Working Holiday Maker & Australian Income Tax Returns 30th June 2017

Working holiday maker tax return 2017 most likely than not will be a technically and legally special tax return, as the law changes from 1 Jan 2017.

Who will be affected: working holiday maker with Visa Sub class 417 and 462
You will receive from your employer two payment summaries if you earn income before and after 1st Jan 2017. You are not entitled to low income offset, neither liable to Australia Medicare levy.
For tax year 30th June 2017, it is a bit complex calculation when you are Australian resident for tax purpose before 1st Jan 2017, and working holiday maker visa 417 or 462  from 1st Jan 2017 up to 30th June 2017, you might end up with three tax rates for income up to $37,000.00, i.e. 0%, 15%, 19%; while for income exceeding $37,000, tax rates are the same for Australian residents and holiday maker.
You are still entitled to superannuation payment from employers if you are eligible.


Insights from super changes 2017


INTHEBLACK – Super changes make 2017 a retirement watershed <!–


Super changes make 2017 a retirement watershed

From the 1 July, Australian superannuation laws will change. Are you ready?

From the 1 July, Australian superannuation laws will change. Are you ready?

The 1 July changes to Australia’s superannuation laws will transform super from being a safe harbour for accumulated wealth to a more limited retirement savings fund for the masses – and its critics say many more people will feel a negative impact than the government claims.

By Lachlan Colquhoun

Time is counting down to the 1 July 2017 changes to specific caps within Australia’s superannuation system, and the incentives to make big lump sum payments before the deadline are having an impact.

According to figures from the Australian Prudential Regulation Authority (APRA), Australians made voluntary contributions of A$4.616 billion to their funds in the December 2016 quarter, compared with A$4.437 billion in the December 2015 quarter, as the total national retirement pool lifted to a record A$2.2 trillion. APRA says there was a 7.4 per cent increase in total superannuation assets over the 12 months to December 2016.

Those figures will be six months old by 1 July, and while there is anecdotal evidence of a wave of big lump sums going into super balances, the true picture won’t emerge until the APRA data is released later this year.

Main 1 July changes

What is clear is that reductions in both the concessional and non-concessional contributions caps are ensuring that 1 July 2017 is a significant milestone in Australian superannuation history.

In pure numbers, the concessional contributions cap will reduce to A$25,000 per year, from the current A$35,000 for those aged over 49 and A$30,000 for all others. The non-concessional cap will move down to A$100,000, from A$180,000.

Concessional contributions to super are those you make before your income is taxed, such as employer contributions and salary sacrifice contributions. Non-concessional contributions are also known as after-tax contributions, and these are contributions made from a person’s after-tax income or non-taxed income. No tax is deducted from these contributions.

“The new message is that superannuation should simply and narrowly be about retirement savings. It is not about exploitation for intergenerational wealth creation and/or tax minimisation anymore.” Paul Drum, CPA Australia

Under the changes the three-year bring-forward rule for non-concessional contributions continues, albeit at a significantly reduced level. This allows people aged under 65 to make a lump sum non-concessional contribution equal to three years of contributions. This presents one last opportunity to contribute larger amounts before the limit drops on 1 July.

This will be welcome news, for example, for individuals who are currently cashed up with a windfall from a property sale or an inheritance. They have a one-off chance to put A$540,000 into their super by 1 July, or A$1.08 million for couples. APRA’s figures for the June 2017 quarter should make interesting reading.

Super’s purpose redefined

Beyond any final flood of lump sums before the deadline, the government’s superannuation changes signal a major philosophical shift in its approach to super, particularly when the contributions cap is considered alongside the lifetime A$1.6 million cap on pension balances.

Paul Drum, the head of policy at CPA Australia, says the new message is that superannuation should simply and narrowly be about retirement savings. It is not about exploitation for intergenerational wealth creation and/or tax minimisation anymore.

In as much as superannuation enjoys taxation benefits, these are now limited by the personal contribution and lifetime balance caps. More affluent people, particularly those with self-managed superannuation funds (SMSFs), who may have viewed super as a personal funds management vehicle, will need to think outside of the super regime for additional wealth creation.

This message, says Drum, is the downside of the changes because they have removed any incentive for saving beyond the minimum.

Professional Development: Pensions – the $1.6m transfer balance cap: this recorded webinar focuses on the Government’s changes to the pension rules coming into effect on 1 July 2017.

While A$1.6 million in a pension fund balance might sound like a lot, at the current modest levels of return this might deliver about A$60,000 per year, depending on how it is invested. Drum’s view is that as a maximum possible amount, it is not significantly higher than the A$23,000 received by single pensioners, or the A$35,000 for couples.

“We had some generous changes made 10 years ago, which removed taxes on benefits for people over 60,” says Drum.

“It was good for those people who hadn’t had a full working life under the superannuation guarantee, but it also created some great opportunities for high income earners to take advantage of the rules.

“Now we are going to the other extreme of shutting down the system considerably, through introducing new minimums.”

Drum says that large balances that date from the last “million-dollar opportunity” created under former treasurer Peter Costello are now “washing out of the system”. He predicts that under the new regime caps, it will be considerably harder for people to accumulate large balances.

Disputing the numbers

Much of the government’ rhetoric in selling the superannuation changes has been that they impact only a small percentage of affluent Australians. In the 2016 budget, the message was that the changes would impact only 4 per cent of people in the super system, but Drum disputes this, saying: “It really is going to affect a lot more people than the government has claimed.”

One area where the changes have been met with some confusion, and increasing consternation, is in the estate and succession planning segment of the wealth management industry.

James Whiley, a special counsel at law firm Hall & Wilcox, says he has been busy explaining the changes to his clients, the majority of whom have SMSFs with personal balances of more than A$1.6 million.

In estate planning, the changes mean that where the death benefit exceeds A$1.6 million, the excess must be cashed out as a lump sum. This will have a particular impact on people who wish to retain benefits within superannuation through reverting to or paying a pension to their dependants once they inherit the estate.

“It really is going to affect a lot more people than the government has claimed.” Paul Drum, CPA Australia

“Another issue we are finding is in cases where people are in second marriages but wish to make provision for children from their first marriage,” says Whiley.

In many cases, he says, people have structured their estate to provide a pension for their children from their superannuation, with the spouse also having access to the balance.

In cases where the superannuation account balance exceeds A$1.6 million, some adjustments need to be made, and the possibility is that the fund will no longer have enough to sustain the pensions and the spouse’s standard of living.

Property more attractive

Drum’s concern is that the changes are more about plugging revenue holes than continuing to build a sustainable system which can provide adequately for the retirement lifestyles of the bulk of Australians. This, he says, is a false economy because it will only result in bigger demands on public finances decades down the track.

For people with super balances of about A$1 million, the incentive to build their super is being eroded. The alternative is to find other investment vehicles which deliver better returns and are more attractive than super.

“Overlay these changes with uncertainty about more tinkering in future and super becomes less attractive,” Drum says.

“People find property attractive and we are already seeing the heat in segments of the residential property market. If people turn from super, then it would follow that even more people will turn to residential property as an alternative investment class.”

More property investors could be an unintended side effect of the government’s changes, but with housing affordability a hot topic the government risks solving one problem and exacerbating another.

Although Drum detects “a lot of negativity about super” at the moment, he sees merit in some of the changes.

As part of a series of arrangements designed to make superannuation more flexible for people with different work patterns across their lives, after 1 July all super contributions with the new caps will be eligible for tax deductions.

This is good news, for example, for people who salary sacrifice and is a long overdue reform for the self-employed, who have been discriminated against by having to pay tax on contributions if they also have part-time work as employees.

While the government is levelling the playing field with some of the changes, it is putting a new ceiling on superannuation. How that plays out is an issue for future governments, and future generations.

Changes at a glance

  • Concessional (before tax) contributions annual cap reduced to A$25,000 for all. (It was A$35,000 for those aged over 49, and A$30,000 for others.)
  • Non-concessional (after tax) annual cap reduced to A$100,000 from A$180,000.
  • A$1.6 million lifetime pension balance cap introduced.
  • People aged under 65 will be able to bring forward three years’ worth of non-concessional contributions as a lump sum, until they reach the A$1.6 million pension cap.
  • Any unused concessional contribution cap can be carried forward over a rolling five-year period after 1 July 2018 (only available to individuals with a super balance of less than A$500,000).
  • People with incomes greater than A$250,000 will pay 30 per cent tax on concessional contributions (up from 15 per cent). This previously applied to incomes greater than A$300,000.

Tax & Super Tips 30th June 2017

Before 30th June 2017 there are some tips for

superannuation tax saving or super co contribution:


People who might be interested are: low income earners, people who are not far from retire, or business owners who would like to reduce taxable income; or people who would like fast track to accumulate super.

  • Government co-contribution: for personal super contribution made, government will co contribute if you meet: 1)10 % test; 2) less than 71 years old at the end of FY; 3) earning income between $36,021.0-0 and $51,021.00. Maximum contribution from government is $500.00, and minimum $20.00
  • Personal super contribution deductions: Criteria for this personal contribution are: 1)10% max earning condition still apply 2016/17 (but will be removed from 2017/18);2) not contribution to Commonwealth public sector super, or not CPF or other untaxed fund. However, you can contribute into other than those funds so be eligible for personal deduction;3) less than 75 year older or 65-74 but work; 4) not exceeding annual concessional super cap; 4) notify fund your intent, and get acknowledge from the funds
  • CAP for 2016/17: $35,000.00 for 49 and old, and $30,000.00 for everyone else. So you can sacrifice if you are an employee, or tax deduction if you are business owner to make use this threshold
  • Tax offset for Spouse contribution: if spouse earning less than $13,800.00, you are entitled to up to $540.00 tax offset.

Please note, if you are interested in any one of those options above, please contact us to check your individual eligibility and detailed procedures how to approach it.

Lower contribution limits may force SMSF re-think

Lower contribution limits may force SMSF re-think |

by Ben SmytheNow that the government’s superannuation changes have become law, much attention has turned to the various opportunities that are available to maximise contributions before July 1, when the new legislation kicks off.

One significant change that may not necessarily hurt too many people on the cusp of retirement but will affect the “wealth accumulators”, is the reduction in the concessional super contribution cap to $25,000 a year. This cap currently sits at $30,000 if you are under age 50, and $35,000 if you are over age 50.

With the reduction in the contribution limit, there is definitely a question mark as to how much you will be able to accumulate within super without the need to top-up your balance with after-tax contributions so you have a meaningful balance at retirement.

The lower limit might also curtail some people’s ability or willingness to set up a self-managed super fund (SMSF). Commentators often cite the figure of $200,000 as a minimum amount required to make an SMSF worthwhile. The lower contribution caps may mean it will take much longer for people to reach this target.

I have run some numbers around what is now possible to accumulate in super with the lower pre-tax contribution ceiling. Assuming someone is employed consistently between the ages of 25 and 60, their starting salary is $75,000, they rely on the 9.5 per cent super guarantee until they are 45 and then start to contribute $25,000 a year, the individual will accumulate approximately $1.5 million by the age of 60.

If you retired today with $1.5 million and your living expenses were $100,000, your super balance would last approximately 20 years, and then you would fall back on to the age pension (not something that I would be recommending clients work towards!).

There are obviously a number of assumptions with this modelling, and it is also only based on one person, no changes to legislation and 3 per cent inflation. However, with a growing majority of people now living beyond age 80, $1.5 million doesn’t go too far these days.

So what are the other implications of this reduced cap? Firstly, the reality is that most people will need to give consideration to making non-concessional, or after-tax, contributions, although given that this money will be locked up for a long time, you would probably not the strategy until you are closer to retirement age.

A bigger issue will be costs. If your super is only growing by way of contributions and earnings, and the contribution multiplier is now going to be smaller, then you need to be very cognisant of the fees you pay because they will detract from returns. This includes administration fees and investment management fees. This may well be a driver for people to take a much closer look at their super and perhaps choose a SMSF for its transparency when it comes to fees.

The administration fee is charged by your fund should really be a fixed dollar amount, as is the case typically with an SMSF. The investment management fee is the fee your fund pays an investment manager, which in a lot of cases is a percentage of your balance. This fee is sometimes hidden and can be quite expensive (more than 1 per cent).

The other typical cost you incur is an insurance premium, with most people having some level of insurance inside super. Premiums for life and total and permanent disability cover are tax deductible when held inside super. But premiums rise with age and after 50 your insurance premiums can really take off and potentially erode a large chuck of your contributions. In other words, you need to assess the merits of insurances inside super as you get older. It can be a good idea to reduce cover, as the risk you are trying to protect reduces over time.

Change definitely presents opportunities. For those building their savings there is a new set of parameters to consider when deciding whether to stay in a pooled fund or go the self-managed route.

Ben Smythe is the Managing Director of Smythe Financial Management.

AFR Contributor

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Business Consultancy-Business Contract-from fair trading NSW

Business to business contracts

Before you sign a contract you should:

  • be sure you really want and know what you are signing for. If in doubt, take time to consider the contract carefully
  • read every word – including the fine print
  • seek legal advice if you don’t understand the contract
  • not be pressured into signing anything
  • if necessary, take the contract home overnight and read it through
  • never sign a contract that contains blank spaces
  • make sure you and the seller/buyer initial any changes you may make to the contract
  • always get a copy of any contract you sign.

Once you’ve signed a contract you really can’t change your mind – you are locked in. If you still wish to pull out of the contract before it is finished, you may end up paying a penalty (sometimes the full amount of the contract) or you may be taken to court by the other party to compensate their loss.

Some contracts may allow you to ‘opt out’ or terminate your contract early, with or without a penalty. If you wish to have an opting-out clause in the contract, you should seek independent legal advice to make sure you are properly covered.

Did you start a new business this year?

Starting a new business can be exciting but there are expenses associated with setting it up. The good news is that you are now entitled to claim certain deductions this year instead of having to spread the deductions over five years.

This applies to the following costs you may have had when setting up your business:

  • Professional, legal and accounting advice
  • Australian government fees and charges.

Do you earn extra money from sharing goods and services?

What is the sharing economy?

The sharing economy connects buyers and sellers, usually through an app or a website. Sometimes sellers may bid against other sellers to win a job.

For example, you may be:

  • providing skilled or trade services, such as creating a website
  • completing odd jobs
  • ride-sourcing – transporting passengers for a fare
  • renting out a room, house or parking space.

What do you have to do?

You’ll have different obligations depending on what you’re doing. Some things to consider are:

  • If you’re providing goods or services for a fee, and it’s not a hobby, it’s assessable income. If you’re registered for GST through your current business, account for GST through your existing ABN and GST registration.
  • If you’re providing ride-sourcing services, you’ll need to charge and account for GST, regardless of your turnover.
  • If you’re renting out your main residence, you don’t need to pay GST but you’ll need to include this rental income in your return.