued a media release titled ‘Increased flexibility for the First Home Super Saver Scheme’ on 8 Sept 2023.

 

The media release states the Government had ‘passed legislation addressing significant pain-points in the scheme.’

 

The Treasury Laws Amendment (2023 Measures No.3) Bill 2023 passed both houses on 6 Sept 2023 and awaits royal assent.

Changes to the scheme schedule:

  Having up to 90 days after entering into a contract to purchase or build a first home, to request the release of contributions and earnings (previously 14 days).

  Allowing users of the scheme to amend or revoke applications made under the scheme (for example release requests).

  Allowing eligible people to use the scheme if they have entered into a contract to purchase their first home but have not yet become the legal owner.

 

It is important to note that at this stage it is unknown when the changes will commence. The legislation states the changes do not commence until the earlier of date of proclamation and 12 months from date of royal assent. Once the changes commence, many amendments will be backdated to 1 July 2018.

6 September 2023
6 September 2023

The Minister for Social Services, Amanda Rishworth has issued a media release detailing increases to social security payments from 20 Sept 2023.

 

The increases are due to indexation, as well as measures originally announced in the Federal Budget and subsequently legislated.

 

From 20 Sept 2023:

  Single JobSeeker Payment recipients will receive a base payment of $749.20 per fortnight, reflecting a $56.10 increase.

  Parenting Payment Single recipients will receive a base payment rate of $942.40, reflecting a $20.30 increase. For those single parents transferring to this payment as a result of the Government’s change in the Budget to extend eligibility until their youngest child turns 14 (up from aged eight), they will receive an extra $227.50 per fortnight compared to their current rate, including supplements.

  Those on a partnered rate of JobSeeker and Parenting Payment will receive a base payment rate of $686.00, reflecting a $54.80 increase.

  As a result of indexation, recipients of the Age Pension, Disability Support Pension and Carer Payment will also receive an increase to their payments. The single pension rate will increase by $32.70 to $1096.70, and the rate for couples combined will increase by $49.40 to $1653.40.

  Single veterans on a service pension will receive an additional $32.70, bringing their service pension to $1096.70 a fortnight, while veterans on the Disability Compensation Payment (Special Rate), known as the Totally and Permanently Incapacitated Payment will receive an additional $53.00 a fortnight, increasing their payment to $1729.20.

  Income support recipients who are renting will also receive an increase to the maximum rates of Commonwealth Rent Assistance, as a result of both the Government’s 15 per cent increase in the Budget and regular indexation.

  Income limits for Commonwealth Seniors Health Card recipients will also be indexed, increasing by $5400 to $95,400 per annum for singles and by $8640 to $152,640 per annum for couples combined.

  Other supplementary payments including Telephone Allowance and Utilities Allowance are also being indexed.

August 2023

30 August 2023
30 August 2023

The ATO recently updated their guide on Market valuation for tax purposes.

 

The guide is intended to assist taxpayers better understand the commissioner’s expectations on market valuation for tax purposes and sets out the basis for an adequate and acceptable valuation approach.

 

The updates to the guide included two changes:

  remove specific references to institutes that provide certification and standards for valuers, and

  insert general statements on the need for valuers to have the appropriate certification and registration or licensing.

24 August 2023
24 August 2023

The 2023 Intergenerational Report was released by Treasury on 24 August 2023. The report projects the economic outlook and the Australian Government’s budget to 2062-63. The report identifies 5 major forces which will shape the Australian economy in the coming decades:

 

This bill implements a number of social security measures announced in the 2023 Federal Budget including:

  population ageing

  technological and digital transformation

  climate change and the net zero transformation

  rising demand for care and support services

  geopolitical risk and fragmentation

 

Among other findings, the report depicts that the Australian population is anticipated to reach 40.5 million by 2062-63, with a significant increase in the elderly population. This will induce a shift towards a more service-based economy due to an aging population, impacting sectors such as care services.

 

Regarding government revenue, tax receipts are expected to make up 93.9% of total receipts by 2062-63, with declining revenue from traditional sources such as fuel and tobacco excise. Personal income tax is projected to grow, while company tax declines, potentially leading to an increased personal tax burden.

 

The report also highlights that health, aged care, NDIS, defence and interest payments on debt will account for a significant portion of Commonwealth spending in 40 years’ time, increasing from currently one third to one-half of the total spend by 2062-63.

3 August 2023
3 August 2023

The Government has established The Aged Care Taskforce (Taskforce) to ‘review funding arrangements for aged care and develop options for a system that is fair and equitable for everyone in Australia’.

 

The Taskforce will seek feedback on draft aged care funding principles and will build on the recommendations in the Royal Commission into Aged Care and Safety.

 

The Aged Care Taskforce Terms of reference include:

  funding and contribution approaches to support innovation in the delivery of care,

  a fair and equitable approach to assessing the means of older people accessing residential and in-home aged care, including the scope of income and assets included in the assessment of means,

  issues and trade-offs for including and excluding different service types in the new in-home aged care program (the service list),

  consumer contributions for in-home aged care, and reforms that support a future transition to a single in-home aged care system, and

  reforms to arrangements for pricing and funding hotel and accommodation costs in residential aged care, including the phasing out of refundable accommodation deposits.

 

Consultations close on 31 August 2023 and the Taskforce will provide an interim report to Government in October 2023 and a final report in December 2023.

2 August 2023
2 August 2023

The Social Services and Other Legislation Amendment (Strengthening the Safety Net) Bill 2023 has been assented on 10 Aug 2023.

 

This bill implements a number of social security measures announced in the 2023 Federal Budget including:

  expanding qualification for parenting payment (single) to single principal carers whose youngest child is aged under 14 years (up from under 8 years);

  increasing the rates of working age and student payments by $40 per fortnight, including jobseeker payment, youth allowance, parenting payment (partnered), austudy payment, disability support pension (youth);

  expanding eligibility for the higher rate of jobseeker payment to recipients aged 55 years and over who have been on payment for nine or more continuous months (reducing the qualifying age from 60 years); and

  increasing the maximum rates of Commonwealth rent assistance by 15 per cent.

 

These measures are scheduled to commence 20 September 2023.

July 2023

25 July 2023
25 July 2023

The ATO recently released data on the operation of the First Home Super Saver Scheme.

 

Among other statistics, it shows that in the 2021-22 financial year, approx. 12,500 members applied for a release request and approx. 9,500 members successfully received a payment under the scheme.

 

The data also details average processing times for First Home Super Saver release requests. In 2021-22, 86% of release requests were completed within 25 days.

 

This is inclusive of the:

  number of business days from the submission of the release request

  superannuation fund sending the FHSS amount to the ATO

  payment to the individual.

 

More information can be found on the ATO website.

21 July 2023
21 July 2023

The Government released a consultation paper on a new individual tax residency framework, which will replace the current individual tax residency rules. This initiative was originally announced by the former government in the 2021-22 Federal Budget, based on the recommendations made by the Board of Taxation in its 2019 report: Individual Tax Residency Rules – a model for modernisation

 

The proposed framework introduces a 'bright line' primary test, which determines tax residency based on an individual's physical presence in Australia for 183 days or more during any income year. Individuals who do not meet the primary test will apply secondary tests to determine their residency status. These tests will be based on measurable, objective criteria with no requirement to test intention or undertake broad, holistic examinations of all relevant facts and circumstances.

 

Public feedback for the consultation paper is sought by 22 September 2023.2-63.

19 July 2023
19 July 2023

The ATO recently updated their online services simulator to include eight different clients’ super and tax scenarios. The purpose of the simulator is to allow individuals to test out the functions and features that ATO Online has to offer.

 

The simulator is strictly read only and can't be used to submit or change anything in a client's record. It doesn't interact with the ATO’s production systems and works on pre-set fictional data.

 

For more information, please go to ATO online services tool.

10 July 2023
10 July 2023

Some choice investment options, called Trustee Directed Products (TDPs), will be included in this year’s super performance test – and this could have a bigger impact than expected.

 

The complexity of determining which investment options are included in the test may mean unanticipated outcomes for some of your clients.

 

Our Head of FirstTech, Craig Day will be hosting a webinar to explain:

 

•  The meaning of TDP's & which Choice options will be subject to the test

  How the performance test applies to TDP's offered through platforms

  What actions super fund trustees will be required to take where a TDP fails the test.

 

Craig will also be joined by George Walker, Executive Director, Investments – Distribution, who will provide more information on which of CFS’s Choice options will be subject to the test and how they are positioned against the test.

 

Online webinar details

  Tuesday 25 July 2023, 12.30pm Sydney time

  CPD points available

 

Register now

1 July 2023
1 July 2023

Prior to 1 July 2023, depending on its situation, an SMSF was required to report transfer balance cap (TBC) events either on:

•  a quarterly basis (within 28 days after the end of the quarter) or

  an annual basis (at the same time as lodging the SMSF’s annual return for the year in which the TBC event occurred).

 

From 1 July 2023, all SMSFs must report most TBC events on a quarterly basis, within 28 days after the end of the quarter in which the event occurs.

 

Under these new rules, any unreported TBC events that occurred prior to 30 September 2023 need to be reported by no later than 28 October 2023. This means that an SMSF who was previously required to report on an annual basis must report any TBC events from 2022–23 by this date (and cannot wait until a later time such as when the fund’s 2022–23 annual return is submitted).

 

For further information about TBC event reporting for SMSFs, see this page on the ATO website

June 2023

30 June 2023
30 June 2023

FirstTech Guides have been updated for 2023/24 - online versions now available:

  Super and Retirement Income Streams Guide

•  SMSF Guide

 

Printed Guides

You can now pre-order copies of the following printed guides using our new ordering process for delivery in August:

  Super and Retirement Income Streams Guide

 

New ordering process:

1. Go to: https://cfs-first-tech.qponline.com.au

2. Click on 'New User' under the blue 'Log In' button

3. Sign up for Your New Account

 

Complete the online ordering process

 

After ordering

•  You will receive confirmation emails from Quality Press

  You can check your order history online at https://cfs-first-tech.qponline.com.au (Orders > Order history)

•  Queries about your online order can be sent to sales@qualitypress.com.au

 

Please note, due to printing timeframes your new guides will not be delivered until August.

28 June 2023
28 June 2023

The ATO has issued draft guidance TD 2023/D1 on how the non-arm’s length income and capital gains tax provisions interact to determine the amount of statutory income that is non-arm’s length income.

 

When the final determination is issued, it is proposed to apply to years of income commencing both before and after its date of issue.

 

The last day for comments on draft TD 2023/D1 is 28 July 2023.

24 June 2023
24 June 2023

The ATO has provided updated information to assist individuals to work out if their military invalidity pension is affected by the Douglas decision.

 

The Federal Court decision in Commissioner of Taxation v Douglas [2020] FCAFC 220 (the Douglas decision) found that, from 1 July 2007, certain invalidity pension payments for veterans and their beneficiaries are superannuation lump sums, and not superannuation income stream benefits.

 

The ATO have advised that the vast majority of veterans will be in a better tax position due to the Douglas decision – paying less tax. Tax will increase for a small number of veterans.

 

As a result of the Douglas decision:

 

  a new veterans' superannuation (invalidity pension) tax offset> (VSTO) has been introduced to ensure veterans and their beneficiaries don't pay more tax because of the Douglas decision

 

  a simplified review process is available to amend prior year tax assessments for veterans – whether you pay less tax following the Douglas decision or are entitled to a VSTO amount.

 

The ATO have advised they are writing to veterans affected by the Douglas decision who will receive a new tax offset or are yet to request a review of their prior years’ tax returns.

May 2023

9 May 2023
9 May 2023

The Government handed down the Federal Budget for 2023-24 on 9 May. FirstTech has unpacked the Budget proposals and summarised their insights and analysis, including potential impacts to your clients' advice strategies.

 

Some of the proposals include:

  Super pay day

Tax increase for super balances over $3 million

•  $20,000 instant asset write-off

  Energy Price Relief Plan

 

Download the FirstTech Federal Budget Briefing, 09 May 2023 here.

April 2023

19 April 2023
19 April 2023

We have made some security updates to the FirstTech App. As a result, iOS device (iPhone and iPad) users will need to update the app by 5 May to maintain access.

 

How do I update the app?

Updating the app is easy. Simply open the FirstTech app before 5 May and select Çontacts, then FirstTech App updates, then Update.

 

To confirm the update has occurred, open the app and click the Disclaimer tab at the bottom of the home page. The version number should be v3.5.

 

What if I don’t update by the 5 May deadline?

If you don’t update the app by 5 May you will get an error message saying “FirstTech is no longer available”.

 

To resolve this simply open this email on your device and then click here and follow the steps to download the app.

 

To confirm the update has occurred open the app and click the Disclaimer tab at the bottom of the home page. The version number should be v3.5.

 

What if I am an Android user?

If you are an Android user, you don’t need to do anything. You only need to update the app if you access it via an iOS device.

 

Don’t have the app yet?

The FirstTech app gives you easy access to the latest rates and thresholds for superannuation, tax and social security. It also includes a handy Centrelink pension calculator.

 

To download the FirstTech app, click here on your Apple or Android device and follow the steps to download the app.

6 April 2023
6 April 2023

The Federal Budget for 2023-24 will be handed down on 9 May 2023.

 

Join our FirstTech team as they unpack the key announcements and outline potential impacts to your clients’ advice strategies.

 

FirstTech will be running 3 webinar sessions on Wednesday 10 May. Select the session you would like to register for:

9.00am – 9.45am

12.30pm – 1.15pm

2.30pm – 3.15pm

 

All session times are Australian Eastern Standard time.

 

Attendees will be eligible for CPD points.

March 2023

6 March 2023
6 March 2023

The Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022 was finally passed by both houses of Parliament and awaits royal assent to become law.

 

The changes will make it easier for parents to claim Parental Leave Pay, with either parent able to claim first. Parents will also be able to access the entitlement in multiple blocks, as small as one day, with periods of work in between.

 

Minister for Social Services Amanda Rishworth said "Around 180,000 Australian families take up this benefit each year and they will now be able to share their entitlement in the way that best suits their circumstances."

 

A new family income test of $350,000 per annum will also see nearly 3,000 additional parents become eligible for the entitlement.

 

The changes will come into effect for parents whose children are born or adopted from 1 July 2023.

 

Single parents will now be able to receive the full 20-week entitlement, up from 18-weeks currently.

 

Parents can pre-claim up to three months before the expected date of birth or adoption so there is no delay to receiving payment. Pre-claims under the improved scheme will be open from the end of March.

 

The Government will bring forward additional legislation before July next year to increase the scheme to 26 weeks by 2026.

 

More information about the Government’s Paid Parental Leave changes can be found on the Department of Social Services website.

6 March 2023
6 March 2023

indexed rates and thresholds for social security, effective 20 March 2023, have been released by the Government. 

 

The updated FirstTech quick reference guide and FirstTech app will be available from 20 March

February 2023

28 February 2023
28 February 2023

Parliamentary FlagPost has highlighted how people in multiple relationships — those with more than one partner — are treated for social security purposes.

 

In December 2016, social security policy recognised that individuals could be in a de facto relationship with more than one person at a time and could treat each relationship as a separate couple relationship. In August 2018, the Department of Social Services policy guide was updated to state: 'The Australian social security system does NOT recognise the existence of multiple relationships'.

 

This February 2023 FlagPost examines the effect of the 2018 policy change.

28 February 2023
28 February 2023

The Treasurer announced an increase in taxation for large superannuation balances to commence from 2025-26. 

 

The Treasurer stated in his media release:

"Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent. This will continue for all superannuation accounts with balances below $3 million.

 

From 2025‑26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.

 

This is expected to apply to around 80,000 people, and they will continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.

 

This adjustment does not impose a limit on the size of superannuation account balances in the accumulation phase. And it applies to future earnings – it is not retrospective."

 

More information about the policy details is available here.

 

This announcement requires the introduction and passage of legislation through Parliament and is not yet law.

27 February 2023
27 February 2023

The ATO has published Military invalidity pensions – Douglas decision - a page dedicated to explaining the impact of the Douglas court decision on veterans receiving military invalidity pensions.

 

From late February, the ATO will write to those veterans affected by the Douglas decision who haven't yet requested a review of their prior year tax returns to advise on their options.

 

The Federal Court decision in Commissioner of Taxation v Douglas [2020] FCAFC 220 (the Douglas decision) found that, from 1 July 2007, certain invalidity pension payments for veterans and their beneficiaries are superannuation lump sums, and not superannuation income streams.

 

The vast majority of veterans will be in a better tax position – paying less tax. For veterans that will pay more tax, the government has proposed a new tax offset. The proposed tax offset will not apply until it becomes law (see Treasury Laws Amendment (2022 Measures No. 4) Bill 2022.

24 February 2023
24 February 2023

The ATO has released a new fact sheet for employers:

Electric vehicles and fringe benefits tax

23 February 2023
23 February 2023

The Australian Bureau of Statistics released the Average Weekly Ordinary Time Earnings (AWOTE) for November 2022. Estimates for AWOTE for full-time adults (seasonally adjusted) increased by 3.4% annually to November 2022.

 

AWOTE is used to calculate the indexation of a number of superannuation and tax rates and thresholds for the next financial year.

 

The ATO will update its Key Super Rates and Thresholds page shortly.  In the interim, we estimate, from 1 July 2023 the following rates and thresholds will apply:

•  Concessional contribution cap: $27,500 (no change)

•  Non-concessional contributions cap: $110,000 (no change)

•  CGT cap amount: $1.705m (2022-23: $1.650m).

  Superannuation Guarantee 'maximum contribution base': $62,270 per quarter (2022-23: $60,220 per quarter)

•  Co-contribution income thresholds:

•  Lower: $43,445 (2022-23: $42,016)

•  Upper: $58,445 (2022-23: $57,016)

•  Lump sum low rate cap: $235,000 (2022-23: $230,000)

•  Untaxed plan cap: $1.705m (2022-23: $1.650m)

•  ETP cap amount: $235,000 (2022-23: $230,000)

•  Genuine redundancy and early retirement payments:

•  2023-34 tax free amount: $11,985 + ($5,994 x each complete year of service)

•  2022-23 tax-free amount: $11,591+ ($5,797 x each complete year of service))

 

Minimum SG rate will rise to 11.0% from 1 July 2023 as previously legislated.

 

As reported on 26 January 2023, the CPI based general transfer balance cap will increase to $1.9 million in 2023-24, as will the total super balance thresholds for non-concessional contributions caps.

Thresholds for bring-forward non-concessional contributions in 2023-24
20 February 2023
20 February 2023

Treasury has released the consultation paper, Legislating the objective of superannuation, which is open for comment until 31 March 2023.

 

The proposed objective is:

"The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way."

 

Stephen Jones, Minister for Financial Services has previously stated:

"We will consult widely to inform a common, agreed objective for super. Australians need to have their say. With an objective that is settled, we can talk sensibly about tax."

 

This comment was made in November 2022, in reference to large super balances and the speculation of caps being introduced.

17 February 2023
17 February 2023

As reported on 16 November 2022, the ATO issued two draft legislative instruments which proposed exemptions from the obligation to obtain a director identification number.

 

These have now been finalised as:

•  LI 2023/1 Corporations (Eligible Officer Exclusion - non-individuals and resigned directors) Determination 2023 (registered 17 February 2023); and

•  LI 2023/2 Corporations (Aboriginal and Torres Strait Islander) (Eligible Officer Exclusion - resigned directors) Determination 2023 (registered 17 February 2023)

 

Broadly there are two categories of entities excluded from requiring a Director ID:

•  corporate directors – non-individual entities that hold a role as a director under the Corporations Act

•  resigned directors – individuals who have ceased to hold any role as a "director or alternate director acting in that capacity" prior to 1 December 2022.

16 February 2023
16 February 2023

The ATO has finalised PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home - ATO compliance approach.

 

Prior to 1 July 2022, to calculate a deduction for expenses incurred as a result of working from home, taxpayers had the choice of using one of the following methods:

•  the shortcut method - available from 1 March 2020 to 30 June 2022 (outlined in Practical Compliance Guideline PCG 2020/3)

•  the fixed-rate method - available from 1 July 1998 to 30 June 2022 (outlined in PS LA 2001/6), or

•  actual expenses; that is, calculating the actual expenses incurred as a result of working from home.

 

From 1 July 2022, the short cut method cannot be used. Taxpayers can continue to claim their actual expenses or, alternatively, they can use the revised fixed-rate method.

 

PCG 2023/1 outlines the revised fixed-rate method for calculating the work-related additional running expenses incurred as a result of working from home. It should be read in conjunction with TR 93/30 Income tax: deductions for home office expenses, which explains when working from home expenses are deductible.

 

To calculate your total deduction for running expenses using the revised fixed-rate method:

 

1. calculate the number of hours worked from home during the income year based on taxpayer records

2. multiply the total number of hours worked from home during the income year by 67c per hour

3. calculate the work-related decline in value of any depreciating assets used to work from home during the income year and any other running expenses incurred which are not covered by the rate per hour

4. add the amounts calculated at (2) and (3) - this is the amount that may be claimed as a deduction in the taxpayer’s tax return.

 

A record of hours for the income year 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 spent accessing employer systems or online business systems

•  time-tracking apps

•  a diary or similar document kept contemporaneously.

 

For the 2022-23 income year only, taxpayers need to keep:

•  a record which is representative of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023, and

•  a record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.

10 February 2023
10 February 2023

In our 26 January Latest News we reported that the new general transfer balance cap will increase to $1.9m from 1 July 2023.

 

The increased general transfer balance cap means the total super balance threshold for non-concessional contributions will also increase to $1.9m.

 

When looking at the bring-forward rule, the thresholds are a combination of the general transfer balance cap and the standard non-concessional contribution cap.

 

The standard non-concessional contribution cap for 2023-24 depends on the AWOTE index figures to be released on 23 February.  It is expected that AWOTE will not increase signficiantly and so it is expected that concessional and non-concessional contribution caps will remain unchanged for 2023-24.

 

The expected bring-forward thresholds for 2023-24 are shown in the table below. This assumes non-concessional contribution caps remain unchanged in 2023-24. 

 

Clients with a total super balance of $1.9m or more on 30/6/2023 will have a Nil non-concessional contributions cap in 2023-24.  This has already been legislated. 

  Expected thresholds for bring-forward non-concessional contributions in 2023-24

January 2023

26 Januaryy 2023
26 Januaryy 2023

The Australian Bureau of Statistics (ABS) has released the CPI index number of 130.8 for the December quarter 2022. The 'general transfer balance cap' for retirement phase income streams increases each 1 July if there is sufficient movement in the CPI index for the December quarter.

 

The CPI index number for December 2022 means the general transfer balance cap will increase by $200,000 (from $1.7m to $1.9m) from 1 July 2023.

 

General transfer balance caps

•  1 July 2017 – 30 June 2021 $1.6m

•  1 July 2021 – 30 June 2023 $1.7m

•  From 1 July 2023 $1.9m

 

Personal transfer balance cap

A client’s personal transfer balance cap determines the amount of superannuation that may be transferred to a retirement phase income stream. A client’s personal transfer balance cap is determined by a number of factors including the date they commence their first retirement phase income stream, the general transfer balance cap at that time, and any proportional indexation that may apply.

 

If a client commences their first retirement phase income stream on or after 1 July 2023, their personal transfer balance cap will be $1.9m.

 

Those who have already used up their personal transfer balance cap in full at some point don't get any value at all out of the indexation of the general transfer balance cap.

 

For clients who commenced a retirement phase income stream prior to 1 July 2023, but did not use up their personal transfer balance cap in full, their personal transfer balance cap will be between $1.6m and $1.7m in 2022-23. These clients may receive an increase (of less than $200,000) in their personal transfer balance cap from 1 July 2023 due to proportional indexation. Please see section 21.2 of the FirstTech Super and retirement income streams guide, for the calculation of proportional indexation and personal transfer balance caps.

 

Impact on other superannuation thresholds

There are several superannuation thresholds that are determined by the general transfer balance cap. These thresholds will also increase from 1 July 2023 (subject to any interim changes in the law):

 

Total superannuation balance – for 2023-24, where a member’s total superannuation balance is greater than or equal to $1.9m at 30 June 2023, their non-concessional contributions cap is nil. 

 

Government co-contributions and tax offsets for spouse contributions – for 2023-24, the co-contribution and spouse contributions tax offset are only available where the member’s total super balance is less than $1.9m at 30 June 2023.

 

Defined benefit income cap – income paid from capped defined benefit income streams (e.g. TAPS commenced prior to 1 July 2017) may be subject to additional taxation, if the annual income exceeds the defined benefit income cap (general transfer balance cap / 16). The defined benefit income cap will increase from $106,250 to $118,750 from 1 July 2023.

 

Bring forward thresholds – the thresholds for making non-concessional contributions under the bring-forward rule are determined by both the general transfer balance cap and the basic non-concessional contributions cap. 1 July changes in contribution caps will not be available until late February 2023.

 

To bring forward the maximum 2 years of non-concessional contributions in 2022-23, total super balance at 30 June 2022 must be less than $1.48m (general transfer balance cap – (2 x basic NCC cap)).

 

If the basic non-concessional cap remains at $110,000, then this threshold would increase to $1.68m from 1 July 2023.

24 January 2023
24 January 2023

The Government released a consultation paper (24 January 2023 – 21 February 2023) on options to amend the non-arm’s length expense (NALE) provisions for superannuation funds to ensure they operate as intended.

 

While the NALI provisions are operating broadly as intended, the government appreciates some superannuation industry stakeholders have raised the potential for disproportionately severe outcomes for breaches relating to general expenses.

 

For the purposes of stakeholder consultation Treasury has developed potential policy changes to the NALI provisions, where they relate to general expenses which have a sufficient nexus to all ordinary and statutory income derived by the fund.

 

Potential amendments to the NALI provisions for superannuation funds could be adopted as follows:

•  Self‑managed superannuation funds and small APRA funds would be subject to a factor‑based approach which would set an upper limit on the amount of fund income taxable as NALI due to a general expenses breach. The maximum amount of fund income taxable at the highest marginal rate would be 5 times the level of the general expenditure breach, calculated as the difference between the amount that would have been charged as an arm’s length expense and the amount that was actually charged to the fund. Where the product of 5 times the breach is greater than all fund income, all fund income will be taxed at the highest marginal rate.

•  Large APRA‑regulated funds would be exempted from the NALI provisions for general expenses.

 

The potential approach outlined in the consultation paper seeks to balance maintaining the integrity of the tax system with providing a greater level of certainty for funds that the consequences of any breaches relating to general expenses would be proportionate to the magnitude of that breach and ensuring the rules are appropriately focussed.

 

The changes are proposed to apply from 1 July 2023, following the expiry of the ATO’s transitional compliance approach for general expenses (PCG 2020/5) for the period 2018-19 to 2022-23.

19 January 2023
19 January 2023

Treasury has released a discussion paper for consultation (19 January 2023 – 16 February 2023) that outlines two complementary proposals that would provide for the release of an offender’s superannuation for the purposes of satisfying unpaid compensation orders. These proposals will close a loophole that is causing further harm to victims by denying them court‑awarded compensation.

 

Under the proposals, certain super contributions made by an offender in the leadup to criminal proceedings would be made available to the victim for the purposes of paying compensation.

 

Courts would also be entitled to access Australian Taxation Office data about offenders' superannuation accounts, giving transparency to victims of their assets.

 

Further information

•  Minister’s media release, No place to hide assets for child sex abusers

  Treasury Discussion Paper, Access to offenders' superannuation for victims and survivors of child sexual abuse

10 January 2023
10 January 2023

It has been reported that Capital Advisory director Michael Miller, received written confirmation from ASIC senior executive leader for credit and banking Tim Gough, that financial advisors can advise on the Home Equity Access Scheme (previously the Pension Loans Scheme), without requiring an Australian Credit Licence, notwithstanding the functional equivalence to reverse mortgages that are regulated under the National Consumer Credit Protection Act 2009.

 

Tim Gough clarified that the operation of Centrelink’s Home Equity Access Scheme is provided for under Division 4 of Part 3.12 of the Social Security Act 1991(Cth) and is a debt owed by the recipient to the Government. Because the scheme is provided under statute and not under a contract, the debts are not considered credit contracts or regulated under the National Consumer Credit Protection Act 2009

 

Approval by licensees would still be required to provide advice on the Home Equity Access Scheme.

 

Public information provided by ASIC is currently not definitive on the subject of the Home Equity Access Scheme. 

•  ASIC REP 586 Review of reverse mortgage lending in Australia (28 August 2018), Table 9, Limitations of other equity release options, lists the Pensions Loans Scheme as an alternative equity release product to a reverse mortgage.

•  ASIC RG 203 Do I need a credit licence? does not specifically address the Home Equity Access Scheme.

1 January 2023
1 January 2023

The Federal Parliament’s sitting calendar for 2023 has been released. Both Houses are due to resume sitting on Monday 6 February 2023, for 2 weeks.

1 January 2023
1 January 2023

Two new measures relating to selling a main residence commenced on 1 January 2023.

•  The eligibility age to make downsizer contributions to super reduces from age 60 to age 55.

  Principal home sale proceeds (where the home was sold on or after 1 January 2023) that are intended to purchase another principal home can generally be exempt from the social security assets test for up to 24 months, with the lower deeming rate applying to any of those proceeds held in a financial investment during the exemption period.

 

For more information, please see FirstTech Strategic Update Downsizer and Principal Home Sale Proceeds Changes.

1 January 2023
1 January 2023

The ATO is concerned about self-managed super funds (SMSFs) entering into certain schemes involving asset protection.

 

The asset protection arrangements that claim to protect SMSF assets from creditors by mortgaging them to an asset protection trust, are commonly referred to as a 'Vestey Trust'.

 

Why some asset protection schemes concern the ATO

First, the arrangement is unnecessary because the super system already protects SMSF assets from creditors.

 

Second, the arrangement is a compliance risk and may contravene one or more super laws. For example, it may:

•  result in the giving of a 'charge' over, or in relation to, a fund asset by the SMSF trustee

•  involve the 'borrowing' of money by the SMSF trustee

•  expose fund assets to unnecessary risk if it’s not clear who owns them

•  cause the fund to be maintained in a way that doesn't comply with the sole purpose test.

 

Finally, SMSF money cannot be used for costs related to asset protection arrangements entered into by members to protect their personal or business assets because these expenses are not incurred in running the SMSF.

 

If the arrangement contravenes the super laws, penalties may apply.

 

For more information see the ATO page: SMSFs and schemes involving asset protection (22 December 2022).

1 January 2023
1 January 2023

Centrelink and aged care rates and thresholds have been updated for 1 January 2023 and are available here:

  Centrelink Quick Reference Guide

  Aged Care Quick Reference Guide

  FirstTech app

Unleash in ways you never thought possible

Get in touch

For technical enquiries contact us
8:30am – 6pm AEST Monday to Friday.

Find a Business Development Manager

Need more information or support? 

 

Adviser login

Sign into our platforms.

 

Disclaimer

The information contained in this update is based on the understanding Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) and Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) has of the relevant Australian laws as at the article date. As these laws are subject to change you should refer to our website at www.cfs.com.au or talk to a professional adviser for the most up-to-date information. The information is for adviser use only and is not a substitute for investors seeking advice. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person, including AIL, nor CFSIL, accepts responsibility for any loss suffered by any person arising from reliance on this information. This update is not financial product advice and does not take into account any individual’s objectives, financial situation or needs. Any examples are for illustrative purposes only and actual risks and benefits will vary depending on each investor’s individual circumstances. You should form your own opinion and take your own legal, taxation and financial advice on the application of the information to your business and your clients.

 

Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

 

AIL and CFSIL are also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.