Foreign resident capital gains withholding (FRCGW) of 12.5% applies for all property sales of AUD$750,000 or more.
At a minimum, that is AUD$93,750 being withheld from the sale and paid to the Australian Tax Office, unless there is an approved variation.
The most common reasons why a seller may apply for a variation include:
making a capital loss
not having an income tax liability
foreclosure.
In 2023 over 60% of applications for variations were lodged late, affecting settlement. When clients are too late in applying, the conveyancer or solicitor has no choice but to withhold 12.5%.
Tips
Include the sales contracts with the variation application
Variations must be lodged online at least 28 days before property settlement to ensure processing time
The main residence exemption doesn’t apply to foreign residents
Australian residents for tax purposes must have a clearance certificate before settlement to prove their residency for tax purposes, so no withholding occurs.
From 1 July, the income thresholds for private health insurance rebate purposes will increase.
Income thresholds
The private health insurance rebate is income tested
This means that if your income is higher than the relevant income threshold, you may not be eligible to receive a rebate
Your rebate entitlement depends on your family status on 30 June
Different thresholds apply depending on whether you have a single income or a family income.
When you lodge your tax return, we calculate your income for surcharge purposes and determine your rebate entitlement.
Your entitlement is also based on the age of the oldest person covered by the policy.
The income thresholds used to calculate the Medicare levy surcharge and private health insurance rebate have increased from 1 July 2024.
2024–25 Income thresholds
Family status
Base tier
Tier 1
Tier 2
Tier 3
Single
$97,000 or less
$97,001 – $113,000
$113,001 – $151,000
$151,001 or more
Family
$194,000 or less
$194,001 – $226,000
$226,001 – $302,000
$302,001 or more
Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child
Family status on 30 June
Your family status on the last day of the income year (30 June) determines whether the single or family income thresholds apply to you. The information below provides guidance to when single or family thresholds apply.
Depending on your situation, your income may be tested against either the Single income thresholds or Family income thresholds.
Single income thresholds
If you are single on the last day of the income year and have no dependents, you are income tested against the single income thresholds.
This applies even if you had a spouse for the majority of the year, as long as you were single on the last day (30 June) of the income year.
If you separated from your spouse during the financial year and remain single with no dependents on 30 June, your rebate entitlement is calculated only on your own income.
Your entitlement to a private health insurance rebate is based on your income for surcharge purposes.
If you were single on 30 June, but had dependent children, you are considered a family and will be income tested using the family income thresholds.
Family income thresholds
If you had a spouse on the last day of the income year (30 June), your income will be tested against the family income thresholds. Your entitlement to a private health insurance rebate is assessed on your and your spouse’s combined income for surcharge purposes.
The family income thresholds also apply if:
you are a single parent with one or more dependents
you don’t have a spouse on the last day of the income year and you either maintain a dependent child or children or contribute in a substantial way to the maintenance of a dependent child.
If your spouse died in the income year and you were single on 30 June with no dependants, your and your spouse’s income is used for surcharge purposes to determine your entitlement under the family income thresholds.
If you have two or more children, the family income threshold is increased by $1,500 for every Medicare levy surcharge dependent child after the first child.
Note: Dependent children’s income is not included when calculating family income. Medicare levy surcharge dependent child is different to dependent persons who may be covered by your private health insurance policy.
A broader range of taxpayers are set to receive tax cuts from 1 July, with Labor’s tax cuts bill passing through the Senate.
The bill to implement Labor’s revised tax cuts has now passed both houses of parliament.
Prime Minister Anthony Albanese announced in late January that Labor would make amendments to the stage three tax cuts to deliver broader and better outcomes to all taxpayers.
The revised measures involved cutting the lowest rate of income tax from 19 per cent to 16 per cent and the second lowest from 32.5 per cent to 30 per cent, increasing the Medicare levy threshold and the top 45 per cent tax threshold.
Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 passed through the Senate without amendment.
The Senate also passed the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024, which increases the Medicare levy and Medicare levy surcharge low-income threshold amounts for individuals, families and individual taxpayers and families eligible for the seniors and pensioners tax offset.
If you use money or assets from your company or trust for private purposes and don’t account for the transactions correctly, there can be tax consequences.
That’s why it’s important to get it right.
Business money and assets you take or use for private purposes can include:
salary and wages
director fees
fringe benefits, such as an employee using the company car
dividends paid by the company to you as a shareholder (that is, distribution of the company’s profits)
trust distributions if your business operates under a trust and pays you as a beneficiary
loans from a trust or company
ad hoc drawings or takings
allowances or reimbursements of expenses you receive from a trust or company.
If you’ve used business money or assets from a company or trust for private purposes, follow these steps to avoid unintended tax consequences:
Keep accurate records of the transactions, and
Account for the transactions in the company or trust tax return and your individual tax return, if applicable.
Remember, there are different reporting and record-keeping requirements for each type of transaction, so make sure you know how to keep accurate records to suit your circumstances.
You can also practise good record-keeping habits by regularly cross-checking your records against the original documents so you can fix mistakes earlier and monitor your business’s cash flow.
Taxpayers are ultimately responsible for keeping business records and what you claim in your tax returns, however Registered Tax or BAS Agents like Allan Hall on the Northern Beaches can help and advise on your tax.
Clothing, jewellery, gaming products, flights and crypto assets are just some of the things you might have to account for in your tax return as part of your business income.
If you received these or any other non-cash benefits instead of money for your goods or services, or as a tip or gift – you must record them as income at their market value.
This means you record the cash price that you would normally have to pay for those goods or services.
You may be able to reduce the assessable amount of a non-cash benefit you’ve received, by the amount you would have been able to claim as a deduction if you had purchased the item to be used in carrying on your business.
It’s important to report your regular forms of income
Such as:
cash and digital payments
vouchers or coupons
business investments
online and overseas business activities
services you provide using your personal effort and skills (personal services income)
the sharing economy, such as ride-sourcing
assessable government grants and payments
the value of trading stock you take for your own use
payments from insurance claims.
There are some payments that aren’t assessable income, so you don’t need to include them on your return, such as:
non-assessable non-exempt (NANE) government grants
bona fide gifts or inheritance
GST you’ve collected
money you’ve borrowed or contributed as the business owner.
Always keep accurate and complete records to prove the income you report and the expenses you claim as deductions.
Remember, registered tax professionals like Allan Hall in Brookvale can help and advise on your tax.
Taxable payments annual report (TPAR) lodgements due 28 August 2023
The ATO is reminding businesses required to lodge a Taxable payments annual report (TPAR) to do so by 28 August 2023.
This deadline is crucial for businesses falling under the TPRS regime to fulfil their reporting obligations.
Entities operating within the construction, cleaning, courier, road freight, information technology, security, as well as investigation or surveillance sectors, and that have engaged contractors in these domains, are mandated to comply with TPAR requirements.
Tony Goding, ATO Assistant Commissioner, stresses the TPRS’s pivotal role in levelling the playing field by ensuring all enterprises contribute their fair share of taxes. Not reporting payments to contractors and deliberately under-reporting income raises red flags, potentially triggering closer inspections by the ATO.
The TPRS serves as an instrument in the ATO’s arsenal, helping in the discovery of unreported income. The TPAR equips the ATO with an array of data points to uncover discrepancies, such as unreported earnings, non-submission of tax returns or activity statements, unjustified GST claims or misuse of Australian Business Numbers.
Recent ATO actions serve as a reminder of compliance expectations. Over 16,000 penalties were issued to businesses failing to lodge TPARs for prior years. With an average fine of around $1,110, these underscore the growing difficulty of evading ATO scrutiny, especially when utilising cash transactions to evade tax.
A recent example exemplifies the efficacy of the TPAR data. An investigation into a cleaning company unveiled a mismatch between declared income and actual earnings. Despite reporting $6,892 in income, the cleaning service provider was found to have received over $80,000 from multiple companies. An audit confirmed the non-submission of activity statements and concealed payments. This resulted in adjustments to the tax return and the imposition of penalties.
Be aware of any tax obligations if your side hustle is considered a business earning business income
Work out whether you’re in business and when your business starts for tax purposes.
What is a business?
Generally, a business involves a set of continuous and repeated activities you do for the purpose of making a profit. Profit can be in money, but it can also be made through other means, like being paid with goods or services (such as a barter deal).
A one-off transaction can also be a business if it is either:
intended to be repeated
the first step in starting a business.
You can run one business or multiple businesses at the same time.
When you’re not in business
Not everything you do to make money is a business. Your activities are not a business when they are:
a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated)
done as an employee
a hobby or recreation from which you don’t seek to profit
a simple investment, such as passively holding shares on which you receive dividends or a rental property you let through an agent.
Even if you’re not in business, you may still need to declare certain payments you receive as assessable income in your income tax return.
When a company is not in business
Most companies are in business if they intend to and are likely to make a profit, however some companies are not in business. For example, a company is not in business if it:
holds assets solely for its shareholders’ private use, and its running costs are funded solely by its shareholders
provides social and recreational activities for members without seeking to make a profit.
Steps to work out if you are in business
Identify all relevant, related activities
Are the activities a business?
When does your business start?
Knowing when will affect the registrations you must have and when you need to apply for them. It may also affect how tax laws apply to your activity, the assets you use, and the tax concessions or deductions available to you.
Have your activities changed?
If your activity changes in a significant way you must reassess whether or not you are in business.
Set a good example for your children with just a few simple changes
As a parent, you try to ensure your children have the skills to make smart financial decisions. But did you know that you could be sending them negative money messages without meaning to?
Here are some useful ways you could teach your children healthy money habits.
Revealing the magic behind digital money
Your children have likely seen you pay for hundreds of transactions without glimpsing cash changing hands. For small children, it can seem like money problems are solved with magic – just wave or tap a plastic card. This makes it important to discuss the value of money with them. A good way to start is to explain how your earnings get deposited into your bank account and how you use this account to pay bills. For older children, consider showing them how taxes are deducted from your salary.
Spending wisely
Frequently buying things on impulse could send the message that it’s fine to spend without planning. Sticking to a budget is key to avoiding impulse buying. To set an effective budget, consider working with a professional financial adviser. Your adviser may help develop a budget that factors in your income, expenses and financial obligations.
Teaching them independence
It’s convenient to do everything for your children. But by giving them a chance to have their own money and decide how and where to spend it, they could learn powerful lessons about budgeting. For adult children, always offering them financial help can create a cycle of dependency. Letting them make their own money decisions could help them develop financial responsibility.
Including them in budgeting
Many parents keep household financial planning and budgeting to themselves. While you don’t have to fully involve your children in managing your family’s finances, giving them a role to play, such as getting them to do grocery shopping using a set budget, can teach them lessons about money. If your children are old enough to earn some income, why not get them to pitch in to help achieve a family goal?
Using your influence positively
You can strongly influence your children in relation to money, so it’s important to pass on smart money management skills. If you don’t know where to start, consider reaching out to your financial adviser to help you stay on top of your finances through proper planning and budgeting.
The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor.
This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.
Mark O’Connell, Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. Consultum Financial Advisers Pty Ltd is a member of the Insignia Financial Group of companies.
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.
