Print Newsletter

Newsletter May 2005

1. Forget about the glossy ads the reality for the employer is:
   
   
   • In general all employees are covered by the new legislation Choice of Superannuation Fund which applies from 1 July 2005. The exceptions are:
     
     
     • Employees covered under an Australian Work Place Agreement or Certified Agreement or a State Award.
       
   • Further information can be obtained from www.wagenet.gov.au
     
2. For all employees covered a Choice of Superannuation Funds "Standard Choice Form" needs to be completed by both the employer and the employee prior to 29 July 2005.
   
   

3. The employer has to elect a default superannuation fund and the details need to be completed on the Standard Choice Form. Please note the default fund is required to have life cover for members.
   
   

   Minimum Life Insurance Cover
   Age range	Level of insurance
   20 to 34	$50,000
   35 to 39	$35,000
   40 to 44	$20,000
   45 to 49	$14,000
   50 to 55	$7,000

   
    
4. If the employee selects a self managed super fund then the employer is required to obtain from the employee;
   
   
   • The funds name
   • The ABN
   • A copy of a letter forwarded by the Australian Taxation Office to the self managed fund. This letter will either be an advice about Regulated Fund or a notice of Complying Fund Status. Both letters will quote the superannuation fund name together with the income tax file number of the fund.
     
5. The penalty for not having the Standard Choice Form completed and signed by 29 July 2005 is a maximum of $500 per employee per quarter.

For cash flow purposes, please note that to claim a tax deduction for superannuation the payment has to be paid before 30 June 2005 and not accrued. 

The ATO has once again raised the issue of Superannuation Funds owning assets but those assets are not in the name of the trustee of the superannuation fund.  The ATO has become aware during their audit process of this issue and have given superannuation funds until 30 June 2005 to have this corrected.

If you have a superannuation fund that owns assets that are not shown in the name of the trustee of the superannuation fund, please contact Wearne & Co immediately so that this can be attended to.

The following is a summary of some of the relevant taxation issues dealt with in the 2005 federal budget.

Personal Tax Cuts

The Government has announced tax cuts to be phased in over the next two years as follows:

Abolition of Superannuation Surcharge

The Government announced that it will abolish the superannuation surcharge from 1 July 2005. As a result, from that date the surcharge will no longer apply in respect of superannuation benefits that accrue, contributions made or termination payments received after 1 July 2005.

Increase in Medicare Levy Thresholds

From l July 2004 the Medicare levy low income threshold will increase to $15,902 for individuals and $26,834 for families. In addition, the amount of threshold for each dependant child or student will also be increased to $2,464.

The Medicare levy threshold for pensioners below age pension age will also increase to $19,252, ensuring that these pensioners do not pay the Medicare levy while they do not have an income tax liability.

Family Tax Benefit

The Government will increase the Family Tax Benefit Part A income threshold from $32,485 to $33,361 on 1 July 2005. From 1 July 2006, the threshold will be further increased to $37,500.