Tag: compliance

empty property

Victoria Vacant Residential Property Declarations due Jan 2025

Posted on | by Allan Hall

Important: Victoria Vacant Residential Property Declarations Due by 15 January 2025

The Victorian State Revenue Office (SRO) requires all owners of potentially vacant residential properties to submit a vacant property declaration by 15 January 2025.

Failure to comply may result in additional Vacant Residential Land Tax (VRLT) penalties, which will be charged on top of existing land tax obligations.

Key Details:

  • Vacant Residential Land Tax (VRLT): From 2025, properties with dwellings deemed vacant are subject to VRLT. From 2026 onward, vacant land without a dwelling will also be taxed.
  • Exemptions for Holiday Homes: Owners may claim an exemption if the property is used for at least four weeks per calendar year. This exemption is not automatic; owners must explicitly apply.
  • Building or Renovating: There is a two-year exemption period for properties undergoing construction or significant renovation.
  • Escalating Rates: The VRLT starts at 1% of the Capital Improved Value in the first year and increases to 2% in the second year and 3% in the third year if the property remains vacant.
  • Strict Enforcement: The SRO Victoria applies these regulations rigorously. Retroactive adjustments or penalty waivers are generally not granted.

Please note that a signed authorisation form is necessary for us to act on your behalf in dealings with SRO Victoria. Read more »

To avoid penalties and ensure compliance, please make your vacant property declaration before 15 January 2025.

If you have any questions or need further guidance, we encourage you to seek professional advice promptly.

CONTACT ALLAN HALL BUSINESS ADVISORS

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health insurance

Navigating SMSFs and Insurance

Posted on | by Allan Hall

Key Rules and Essential Considerations

If you’ve chosen to manage your own SMSF, it’s likely you’re also proactive and responsible regarding insurance.

Whether you currently hold life insurance outside super or within an existing super fund, starting an SMSF requires attention to your insurance strategy.

SMSF trustees must assess whether to obtain suitable insurance coverage for each fund member as part of developing their investment strategy.

What are the rules?

Legally, all SMSFs must prepare a documented investment strategy during setup.

This strategy—including any insurance coverage—must be regularly reviewed by the fund’s trustees to ensure it aligns with members’ evolving needs and circumstances. Compliance with this investment strategy is checked annually by a licensed SMSF auditor.

In 2015, the Federal Government’s Super System Review found that SMSF members were more likely to hold insurance outside super compared to members in other superannuation sectors. Consequently, SMSFs are not required to provide default insurance for members as many public sector funds do.

However, SMSF trustees still need to carefully consider each member’s financial situation to determine if they have adequate insurance coverage. Key considerations include:

  • Current debt levels of members
  • Whether members have dependents and, if so, how those dependents could be financially supported in the event of the member’s death or inability to work.

What types of insurance cover can SMSFs provide?

SMSFs are permitted to offer any insurance cover that aligns with one of these superannuation conditions of release:

  • Death (life insurance)
  • Permanent incapacity leading to the member’s permanent cessation of work (total and permanent disability insurance or TPD)
  • Temporary incapacity that causes the member to stop working temporarily (income protection insurance)
  • Terminal illness diagnosis (by two medical professionals) indicating likely death within two years, generally included as a feature in life insurance policies.

Note: With TPD insurance, insurers apply different definitions and features. A key distinction in TPD policies is occupation type, with two options:

  1. ‘Own occupation’ provides benefits if the member cannot work in their specific role
  2. ‘Any occupation’ offers benefits only if the member is unable to work in any gainful role they are reasonably suited for.

SMSFs cannot hold ‘own occupation’ TPD policies unless issued before 1 July 2014, as policies issued after this date must meet a condition of release to ensure proceeds are accessible before members reach preservation age. The ‘any occupation’ definition aligns with the permanent incapacity condition, so it is the permissible definition.

Each of the above conditions of release allows a fund member to access their super funds regardless of reaching preservation age.

Once you determine the insurance cover type you need, you can weigh the benefits of holding it within your SMSF, an existing super fund, or personally, outside super.

Ensure your SMSF’s insurance strategy meets legal standards and protects your members — review your coverage options and compliance obligations today.

CONTACT ALLAN HALL SUPERANNUATION

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assets

Valuing fund assets for SMSFs

Posted on | by Allan Hall

Each year you need to value your SMSF assets and provide supporting evidence to your auditor.

One of the many responsibilities SMSF trustees have every income year is valuing your fund’s assets at market value.

The market value of an asset is the amount that a willing buyer and seller would agree to in an arms-length transaction. These valuations will be used when preparing your fund’s accounts, statements and SMSF annual return (SAR).

Your asset valuations will be reviewed by your approved SMSF auditor as part of the annual audit prior to lodgement of your SAR. Your auditor will check that assets have been valued correctly, assess and document whether the basis for the valuations is appropriate given the nature of the asset. They are not responsible for valuing fund assets.

Make sure you get your valuations done before going to your auditor.

It’s your responsibility to provide objective and supportable evidence to your auditor for the valuation of the fund’s assets, including all relevant documents requested to prevent delays in auditing the fund. Failure to do so could result in a potential late lodgement of your annual return or a contravention if mistakes have been made.

Start researching now to find what type of evidence your need to support the valuation as this can take time. For some asset types the law requires valuations to be undertaken by a qualified independent valuer. Find out more by visiting SMSF valuation guidelines.

CONTACT ALLAN HALL SUPERANNUATION

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Businessman flying

Super clearing house end-of-year dates

Posted on | by Allan Hall

Please note the ATO’s annual office shutdown dates impacting the Small Business Superannuation Clearing House.

As the ATO approaches their annual office shutdown, these are the key dates to be aware of for the Small Business Superannuation Clearing House (SBSCH):

  • 5:30 pm AEDT on 10 December 2024 – all super payments with instructions received after close of business on this date will be processed from 2 January 2025
  • 28 January 2025 – super guarantee quarterly payments due.

The ATO and their contact centres will close at noon Tuesday 24 December 2024 and re-open at 8:00 am Thursday 2 January 2025, local time.

For the latest information about the SBSCH and ATO Online system maintenance schedule, please check SBSCH system status and system maintenance.

CONTACT ALLAN HALL BUSINESS ADVISORS

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Compliance cogs

Developing a Compliant and Effective SMSF Investment Strategy

Posted on | by Allan Hall

Your SMSF investment strategy  

Managing a Self-Managed Super Fund (SMSF) requires a well-structured investment strategy to ensure that retirement goals are met and the fund meets the ‘sole purpose test’.  

This test requires the fund to be maintained solely for the purpose of providing retirement benefits to members or their dependants if the member dies before retirement.   

All investment decisions need to be made in the members’ best interests and also to meet the sole purpose test. The decisions regarding how the funds are invested need to be documented in the investment strategy. 

As per Australian superannuation laws, trustees must develop, implement and regularly review the SMSF investment strategy, ensuring it aligns with the fund’s objectives and its members’ circumstances: 

  • Reflect Member Needs: Circumstances change; make sure the strategy still fits members’ retirement goals and risk profiles 
  • Adapt to Market Changes: Markets shift; adjust the strategy to reflect current economic conditions and protect fund performance 
  • Audit Readiness: Avoid potential audit issues by ensuring the strategy matches actual investments, preventing any compliance breaches 
  • Fund Future-Proofing: Use this review to plan for the next financial year, adjusting for diversification, liquidity and evolving fund goals. 

An SMSF investment strategy must consider crucial factors, including risks, diversification, liquidity and insurance coverage for members. It should address how the fund will make, hold and realise assets in a way that meets members’ retirement needs, factoring in their age, employment status and risk appetite. The strategy must be tailored to the fund’s unique circumstances and must go beyond simply restating legislative requirements. 

Trustees are free to choose their investment types, provided they comply with superannuation laws. However, placing all investments in one asset class can lead to concentration risk, especially if the asset is leveraged. To mitigate such risks, trustees should outline how the strategy addresses the lack of diversification and ensures the fund’s long-term stability. 

Regular reviews of the investment strategy are essential 

Significant events like market changes or members transitioning to pension phase should prompt a review to ensure liquidity and cash flow needs are met. Additionally, trustees must demonstrate that these reviews have taken place, with documented evidence available for auditors. 

Auditors will assess whether the SMSF has a compliant investment strategy and if it was adhered to throughout the year. In case of breaches, trustees must rectify the situation promptly to avoid penalties or disqualification. 

For expert advice on creating or reviewing an SMSF investment strategy, trustees should consult a licensed financial adviser to ensure the strategy’s effectiveness in meeting retirement goals. 

The fund’s accountant is generally not able to provide this but can assist trustees to complete a compliant template to create a suitable investment strategy for the fund. 

CONTACT ALLAN HALL SUPERANNUATION

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super

ATO Recovers Unpaid Super as part of Employer Compliance

Posted on | by Allan Hall

ATO highlights of 2023–24 year

Highlights of super guarantee (SG) annual employer compliance results for 2023–24.

The ATO’s report underscores their commitment to collecting employees’ superannuation entitlements by ensuring employers meet their SG obligations. It also highlights the significant impact of compliance activities and employer engagement in recovering unpaid superannuation for employees.

Highlights of the 2023–24 financial year are:

  • Employers are paying more than 92.4% of the SG they are required to, without ATO intervention
  • A total of $1.91 billion in superannuation guarantee charge (SGC) liabilities was collected through ATO compliance, proactive reminders and prompts, and employer voluntary disclosures of unpaid SG, for over 1.13 million employees
  • $932 million was distributed to employee funds and individuals from liabilities raised for current and prior financial years, for 797,000 employees
  • Approximately 23,600 SG cases were finalised, resulting in $659 million SGC liabilities and $300 million in Part 7 penalties being raised
  • 167,000 employers received proactive ATO actions including reminders and prompts to check their obligations, raising $240 million in SGC liabilities:
    • 100,000 reminders to employers
    • 67,000 prompts to employers
  • Employers made voluntary disclosures of unpaid super, resulting in around $539 million in SGC liabilities being raised.

It is best to take swift action on an outstanding tax debt

For those unable to pay their full obligations, payment plans can be set up through the ATO’s online services. It is important to note that taxpayers with debts under $200,000 can request these arrangements online through their tax agent or independently.

In cases of genuine financial hardship, there are additional options available, including deferred payments and interest remissions. However, address any outstanding issues proactively to avoid further penalties.

The ATO has also begun a phone campaign to recover debts

Remain cautious and never disclose personal information, such as tax file numbers or credit card details, over the phone. Always request a call reference and independently contact the ATO using a publicly listed number for verification.

If you have any concerns regarding the legitimacy of ATO communications, contact Allan Hall Business Advisors. Our team is here to help you navigate these changes and ensure that your business remains compliant with the latest tax obligations.

For more information, or if you have concerns about unpaid tax, please contact Allan Hall Business Advisors.

CONTACT ALLAN HALL BUSINESS ADVISORS

Related reading

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managing debt

Updated ATO approach to Unpaid Tax and Super obligations

Posted on | by Allan Hall

Revised approach targets businesses failing to respond to unpaid tax and Employer Superannuation obligations, plus Individuals with unpaid taxes.

Key points

  • Intensified focus on businesses that ignore unpaid tax and employer superannuation obligations
  • Stricter actions for businesses and individuals not responding to reminders, including SMS and letters
  • Prompt action urged to avoid penalties.

The ATO has emphasised that businesses and individuals failing to meet their tax obligations not only jeopardise their own financial health but also pose risks to other small businesses and employees.

As a result, the ATO is implementing a more targeted strategy aimed at businesses that refuse to respond or set up payment plans.

Key Changes to ATO Debt Collection

The ATO’s revised approach includes:

  • Director Penalty Notices (DPNs): Directors of businesses with outstanding Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, or superannuation guarantee charge (SGC) obligations who fail to engage will face quicker action, including the issuance of DPNs. Directors of multiple companies may receive DPNs that cover all related entities.
  • Garnishee Notices: The ATO may issue garnishee notices to financial institutions, employers or other businesses that hold funds for non-compliant companies or individuals.
  • Engaging External Debt Collection Agencies: From January 2024, the ATO has engaged Recoveries Corp to assist in the collection of overdue debts. Anyone who receives a call from debt collectors are urged to remain vigilant and verify the authenticity of the communication.

It is best to take swift action on an outstanding tax debt. For those unable to pay their full obligations, payment plans can be set up through the ATO’s online services. It is important to note that taxpayers with debts under $200,000 can request these arrangements online through their tax agent or independently.

In cases of genuine financial hardship, there are additional options available, including deferred payments and interest remissions. However, address any outstanding issues proactively to avoid further penalties.

The ATO has also begun a phone campaign to recover debts.

Remain cautious and never disclose personal information, such as tax file numbers or credit card details, over the phone. Always request a call reference and independently contact the ATO using a publicly listed number for verification.

If you have any concerns regarding the legitimacy of ATO communications, contact Allan Hall Business Advisors. Our team is here to help you navigate these changes and ensure that your business remains compliant with the latest tax obligations.

For more information, or if you have concerns about unpaid tax, please contact Allan Hall Business Advisors.

CONTACT ALLAN HALL BUSINESS ADVISORS

Further reading

  1. ATO changing approach to collecting unpaid tax and super »
  2. Find out what happens if you don’t pay your ATO debt »
  3. Director penalties »
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crypto

Investing in crypto – record keeping requirements

Posted on | by Allan Hall

Crypto asset records you should keep

You need to keep records of each of your crypto assets for each and every transaction (including coin swaps), to work out if you have made a capital gain or loss.

For your crypto assets, you should keep:

  1. receipts when you buy, transfer or dispose of crypto assets
  2. a record of the date of each transaction
  3. a record of what the transaction is for and who the other party is (this can just be their crypto asset address)
  4. exchange records
  5. a record of the value of the crypto asset in Australian dollars at the time of each transaction
  6. records of agent, accountant and legal costs
  7. digital wallet records and keys
  8. a record of software costs that relate to managing your tax affairs.

You need to keep details for each crypto asset as they are separate CGT assets. Keeping good records is essential for meeting your tax obligations, and saves us time when we prepare your tax return.

Tips for protecting crypto asset records

Keeping good records is important as crypto can be volatile. These record-keeping tips may help safeguard you against loss of information, which could happen at any time. Keep these records during the period you hold or transact using crypto:

  1. Export your transaction history regularly (eg every 3 months) to protect you in case of loss of access to your account
  2. Before closing an account, export your complete transaction history
  3. Find a reputable Australian crypto tax calculator – there are free and low-cost services you can use to sync your exchange and wallet accounts
  4. Use a blockchain explorer or contact the crypto exchange’s customer service if you need to recreate lost records.

How long to keep records

Keep records for 5 years from the latter of:

  1. when you prepare or obtain the records
  2. when transactions or acts are complete
  3. the year that the CGT event happens.

You should keep records long enough to cover your amendment period (usually 2 or 4 years) for an assessment that uses information from the record.

Your records must be in:

  1. English or be translatable to English
  2. in writing, however they can be electronic/digital or paper.

CONTACT ALLAN HALL BUSINESS ADVISORS

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shares

Share investing versus share trading

Posted on | by Allan Hall

Understanding Share Investing vs Share Trading: A Guide to ATO Classifications

Key tax differences between share investors and traders explained

A commonly asked question we receive at Allan Hall is how the ATO classifies a share investor vs a share trader.

Typically clients make a profit and they want to be assessed as an ‘investor’ so that the capital gain is taxed with any applicable discounts. Conversely if they incur a loss we receive questions as to whether they are classified as a ‘trader’ so that the losses can be deducted against other income they have earned.

Tax treatment

If you hold shares as an investor:

  1. your shares are assets and are subject to capital gains tax when you sell them
  2. your costs are taken into account at the time you sell your shares
  3. if you have a capital loss you can use it to offset capital gains but not to offset income from other sources
  4. income is earned from dividends and similar receipts.

If you are a share trader:

  1. your shares are treated like trading stock in the ordinary course of a business
  2. your gains are treated as ordinary income
  3. your losses and costs are treated as deductible expenses in the year they are incurred.

How to determine if you are a share trader

Determining if you are a share trader is the same as determining whether your activities are considered to be carrying on a business for tax purposes.

Under tax law, a business includes ‘any profession, trade, employment, vocation or calling, but does not include occupation as an employee’.

To determine whether you are a share trader or a business of trading shares, the following factors have been taken into account in court cases:

  1. the nature and purpose of your activities – typically the ATO wants to see a business plan that details the intention to make a profit and the ways this would be achieved
  2. the repetition, volume and regularity of your activities – the higher the volume the more likely you are carrying on a business
  3. whether your activities are organised in a business-like way – advice received, company analysis methodology, record keeping etc  
  4. the amount of capital invested

The above is a brief overview of the issues involved. Should you require further advice please contact your Allan Hall advisor.

CONTACT ALLAN HALL BUSINESS ADVISORS

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