Important Year-End Super Considerations for 2023-24

Posted on 12 June 2024 | by Allan Hall

ACT NOW to ensure your super is in order before 30 June 2024

These rules commenced on 1 July 2018 so we are now into the fifth year of ‘catch up’ contributions whereby a person with a super balance of less than $500,000 as at 30 June 2023 is able to make a personal concessional contribution in 2023/24 equal to the unused amount of the concessional contribution limits applicable from 2018/19 to 2022/23. Please note that 2023/24 is the last year in which any unused contributions from 2018/19 can be claimed as they drop off after five years.

Financial Year	Applicable limit
2018/19	$25,000
2019/20	$25,000
2020/21	$25,000
2021/22	$27,500
2022/23	$27,500

For example, Sam had employer contributions of $15,000 for each of 2018/19, 2019/20 and 2020/21 and $18,500 for each of 2021/22 and 2022/23. His total superannuation balance at 30 June 2023 was $380,000. If Sam has higher than normal taxable income in 2023/24, due to say, a capital gain then, in addition to his current year 2023/24 contributions he can contribute an extra $48,000 as a personal concessional contribution before 30 June 2024 to reduce his taxable income. The extra $48,000 comprises $30,000 in unused contributions from 2018/19 to 2020/21 and $18,000 in unused contributions from 2021/22 and 2022/23.

Please contact us if you want to check your unused catch up contribution amount.

Non Concessional Contributions

It is possible to ‘bring forward’ up to 3 years of contributions in 2023/24 if you were under age 75 on 1 July 2023 and your total superannuation balance at 30 June 2023 was within the thresholds noted below:

Total Super Balance as at 30 June 2023	Age <75 on 1 July 2023
Your Total Super Balance is the combined total of all balances in super funds of which you are a member
Less than $1,680,000	$330,000
Greater than $1,680,000 but less than $1,790,000	$220,000
Greater than $1,790,000 but less than $1,900,000	$110,000
Greater than $1,900,000	$0

Please note for planning purposes that the bring forward thresholds will change on 1 July 2024 with effect for 2024/25. These changes are noted in the following table below:

Total Super Balance as at 30 June 2024	Age <75 on 1 July 2024
Less than $1,660,000	$360,000
Greater than $1,660,000 but less than $1,780,000	$240,000
Greater than $1,780,000 but less than $1,900,000	$120,000
Greater than $1,900,000	$0

Strategy Tip

If wanting to maximise super contributions, consider contributing only $110,000 in 2023/24 to enable a contribution of $360,000 in 2024/25, provided all eligibility criteria are met.
If wanting to equalise super balances between spouses, consider a withdrawal from the high balance and a contribution into the low balance. This is useful for optimising the member balances to take full advantage of the pension cap and various eligibility provisions associated with a person’s total superannuation balance. It also has the effect of lowering the ‘taxable’ portion of that member’s benefit which reduces any future tax payable on death benefits received by the beneficiaries. Please talk to us if you are keen to learn more about this.

If you are aged 67 to 74 years, you must satisfy a work test in order to be eligible to claim a tax deduction for your personal concessional contributions.

Work Test

To satisfy the work test, you must have worked at least 40 hours in a consecutive 30-day period in the 2023/24 financial year.

If you are aged 75 or over, your super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) on your behalf.

Minimum Pension 2023/24

If you are in pension phase, please check to ensure you have withdrawn your minimum pension for this financial year before 30 June 2024. Where these requirements have not been met your fund will be subject to 15% tax on its pension asset investment earnings, rather than being tax-free.

For our SMSF clients, the amount would have been notified to you in the completion letter in the FY23 financials package. Please contact us if you are unsure of your minimum pension payment for 2023/24.

ALLAN HALL SUPERANNUATION

compliance, contributions, EOFY, pension payments, self-managed superannuation SMSF, strategy, superannuation

Steps to process and finalise payroll

Posted on 5 June 2024 | by Allan Hall

With mere weeks remaining in FY24, now is a great time to think about your EOFY preparation.

A good place to start? Preparing your payroll to make finalisation as easy as possible come July.

Completing your EOFY is better off in Xero. To help Xero Users get through from start to finish, we’ve included some handy steps to guide you through the process.

1. Check your employees’ records

As part of Single Touch Payroll (STP), there are key compliance requirements that affect the way employees are set up in Xero.

In Xero Payroll, all active and terminated employees (who will be included in the STP finalisation for the financial year) will need an employment type, income type and tax scale defined in their records.

Review your employees’ records to ensure they’re STP compliant. You can run the Employee Contact Details report to check for accuracy, keeping a close eye on things like date of birth, email address and postcode.

2. Review pay items and their settings

Under STP, the ATO requires the correct reporting categories to be used for your earnings, deduction and paid leave pay items. Allowances will also need to be assigned an appropriate reporting type.

Because these categories tell the ATO how to treat each type of payment you’re reporting through STP, it’s important to double-check that the earnings, deduction, paid leave and allowance pay items used in the current financial year are correctly assigned.

3. Post and file any pay runs for the 2023/2024 financial year

Any pay runs with a payment date in this financial year will need to be posted and filed before you complete your employees’ STP finalisation. If these pay runs are to be reported in FY24, remember that you’ll need to make sure the payment date is on or before 30 June 2024.

Be sure to check that all of your pay runs have been filed to the ATO successfully using STP.

4. Process any outstanding superannuation payments

To claim a deduction on superannuation accruals submitted via auto super for the current financial year, super batches should be approved no later than 2:00pm AEST, 18 June 2024. We recommend marking this date in your calendar so you don’t forget.

If you’re not registered for auto super, it’s not too late. Alternatively, the payments can be made manually outside of Xero.

5. Reconcile your payroll accounts

After processing all pay runs for the financial year, it’s important to forensically check the accuracy of your reporting. One way to do this easily is by generating the Payroll Activity Summary report and comparing it with the General Ledger report.

You can specify a custom date range in both reports to help find any discrepancies. If you come across any discrepancies in your payroll accounts, you can use the remove and redo feature to edit the transaction and allocate it to the correct accounts.

Troubleshooting tips

If you have multiple payroll expense accounts for earnings or superannuation, be sure to add up the totals for each account when comparing them to the Payroll Activity Summary report
Use the Account Transactions report to identify any transactions that may have been incorrectly reconciled against your Expense Accounts
Check for any manual journals that may have impacted your totals by running the Journal report and clicking on Manual Journals
If you’re unable to locate a discrepancy, try running your reports using a smaller date range to narrow down the issue
If you started using Xero midway through the financial year, double-check that the employee opening balances match your organisation’s conversion balances to avoid any discrepancies.

6. Review the Payroll Activity Summary report against the Payment Summary Details report

It can be easy to get the Payroll Activity Summary report and the Payment Summary Details report confused, so remember you’ll still need to compare this information if you’re completing an STP finalisation. You can run these two reports for a custom date range and make sure the information balances.

It’s important to note that the Payroll Activity Summary report shows gross earnings, whereas the Payment Summary Details report shows taxable earnings.

If there are salary sacrifice or pre-tax deductions that have been processed during the financial year, they will need to be deducted from the gross wages that show in the Payroll Activity Summary report. The total should then match the Payment Summary Details report (note that this will only show truncated values – the cents will not show in this report).

7. Remember to identify and amend any mistakes

Any errors made throughout the financial year can be corrected using an unscheduled pay run. Simply create the pay run for the required period and enter the adjustment amounts. You can even enter negative values, if needed.

You will need to check that the payment date of the unscheduled pay run falls within the correct financial year (for example, on or before 30 June 2024) to ensure it’s reported correctly.

8. Process STP finalisation

Last but not least, it’s time to process your STP finalisation. Xero’s product team has been working to make this process simpler, and easier to understand. Xero users might notice some tweaks this year, such as an improved layout for the STP YTD Summary and clearer totals columns.

You’ll need to file at least one pay run before you’re able to complete the STP finalisation process. Your first submission will include all year-to-date (YTD) payroll information that has been entered into Xero.

Keep these tips in mind to help you along the way:

Information included in the STP finalisation will pre-populate based on the information processed in Payroll – you’ll be able to see gross totals, taxes and super — you can also view and easily edit RFBA and RFBA-E (reportable fringe benefit amounts)
If you need to report any leave paid out on termination as ‘Lump Sum A’ or ‘Lump Sum B,’ you can do this by processing an unscheduled pay run
If you have terminated any employees on or before 30 June 2024 who need fringe benefit tax (FBT) amounts reported, you can use the toggle Show terminated employees for RFBA at the bottom of the STP finalisation page
Any Employment Termination Payments (ETP) that have been processed can be shown by clicking View Report to see the STP YTD Summary
If you started using Xero part way through the financial year and need to report employee opening balances through STP
Based on the ATO’s requirements, gross payments are reported as the pre-sacrificed amount. This means salary sacrificed amounts, such as pre-tax deductions and reportable employer super contributions (RESC), are included in gross payments.

Looking ahead to FY25

The Government has made changes to individual income tax and superannuation guarantee rates, as well as thresholds such as STSL indexation (study and training loan indexation). These come into effect 1 July 2024. Pay runs with a payment date of 1 July 2024 or later will have these new rates automatically applied.

The super guarantee (SG) rate is increasing from 11 to 11.5 per cent on 1 July 2024. Any employees with a superannuation line set up with a rate type of statutory rate will be automatically updated. If their rate type has been set up as Percentage of Earnings, you will need to ensure you edit this percentage manually. These changes to income tax rates and thresholds will also be automatically applied in pay runs with a payment date of 1 July 2024.

If your organisation is impacted by changes to the minimum wage, you will need to update your employees’ pay templates. To find out if these changes could affect you, please refer to the Fair Work Ombudsman.

Looking for EOFY payroll help? Call Allan Hall’s Xero Certified Advisors for everything you need to know (and do) to round out FY24, and set up strong for the new financial year ahead.

CONTACT ALLAN HALL BOOKKEEPING

bookkeeping, compliance, employer, EOFY, payroll, single touch payroll STP, small business, super guarantee SG, superannuation, wages, xero

Complete these checks to help meet your super obligations

Posted on 30 May 2024 | by Allan Hall

Simple checks for super success

Meeting your super obligations as an employer is important, and there’s a lot you need to think about.

To help streamline the process, complete these simple checks for super success:

Check if your workers are eligible to receive super guarantee (SG).
It’s important to classify your workers correctly. You’ll need to work out which of your workers meet the eligibility requirements to receive SG.
Check your eligible workers’ super fund details are correct.
Make sure you pay super contributions to the correct fund, and that you provide each fund with the relevant worker’s tax file number. The correct fund may be the fund each of your workers chose, their stapled super fund or your default fund.
Check you’re paying the right amount of super.
The SG rate is currently 11%; however, from 1 July 2024 it will increase to 11.5%.
Check you’re paying the contributions on time.
You need to pay super contributions at least 4 times a year by the quarterly due dates. The next payment is due on 28 July. If you use a super clearing house, allow enough time for the payment to reach each of your workers’ super fund accounts.
Check you know what to do if you miss or make a late payment.
If you miss a payment, you’ll need to lodge a super guarantee charge (SGC) statement and pay the SGC to us by the due date to avoid penalties.

For more information to help you meet your super obligations, see the ATO’s checklist. This covers topics such as paying and reporting electronically, record keeping and more.

CONTACT ALLAN HALL SUPERANNUATION

compliance, contributions, employer, EOFY, payroll, super guarantee SG, superannuation

Trust distribution reminder

Posted on 27 June 2023 | by Allan Hall

All trustees need to consider their trust distributions for the 30th June 2023

As we approach the end of the financial year all trustees need to be considering their trust distributions for the 30th June 2023.

Trustee minutes document the trustee’s decision in relation to the distribution of income for the financial year, and many Trust Deeds require the decision to be made prior to the end of the financial year.

This is a reminder to make sure you make your determinations before the end of the 30th June, and we provide a download to a pro forma document (below) to help you record the decisions.

This is for recordkeeping purposes, noting the final distribution amounts (based on your percentage (%) distributions) will be determined, once the final 30 June 2023 accounts and tax returns are complete. It is a record of your decision.

If you have any questions, please contact us on 02 9981 2300.

DOWNLOAD RESOLUTION RECORD FORM (Word doc)

ATO priorities this tax time

Posted on 30 May 2022 | by Allan Hall

Four priorities for the ATO this tax time

The Australian Taxation Office (ATO) has announced four key focus areas for Tax Time 2022.

The ATO will be focusing on:

record-keeping
work-related expenses
rental property income and deductions, and
capital gains from crypto assets, property and shares.

These ATO’s priority areas ensure that there is an appropriate level of scrutiny on the correct reporting of deductions and income.

Taxpayers can take steps to lodge right the first time

Assistant Commissioner Tim Loh explained that the ATO is targeting problem areas where they see people making mistakes.

“It’s important you rethink your claims and ensure you can satisfy the 3 golden rules,” Mr Loh said.

You must have spent the money yourself and weren’t reimbursed
If the expense is for a mix of income-producing and private use, you can only claim the portion that relates to producing income
You must have a record to prove it.

Record-keeping

With some weeks left until 30 June, start organising the income and deductions records you’ve kept throughout the year. This will guarantee a smoother tax time and ensure you claim the deductions you are entitled to.

For anyone who deliberately tries to increase their refund, falsify records or cannot substantiate their claims, the ATO will be taking firm action to deal with these taxpayers who are gaining an unfair advantage over the rest of the Australian community who are doing the right thing.

Lodge right, no worries

We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers. For most people, this information will be automatically pre-filled in their tax return by the end of July. This will make the tax return process smoother, save you time, and get your tax return right. If you want to lodge earlier, you must take extra time to manually add all your income.

Available pre-fill information and readiness to lodge can be easily checked in the ATO app this tax time.

NB: While the ATO receives and matches a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, they don’t pre-fill all of that information for you.

Work-related expenses

Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” said Mr Loh.

To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances. You can choose from the shortcut (all-inclusive), fixed rate and actual cost methods, so long as you meet the eligibility and record-keeping requirements.

Each individual’s work-related expenses are unique to their circumstances. If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.

You can easily keep track of your expenses with myDeductions tool in the ATO app. Just take a photo of the receipt in the app, record the details of the expense and at tax time, simply upload the information directly to your return in myTax or email it to your registered tax agent.

Rental income and deductions

If you are a rental property owner, make sure you include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain.

“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance. If we do notice a discrepancy it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return. We can also ask for supporting documentation for any claim that you make after your notice of assessment issues,” Mr Loh said.

Capital gains from crypto assets, property and shares

If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.

Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it.

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can’t offset your crypto losses against your salary and wages,” Mr Loh said.

CONTACT ALLAN HALL

Tag: EOFY