kaw accounting logo
M. 0434 194 694
E.

Firm Blog

Transition to retirement

Posted on November 24, 2020 by KAW Accounting

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.  You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.  Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer’s compulsory contributions as well as any voluntary contributions you may be making.  Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.  Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes. TTR can help ease your mind as you transition into retirement but it […]

Keep Reading...


Tax contributions on your super

Posted on by KAW Accounting

How much tax you pay on your super contributions and withdrawals depends on a variety of factors. The process takes into account your total super amount, your age, and the type of contribution or withdrawal you make.  How are super contributions taxed? The money that you contribute to your super account through your employer is taxed at 15%, and this is the same with salary sacrificed contributions. But there are exceptions to this: If you earn $37,000 or less, then the tax will be paid back to the super account due to the low-income super tax offset (LISTO) If your income and super contributions add up to more than $250,000, then you are also required to pay an additional 15% Division 293 tax.  Any after-tax super contributions (non-concessional contributions) are not taxed further. How are super withdrawals taxed? How much tax you pay on withdrawals depends on whether you withdraw as a super income stream or a lump sum. Since this can be a convoluted process, it may be beneficial to approach an advisor and clarify any questions you may have before you withdraw money.  What about beneficiaries? If someone dies, then their super money will go to their beneficiary. […]

Keep Reading...


Superfund categories and what they mean

Posted on November 18, 2020 by KAW Accounting

There are four different categories of super funds. These have different primary features and are more applicable to certain people than they are to others.  Retail super funds Anyone can join retail funds. They are mostly run by banks and investment companies: Allow for a wide range of investment options. Financial advisors may recommend this type of fund as they receive commissions or might get paid fees for them. Although they usually range from medium to high cost, there may be low-cost alternatives. The companies that own these funds will aim to keep some of the profit they yield Industry super funds Anyone can join bigger industry funds, but smaller ones may only be open to people in certain industries i.e. health. Most are accumulation funds but some older ones may have defined benefit members Range from low to medium cost Not-for-profit, so all profits are put back into the fund Public sector super funds Only available for government employees Employers contribute more than the 9.5% minimum Modest range of investment choices Newer members are usually in an accumulation fund, but many of the long-term members have defined benefits Low fees Profits are put back into the fund Corporate super […]

Keep Reading...


Small business CGT concessions

Posted on by KAW Accounting

Businesses receive four different types of concessions on top of CGT exemptions and rollovers which are available to everyone. These allow businesses to disregard or defer some or all of the capital gains from an active asset which is used in the business. The four additional concessions include: 15-year exemption: If the business has owned an asset for 15 consecutive years and you are 55 years or over and are retiring or permanently incapacitated, then the capital gain won’t be assessable when you sell the asset. 50% active asset reduction: Being a small business, ATO permits reduction of the capital gain on an active asset by 50%. This is in addition to the 50% CGT discount if ownership of the asset extends over a year.  Retirement exemption: Capital gains incurred from the sale of active assets are exempt up to a lifetime limit of $500,000. However, you must pay the exempt amount into an appropriate super fund or retirement savings account if you are under 55 years of age. Rollover: You may defer all or part of a capital gain for two years upon selling an active asset. Your deferral period can be longer than two years if you acquire […]

Keep Reading...


What is an annuity?

Posted on November 11, 2020 by KAW Accounting

An annuity provides guaranteed income for a number of years, or for the rest of your life. It is also known as a lifetime or fixed-term pension.  You can buy an annuity from a super fund or life insurance company. You are able to choose whether you want the payments to last for a fixed number of years, your life expectancy, or the rest of your life.  In order to buy an annuity through your super fund, you must be in the ‘preservation age’ which is between 55 and 60. Additionally. You are required to meet a condition of release e.g. permanently retiring.  You are also able to buy an annuity in joint names using savings. Through this method, you can split income for tax purposes. If either you or your partner dies, then the survivor has ownership and access to the funds. On the other hand, buying an annuity using a super lump sum can only be in the name of the owner.   When you buy the annuity, you decide the payment amount you will receive. This can increase each year by a fixed percentage or indexed with inflation. Further, you can also choose if you are paid monthly, […]

Keep Reading...


Claiming your tax deductions

Posted on by KAW Accounting

There are different types of deductions which individuals can claim to reduce their taxable income.  Work-related expenses In order to claim work-related tax deductions, the expenses must have to meet three criteria. Firstly, all the expenses have to be paid by the individual, without being reimbursed by the employer. Secondly, they must be directly related to earning your income. Finally, there must be a record of the expenses (i.e. a receipt).  There are various different expenses which can fall under this category.  Vehicle and travel expenses: Commuting between different locations but not usual travel between home and work Clothing, laundry and dry-cleaning expenses: Cost of work uniform which is distinct and unique (i.e. has a specific logo) Self-education expenses: Any courses or study associated with employees current role, such as textbooks Tools and other equipment: If you purchase tools or equipment, then a deduction for some or all the cost could be claimed Investment expenses The cost of earning interest, dividends or other investment income can also be claimed. This can include: Interest charged on money borrowed to invest Investment property ex[enses Investing magazines and subscriptions Money you paid for investment advice Home office expenses A portion of the costs […]

Keep Reading...


Super scams: What to look out for

Posted on November 5, 2020 by KAW Accounting

The market for super funds is extremely competitive.Scammers take advantage of this by promising unrealistic benefits to acquire personal or account details. They are able to use this information to steal your identity or transfer your super to an account they can access.  Scammers can approach you in various ways. You could receive a phone call, email or be contacted online.  This is what you should be weary of:  Advertisements promoting early access to super Offers to ‘take control’ of your super Offers to invest your super in property Offers of quick and easy ways to access or ‘unlock’ super The best way to spot a scam is to know what the rules about your super fund are. Knowing when you can legally access your super will protect you from false promises. Additionally, the ASIC website lets you check if someone is licensed, if they are not licensed, more likely than not, they should not be trusted.  If you believe that you’re being targeted by a scam, then rather than simply ignoring approaches and not engaging, you should report the scam. You can do this by calling the ATO or completing the online complaint form on the ASIC website. 

Keep Reading...


How are investments taxed?

Posted on by KAW Accounting

Investment income needs to be included when conducting tax returns. This includes any income acquired through interest, dividends, rent, managed funds distributions and capital gains. The income yielded from investments is taxed at a marginal tax rate.  Individuals are able to claim deductions for the cost of buying, managing and selling an investment. However, the Australian Tax Office (ATO) provides rules about what an or cannot be claimed as a tax deduction.  The MoneySmart website has a simple and easy-to-use tax calculator that may give an indication as to what the annual tax will be. However, it is recommended that if an individual has a diverse portfolio that yields income from multiple sources, then should consult an accountant or advisor that can lead them through the process as it can become quite complex.  In order to minimise taxation on investment income, individuals should consider tax-effective investments which provide concessional taxation. These include superannuation and insurance bonds. 

Keep Reading...


PAYG instalments for business and investment income

Posted on October 29, 2020 by KAW Accounting

Pay as you go (PAYG) instalments are payments you can make throughout the year to avoid accumulating a large tax bill to pay at the end of the year. Making these payments is a great way to budget for income tax and keep a healthy cash flow.  To qualify for PAYG instalments, you must earn over a threshold amount from your business or investment income (also known as instalment income). The amount that you pay in PAYG instalments throughout the year will be offset against any owed tax for the entire year. But it is important to lodge your activity statements and pay all PAYG instalments before lodgment of tax returns if you want these to be included in your tax assessment.  There are two options for calculating and paying PAYG instalments: Instalment Amount: Simplest option which involves paying instalment amounts the ATO calculates based on relevant information.  Instalment Rate: You calculate the instalment amount using instalment rate provided by the ATO and your instalment income. Therefore, dependent on income as you earn it and not predetermined. 

Keep Reading...


First home super saver scheme

Posted on by KAW Accounting

The first home super saver (FHSS) allows individuals to save up for their first home in their super fund. The money saved in the super fund is taxed concessionally and therefore, individuals are able to save faster.  Individuals can make voluntary concessional (before-tax) or voluntary non-concessional (after-tax) contributions into their super fund. They can then apply for those contributions to be released. This also releases any earnings associated with those contributions.  This scheme can only be used by a first home buyer if both of the following apply:  They are living in the premises they are buying/intend to buy (when practicable) Intend to live in the property for at least 6 months within the first 12 months (when practicable to move in)  The eligibility criteria to participate in FHSS is as follows:  Make super contributions from any age BUT only request a determination or release of amounts after 18 years of age Never have owned a property in Australia (includes investment property, vacant land, commercial property, lease of land in Australia, company title interest in land in Australia) other than if there has been financial hardship as deemed by the Commissioner of Taxation. No previous request to the Commissioner to […]

Keep Reading...


kaw accounting associations kaw accounting associations

Free consultation

Finding an accountant that is the right fit can be difficult. We offer a one-hour free initial consultation to all new clients and interested parties seeking financial advice or wishing to find out more about the services we provide. This is your chance to find out what we can do for you before making any long term commitment. We look forward to assisting you with any financial, taxation or compliance needs.