Due date for lodgement of 2017 SMSF returns only 30 June 2018
Following the fundamental changes to the superannuation landscape that applies from 1 July 2017 (as reported in previous top tax tips and a detailed Nexia tax update on the Superannuation changes), the ATO has extended the due date for lodgement of 2017 SMSF annual returns from 15 May 2018 to 30 June 2018.
This extension of time is good news for SMSFs because now they will have more time to consider and make relevant elections to ensure they fully utilise the transitional CGT relief available for SMSFs.
This CGT relief is necessary because if the balance of a member’s superannuation account was in retirement phase and was valued at more than $1.6 million on 30 June 2017, the superannuation law required that the excess be commuted before 1 July 2017 to either accumulation phase (where earnings are taxed at 15%) or taken outside of superannuation (where earnings are taxed at the individual’s marginal tax rate). The CGT relief is accessed via CGT elections that are evidenced when the SMSF annual return is lodged – now by 30 June 2018.
The CGT election enables SMSF trustees who had part of the super fund in retirement phase at 9 November 2016 to elect for certain assets to be treated as if they were sold and reacquired for CGT purposes on 30 June 2017. The rules differ for SMSFs whose assets were segregated at 9 November 2016, compared with those funds that were using the proportionate method. The CGT election can be made on an asset by asset basis. The election crystallises the capital gain on the SMSF assets, thus resetting the cost base at 30 June 2017. However, the election will not be beneficial in all situations and therefore care should be taken when making the election.
The CGT rules are complex and require detailed consideration. Please speak to your Nexia adviser for assistance.
Are you a farmer affected by drought?
The ATO is offering assistance to primary producers affected by drought e.g. providing extra time to pay their taxes, waiving penalties or interest on late payments, offering payment plans as well as interest free periods and in cases of serious hardship, release such farmers from payment of some taxes.
If you are a farmer, please speak to us so that we can help you manage your tax obligations.
A new (calendar) year and some tax new year’s resolutions!
Some individuals make personal New Year resolutions at the start of the calendar year.
Although the tax year of businesses are normally different from the calendar year (i.e. the tax year normally runs from 1 July to 30 June the following year), businesses wanting to make “tax” new year’s resolutions should not engage in the following types of business activities or events that may attract ATO attention:
- Low transparency of tax affairs;
- Tax and economic performance that is not comparable to similar businesses;
- Tax outcomes that are not consistent with the intent of the tax law (e.g. making controversial interpretations of the law);
- Business owners living an excessive lifestyle that is not supported by declared after-tax income;
- Business owners accessing business assets for tax-free private use; and
- Poor governance and risk-management systems in the business.
We can perform a tax health check of your affairs to ensure you are on the way to making your tax year a good tax year.