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Newsletter June 2011

The government has introduced a flood levy (also known as the Temporary Flood and Cyclone Reconstruction Levy) to help fund the rebuilding of essential infrastructure (for example, roads, bridges, and schools) that were damaged by natural disasters. This flood levy will apply for the 2011-12 income year and will be paid by most taxpayers.

The new law imposes a flood levy for the 2011/2012 year only as follows;

• For an individual with a taxable income between $50,001 and $100,000, the levy will be payable at the rate of 0.5% of that part of the taxable income which exceeds $50,000,  
• For an individual with a taxable income over $100,000, the levy will be imposed at the rate of 0.5% on the income between $50,000 and $100,000, and 1% of the taxable income that exceeds $100,000. 

Employers are responsible for paying the flood levy on behalf of its employees. The levy will form part of the 2011/2012 PAYG Withholding tables. Some employees will be exempt from the flood levy if they have been affected by a natural disaster.  

Members of Self-Managed Superannuation Funds (SMSF’s) should be aware of possible adverse impacts of the members moving overseas, or temporarily moving overseas.

Where an established SMSF has members who will be based overseas, the SMSF must continue to meet the definition of an Australian superannuation fund for the fund to continue as a complying superannuation fund. There are three rules that must be considered;

1. Established in Australia – either the SMSF must be established in Australia, or any asset of the SMSF must be situated in Australia. This rule is almost always met.
2. Central Management and Control – the central management and control of the SMSF must ordinarily be in Australia. The high level decision making processes must remain in Australia, which the ATO can determine is more than the simple day-to-day operations of the fund. A common strategy to keep the SMSF’s central management and control in Australia is for the overseas members to execute an Enduring power of attorney in favour of an Australian resident.
3. Contributions – if no contributions are made by any of the members of the SMSF during the time a SMSF member is based overseas, then this rule will be satisfied.

If a SMSF is determined to be non-complying, the market value of the SMSF as at the end of the financial year, less the value of any undeducted contributions, will be taxed at the highest marginal tax rate, being 45%.

The benchmark interest rate for the fringe benefits tax (FBT) year commencing 1 April 2011 is 7.80%. This rate replaces the rate of 6.65% that has applied for the previous FBT year commencing on 1 April 2010.

The rate of 7.80% is used to calculate the taxable value of;

• A fringe benefit provided by way of a loan, and
• A car fringe benefit where an employer chooses to value the benefit using the operating cost method.

Australia's first national Paid Parental Leave (PPL) scheme started on 1 January 2011. This means from 1 July 2011, employers must provide parental leave pay to their eligible long-term employees.

Employers can register at any time to provide parental leave pay to their eligible employees through the Centrelink website at www.centrelink.gov.au

Employers should know that parental leave pay:

• will be provided to them by the Family Assistance Office in advance of their employee's usual pay cycle,
• is subject to PAYG withholding,
• does not change an employee's usual pay cycle,
• does not attract super contributions,
• does not increase payroll tax or workers' compensation premium liabilities,
• should be rolled into salary and wages on an employee's payment summary.

The Tax Office has reminded us about SuperSeeker, which is their online tool that you can use to search for lost and unclaimed super, and consider consolidating your super accounts. To use SuperSeeker, all you need is your tax file number, name and date of birth.

Lost Super - if you find super that you had previously lost and wish to transfer the whole balance to another fund, SuperSeeker can help by pre-filling a transfer form with your information. You can then print the form and send it to your current fund. This will help make the process of consolidating lost super easier.

Unclaimed super - unclaimed super is different to lost super. Unclaimed super is an amount payable to a member of a super fund because they meet the eligibility requirements, where the super fund after making reasonable efforts have been unable to contact them. This can include members who have reached the eligibility age and also former temporary residents.

The ATO has a register of people who have been reported by their funds as having unclaimed super.
If you use SuperSeeker and find an unclaimed super account or other amounts held by us, we will provide a link to the forms they need in order to make a claim.