Month: October 2023

Transitioning to Retirement Made Simpler

Posted on by Adam_Admin

Not quite ready to take the plunge into full retirement, but ready to make a start?

Transitioning into the retirement phase of your life means undergoing the process of slowly relying less on work-related earnings and more on superannuation and investments to cover your lifestyle expenses.

The time taken to transition into retirement is up to you;  it may take as little as 6 months or as long as 5 years.

However, income may be a source of concern during this transition period – this is why transition to retirement pensions can be of assistance.

A transition to retirement (TTR) pension allows you to supplement your income by allowing you to access some of your super once you’ve reached your preservation age.

This type of pension is similar to an account-based pension, but has a few extra rules.

Not only must you first have reached your superannuation preservation age, for TTR pensions in the pre-retirement phase, the minimum pension payment is 4% up to a maximum 10% of your account balance as at 1 July of each financial year or the value from the date your TTR pension started in that financial year. The minimum payment percentage is pro-rated in the first financial year.

If you start a TTR pension part way through a year, the 4% is pro-rata based on the remaining days in the financial year, divided by the total days in the year. The 10% upper threshold remains calculated based on a full year (i.e. no pro-rata necessary).

How Can A TTR Pension Benefit You?  

  • You cut back your working hours without reducing your income.
  • The taxable component of TTR pension payments attracts a 15% tax offset between the preservation age and 59, and all payments are tax-free at age 60 or over.
  • Investment earnings are generally taxed at a maximum rate of 15%.

You can start a transition to retirement pension by contacting your superannuation fund and asking if they offer transition to retirement pensions. If they do and you are comfortable using their product, you can then follow the process to commence the pension. Alternatively, you may choose to start a transition to retirement pension with a different superannuation fund.

However, bear in mind:

  • You’ll need to keep a super account open to accept employer contributions (or any other contributions), as these can’t be contributed directly to a pension account.
  • TTR pensions don’t hold any insurance cover. This means you may want to keep any personal insurance you have connected to your super account.

There are a number of things you should consider before starting a TTR pension; professional financial advice is recommended. Why not start a conversation with a trusted, licensed adviser today?

Claiming The Small Business Technology Investment Boost

Posted on by Adam_Admin

Could your small business claim a 20% bonus deduction on technology expenditure that supports their digital operations or the digitisation of their operations?

The small business technology investment boost is a broad measure intended to cover a wide range of business expenses and assets; however, questions may arise when you go to claim.

Can I Claim The Boost? 

To access the small business technology investment boost, your business needs to meet the standard aggregated annual turnover rules (with an increased $50 million threshold).

The expenditure must:

  • already be deductible for your business under taxation law
  • be incurred between 7:30 pm AEDT 29 March 2022 and 30 June 2023.

If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use for a taxable purpose by 30 June 2023.

What Can I Claim With The Boost? 

A good indicator of eligibility is to consider if the small business would have incurred the expense if they didn’t operate digitally. That is if they hadn’t sought to adopt digital technologies in the running of their business. Using this rule of thumb, the costs below are eligible:

  • advice about digitising a business
  • leasing digital equipment
  • repairs and improvements to eligible assets that aren’t capital works.

Eligible expenditure may include, but is not limited to, business expenditure on:

  • digital enabling items – computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks
  • digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design
  • e-commerce – goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth
  • cyber security – cyber security systems, backup management and monitoring services.

Whether some expenditure is eligible for the boost will depend on its purpose and link to digitising the operations of the specific small business. For example, the cost of a multifunction printer would not be eligible if it were intended only to make copies of paper documents. However, it would be claimable if it was being used to convert paper documents for digital use and storage

New and ongoing subscription costs can also qualify as eligible expenditures if related to your client’s digital operations. For example, your ongoing subscription to an accounting software platform for your business would qualify. Likewise, a new subscription for digital content that is used in developing web content to advertise their business would be eligible.

In these cases, you should keep explanations of how the expenses relate to digitising their business, as well as accurate records of all their claims.

Where the expense is partly for private purposes, the bonus deduction can only be applied to the business-related portion.

Special rules apply if claiming the bonus deduction for eligible expenditure on a depreciating asset.

To avoid confusion or complications around applying the small business technology investment boost, it may be best to speak to your trusted tax agent. We’re here to help.

The Importance Of Establishing A Company Culture

Posted on by Adam_Admin

Company culture has become an important part of how businesses are perceived. Businesses with a positive culture are more likely to attract clients and customers. Statistics also show that over 50% of executives believe that having a good culture can influence productivity, creativity, profitability, firm value and growth rates.

However, while describing and quantifying a company’s products and services can be easier, defining culture is a lot more complicated. It requires capturing the company environment, values and relationships.

Identifying your company culture, or what you want it to be, will determine your work processes, hiring new people into your team, and how you and your employees interact with clients.

The first thing to do is to identify key traits that describe your culture. Bring together a diverse group of people from across your company and brainstorm words and qualities that represent the culture. Collate the words you hear the most so that you end up with a list representative of the culture that employees most relate to.

The next thing you need to do is distil this list down to the core values you can see in it. You can conduct surveys (if you have a large company) or talk to your employees (if the company is small) and ask them whether the values you have chosen resonate with them and if not, which ones do. At this point, you should aim to have around 5 values, but this is a flexible number.

Last of all, once the core values have been established, share them throughout the company. Employees should relate to these values, and they should also feel motivated to embody them. Communicate with your employees why these values may or may not be working/suitable.

Remember that this is a process. You may not get it right the first time, which is why it is important to be receptive to feedback from all members of the company.

The Age Pension Thresholds Have Changed Since 1 July 2023…

Posted on by Adam_Admin

One of the most common questions from those entering or nearing retirement is, ‘How much money can I have before it affects my pension?’

Our answer is usually derived from the total value of your savings, other assets and any income that might be earned from other sources. However, from 1 July 2023, the thresholds determining how much pension you may be paid have changed due to inflation-related adjustments.

This means that many of those who may otherwise have been looking at a part-pensioner status due to being over the threshold may be able to be on a full pension with the adjusted thresholds (depending on their circumstances).

Similarly, those who may have been ineligible for a pension due to being over the cut-off point for the assets test should become eligible to start claiming a part pension (and all the concessions that go with it).

What Assets Will I Be Tested On? 

The assets that you or your partner own that are included in your assets test include the following:

  • Real estate (excluding your family home)
  • The market value of your household contents (such as fridges, appliances, etc).
  • Superannuation balances if you and your partner have reached the Age Pension eligibility age, including the balance of your pension accounts that provide you with an income stream. If your partner is below the Age Pension eligibility age, their super balances will not be included in your assets test
  • Other financial investments, like term deposits or any surrender value of life insurance policies
  • Retirement village contributions
  • Business assets
  • Motor vehicles
  • Boats
  • Caravans
  • Jewellery
  • Cryptocurrencies

The Age Pension assets limits are adjusted three times a year based on movements in the consumer price index (CPI). The thresholds for the full Age Pension change in July, while thresholds for the part-Age Pension change in March and September.

Assets Limit For A Full Age Pension

To be eligible for either a full or part-Age pension, there are limits on the value of the assets you (and your partner combined) can own.

The limits depend on whether you own your own home, as well as your living arrangements (including if you have a partner and whether they are age-eligible for the pension or not). The asset limits are higher for non-homeowners in recognition of the higher cost of housing for pensioners who rent their homes.

You also need to pass the income test and age and residency requirements.

The asset-free thresholds for full-age pension are the same for couples living together and those separated by illness.

If the value of the assets is above the thresholds, you may still qualify for a part-Age Pension.

The Income Test

The new thresholds also increase the amount pensioners can earn before their pension starts to reduce under the income test. For a couple, the income test cut-off point rises from $336 a fortnight to $360 a fortnight – for singles, it increases from $190 a fortnight to $204 a fortnight.

If you reach the threshold limits in the assets and income tests, your pension will be based on the lower amount.

For example, if you are eligible for $400 per fortnight according to the assets test and $500 per fortnight under the income test, then the $400 per fortnight test will apply.

Questions About The Pension

If you have questions about your retirement plan or pension eligibility, why not start a chat with a trusted advisor (like us) today?

Providing Affordable Housing? You Could Be Eligible For A CGT Discount

Posted on by Adam_Admin

An additional 10% capital gains tax (CGT) discount may be available when you sell an Australian residential rental property that you used to provide affordable housing.

This will increase the potential maximum capital gains discount percentage on your sale from 50% to 60%.

What Is Affordable Housing?

For the affordable housing CGT discount purposes, affordable housing is any dwelling (house, unit or apartment) where the following conditions are satisfied:

  • The dwelling is both a taxable Australian real property (TARP) and residential premises that you rent out or genuinely make available for rent. Caravans, mobile homes and houseboats are not residential premises.
  • The dwelling is not a commercial residential premises.
  • Management of the tenancy or its occupancy is done exclusively by a registered community housing provider (CHP).
  • Each entity that holds an ownership interest in the dwelling has a certificate from the provider showing that the dwelling was used to provide affordable housing.
  • No entity that has an ownership interest in the dwelling is in receipt of an incentive from the National Rental Affordability Scheme (NRAS) for the NRAS year.
  • If a managed investment trust (MIT) has an ownership interest in the dwelling, the tenant does not have an interest in the MIT that passes the non-portfolio test.

Eligibility For Affordable Housing CGT Discount

When you sell a rental property used to provide affordable housing, you may make a capital gain on the profit. This may qualify you for an additional (up to 10%) affordable housing capital gain discount if you meet the following eligibility criteria:

The capital gain must have been either

  • made by you as an Australian resident individual, or
  • distributed or attributed to you either
    • directly from a trust or managed investment trust (MIT)
    • indirectly from a trust through an interposed partnership, MIT or other trusts (this does not include public unit trusts or super funds).

You must have also provided:

  • new or existing affordable housing
  • rental rates below market rent
  • affordable housing to eligible tenants on low to moderate incomes (based on household income thresholds and household consumption)
  • Affordable housing for a minimum period of three years (1,095 days) from 1 January 2018. This can be continuous or an aggregation of three years over a longer period.

The additional discount will be pro-rated for periods where you don’t use the property for affordable housing purposes or were a foreign or temporary resident for part of the time you owned the property.

Investing In Affordable Housing Through a Trust 

You can invest in affordable housing through a trust.

As an individual investor, only you can claim the additional affordable housing CGT discount. The trust cannot claim this discount.

For you to qualify for the affordable housing CGT discount:

  • the trust can be a managed investment trust (MIT), but not a public unit trust or super fund
  • the trust must be entitled to the general CGT discount on the capital gain on the property, either in full or part.

The capital gain can be distributed or attributed to you:

  • directly from the trust or MIT
  • indirectly from the trust or MIT through an interposed partnership, MIT or other trust, but not through a public unit trust or super fund.

Consulting with a tax professional could assist you in determining your eligibility for CGT discounts – why not speak with us today?