Print Newsletter

Newsletter November 2005

The government will now allow members to split both their personal and employer superannuation contributions with their spouse.  The splitting of superannuation contributions will enable couples to maximise superannuation benefits by:

• utilising two Reasonable Benefit Limits (RBL);
• utilising two low rate thresholds for the post June 1983 component;
• income splitting in retirement through superannuation held in both names.

The splitting of superannuation contributions can also be used in conjunction with existing superannuation strategies, such as spouse contributions, salary sacrifice and government co-contributions. The splitting of superannuation contributions is another strategy to boost the retirement savings of a spouse and to broaden the accessibility of superannuation to those who are outside the paid workforce.

It is not compulsory for a superannuation fund to allow splitting of contributions. This means that individual funds will determine whether they will offer this option for members.

Amounts that cannot be split include:

• existing accumulated superannuation savings including rollover amounts;
• employer ETPs;
• CGT exempt amounts;
• invalidity components;
• concessional components.

The Australian Taxation Office has released guidance to its staff on when to administer superannuation choice penalties on employers who fail to comply with choice of superannuation fund requirements.

The ATO will adopt a transitional approach to the first 12 months of the choice of super fund regime.  During this period the ATO will focus on education and will reduce penalties to nil until 30 June 2006, except where employees intentionally disregard their super choice obligations.

From 1 July 2006, the ATO will cease the automatic waiver of penalties. The ATO will instead use the following table which outlines the level of reduction and the total shortfall applied.

A recent court case has determined that a taxpayer is entitled to claim an income tax deduction for expenses incurred in sponsoring events.

It was decided that if a taxpayer intends to provide sponsorship in the belief that the exposure from that sponsorship will benefit their business in the form of advertising and will generate future income, then a deduction will be allowed under section 8-1 of the Income Tax Assessment Act 1997.

Land tax is a tax levied on the owners of land in NSW as at midnight on 31 December each year.  In general, your principal place of residence or land used for primary production is exempt from land tax.  You may be liable for land tax if you own or part own vacant, a holiday home, investment properties, company titled units, residential, commercial or industrial units.

For land held as at 31 December 2005 that will be subject to land tax there is a $330,000 threshold. The land tax rate will be 1.7% on the combined value of all land excluding exempt land as above that is in excess of $330,000 plus $100. There is no threshold for non-concessional companies and special trusts which are taxed at a flat 1.7% on the total of all taxable land owned.

The Queensland government has proposed that, from 1 July 2006, it will introduce a luxury property tax on the purchase of property in Queensland.  It is has been reported that for the first time a state government has tried to introduce what is essentially a tax on interstate migration.

The transfer duty is payable on properties worth more than $700,000.00.