You can access your super:

• when you turn 65 (even if you haven’t retired), or
• when you reach preservation age and retire, or
• under the transition to retirement rules, while continuing to work.

There are very limited circumstances where you can access your super savings early. These circumstances are mainly related to specific medical conditions or severe financial hardship.

Your preservation age is not the same as your pension age. Your preservation age is the age at which you can access your super if you are retired (or have started a transition to a retirement income stream).

Your preservation age depends on when you were born. You can use this table to work out your preservation age.

Source: https://www.ato.gov.au/Individuals/Super/Accessing-your-super/

The minimum super you must pay each quarter for each eligible employee is called the super guarantee (SG).

Currently the SG is 9.5% of their ordinary time earnings (OTE).

OTE is usually the amount your employee earns for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.

To work out what you must pay, multiply your employee’s OTE for the quarter by the SG rate (or the percentage you use if you’re paying super at a higher rate).

For employees who started in the quarter, their earnings are calculated from the day they started.

If you make super contributions under an award, check that they are enough to satisfy both the award and the SG.

Source: https://www.ato.gov.au/Business/Super-for-employers/How-much-to-pay/

More than 800,000 Australian employers are required to make super guarantee contributions on behalf of employees.

For many, this can be a complex process, with multiple superannuation funds to which they contribute – each with their own specifications for accepting the contributions data and payments.

From 1 July 2014 – Employers with 20 or more employees started making contributions using SuperStream – they have up to 12 months to make the change.

From 1 July 2015 – Small employers (with 19 or fewer employees) will start making contributions using SuperStream – they will have up to 12 months to make the change.

SuperStream improves the productivity of the superannuation system by introducing common data items, electronic communications, simpler channels and faster business processes for sending employer contributions.

Source: https://www.ato.gov.au/Super/SuperStream/In-detail/What-you-need-to-know/Employers/SuperStream–simplifying-employer-contributions/

The RBA board minutes shouldn’t really tell us anything we don’t already know given we have had the governor’s statement and a quarterly Statement on Monetary Policy (SoMP) to guide markets.

But it’s clear in the minutes, which bridge the brevity of the governor’s statement and the vastness of the SoMP, that the RBA really is gearing up for a lift in the domestic economy and the continuation of Australia’s economic transition.

The RBA highlights that Asia has slowed more than they expected and that subdued inflation leaves scope for another rate cut if necessary. But then they go on to make the point on why that cut is unlikely to be necessary.

The minutes show the RBA continues to believe that the combination of a lower Australian dollar and record low interest rates (even with the recent uptick in mortgage rates) continue to drive domestic growth.

“Members noted that recent data on economic activity in Australia suggested that the moderate economic expansion had continued. The very low level of interest rates was supporting growth in household consumption and dwelling investment,” the minutes report.

“Household consumption was forecast to contribute significantly to expenditure growth over the next couple of years, supported by low interest rates and relatively strong employment growth.”

That’s even though wages growth is still reasonably low, the RBA said.

On the exchange rate the minutes were almost exultant, for central bankers at least, about the fall in the Australian dollar.

The RBA noted that while the dollar was adjusting to the fall in commodity prices it was also driving increased demand for domestic production especially in the services sector, which had experienced strong employment growth over the past year.

Against the backdrop of Aussie dollar-induced growth and a pickup in household consumption the RBA highlighted how near we are to the end of the dampening effects on GDP from the mining slowdown.

Mining investment was expected to continue to decline over the forecast period, with the decline expected largely to have run its course by the end of 2017.

That’s good news if the rest of the economy is benefiting from a weaker Aussie dollar and a lift in the domestic sector.

Indeed the RBA reiterated that “the forecast for the Australian economy remained for growth to strengthen gradually over the next two years as the drag on GDP growth from falling mining investment waned and activity progressively shifted to non-mining sectors of the economy.”

That’s not without risks the minutes show.

But the outlook seems to have brightened and the RBA is confident enough that there will be no re-ignition of the housing boom again now that it and APRA’s attention has been focused on lending.

So, there being no inflationary issues, no barrier exists to another cut should the economy need it.

That’s a win-win for the economy and the RBA.

Article source: http://www.businessinsider.com.au/the-rba-minutes-just-made-a-great-case-for-australias-economic-recovery-continuing-2015-11

The Reserve Bank seems unlikely to cut the cash rate thanks to benefits from the lower Australian dollar flowing through to the economy.

In the minutes of its November board meeting, the central bank gave an upbeat assessment on the Australian economy but also said very weak inflation gave it scope for a rate cut if need be.

During the November 3 meeting, the RBA board decided to keep the cash rate on hold at 2.0 per cent, partly because economic conditions had firmed, aided by weaker dollar.

“Support provided to the economy following the depreciation of the exchange rate was particularly apparent in the sizeable contribution to growth from net service exports over the year to date,” the RBA said.

Looking ahead, board members believed the services sector would continue to boost growth in output.

They also noted that inflation remained below target, highlighting the lower-than-expected inflation print in the September quarter.

Consumer prices rose 0.5 per cent in the September quarter for an annual rate of 1.5 per cent, and has now been below the RBA’s two to three per cent target band for a year.

“Inflation was forecast to be consistent with the target over the next one to two years, but somewhat lower than earlier expected,” the bank said.

The RBA has since trimmed inflation forecasts, while being more positive on jobs growth and the housing market.

The minutes noted employment growth, concentrated in the household and business services sectors, had been stronger than expected this year.

“Measures of job vacancies and advertisements pointed to continued growth in employment in the months ahead,” the bank said.

The central bank acknowledged household consumption is tipped to add significantly to growth in the next two years thanks to relatively strong employment and low interest rates.

But board members warned the unemployment rate was still high and wages growth was sluggish.

“The gradual nature of the pick-up in domestic growth suggested that spare capacity would persist for some time,” the RBA said.

The meeting was held two weeks ago, before a surprise drop in the jobless rate all but guaranteed interest rates to remain steady ahead of Christmas.

Australia’s unemployment rate fell to 5.9 per cent in October, while the total number of people with jobs surged by 58,600.

The RBA said tighter regulations were helping to contain the housing market, and removing any obstacles to cutting rates if necessary.

“While the recent changes to some lending rates for housing would reduce the support to demand from low interest rates slightly, overall conditions were still accommodative,” the RBA said.

“Forward-looking indicators of housing activity generally pointed to further growth in dwelling investment, albeit at a moderating rate.”

Article source: https://au.finance.yahoo.com/news/rba-confidence-economy-grows-015822505.html

The Australian Taxation Office is cracking down on family businesses which misuse partnership and trust structures to shift profits and avoid paying income tax, with 75 companies already in its sights. Tax agents who promote the illegal practice are also in the firing line.

The ATO on Thursday said it was targeting arrangements where individuals extracted profits from their business, for themselves or a family member, by funnelling the payments into a purported private company partnership for the purpose of qualifying for the lower corporate tax rate.

The ATO told Fairfax Media it was concerned the “wealth extraction strategy” was being marketed to successful small business owners and professionals who ran their business through trust structures, leading it to fire a warning shot now before it became more widespread.

“We’re seeing contrived arrangements where business profits are claimed to be diverted to a partnership and as much as 99 per cent of profits are allocated to the private company and taxed at the 30 per cent corporate tax rate,” ATO deputy commissioner Michael Cranston said.

“The company typically doesn’t control or benefit from the profits. Rather, the money is loaned or paid to individuals who do not include the amounts in their assessable income avoiding ‘top-up’ income tax on what they receive.”

If the profits were paid directly to an individual up to 49 per cent tax may be applicable, 19 per cent higher than the corporate tax rate, with the difference between the corporate rate and the marginal income tax rate payable as “top-up” income tax.

Voluntary disclosure urged

The profits are usually channelled to the partnership through a discretionary trust or through dividends from a private company, such as under a “dividend access share” arrangement.

“We are currently reviewing a number of cases that involve the arrangement and will continue engaging with taxpayers over the coming months,” Mr Cranston said.

An ATO spokesperson confirmed that 23 audits had already begun in relation to the misuse of private partnerships for profit shifting and tax avoidance, with a further 52 potential cases under review.

Cases dating as far back as the financial year ended June 2012 may be reviewed.

“We encourage taxpayers who think they may be involved in such arrangements to contact us to make a voluntary disclosure or seek a private ruling. Affected taxpayers may also want to consider seeking independent advice from an adviser not involved with the arrangement,” Mr Cranston said.

“A significant proportion of those taxpayers already being investigated are actively pursuing settlement options.”

The ATO has been emboldened by two recent rulings in its favour by the Administrative Appeals Tribunal: against D Marks Partnership & Ors in September; and NR Allsop Holdings as general partner of Q Uniform Partnership in August. In both cases the ATO successfully argued partnership structures were established to reduce tax and were not genuine limited partnerships for business purposes.

Broader reforms needed

But tax experts warned as long as there is an almost 20 per cent gap between the corporate tax rate and the top marginal income tax rate, small to medium size family businesses will continue to be tempted to break the rules.

“Many family businesses have been using these sorts of inappropriate practices for years to avoid or defer tax and it is no wonder when there is up to a 19 per cent difference between the corporate tax rate and the top marginal income tax rate,” Grant Thornton tax partner Paul Banister said.

“The longer broader tax reform is delayed, the more these symptomatic tax avoidance issues are going to be an issue”.

Mr Banister called for a broadening of the tax base, including lifting the GST to 15 per cent and targeting superannuation tax concessions, to fund a lowering of the top marginal income tax rates.

CPA Australia chief executive Alex Malley said the accountants’ peak body supported the ATO’s compliance initiatives, while also calling for “urgent reform” of the total tax system.

“This includes our over reliance on income taxes, be they individual or company. We need to recalibrate the tax mix, and ensure we’re as competitive as we can be, domestically and internationally.”

Article source: http://www.theage.com.au/small-business/tax-time/ato-cracks-down-on-wealth-extraction-strategy-20151112-gkwyyv.html

The Federal Treasurer has signalled changes to superannuation tax might form part of the Government’s plans for reform.

Scott Morrison has already said changes to superannuation are being considered, and today he took it further, indicating he is interested in a Deloitte Access Economics proposal to make higher income earners pay more on their superannuation contributions.

“The Government is looking at a range of issues on superannuation and I have been very clear on this for some time,” Mr Morrison said.

“What we are seeking to do with superannuation is ensure that people are independent in their retirement and that the tax incentives that are applied to superannuation are ones that best put Australians who are at risk of not being independent in retirement in a strong position,” he said.

Deloitte Access’s Chris Richardson argues the better-off get a big tax advantage from their super contributions because most people pay the same 15 per cent tax.

Mr Richardson’s proposal is for people to pay their normal income tax rate but with a 15 per cent discount, saying it would save the Government $6 billion in 2016-17, or enough to cut the company tax rate from 30 per cent to 26 per cent.

News Corp reports finding a fairer way to encourage retirement savings has been moved to the top of Malcolm Turnbull’s tax agenda, with the Government stepping up work on how it might be implemented.

Mr Morrison pointedly said tax incentives need to be targeted.

“I’ve talked about the need for greater flexibility over people’s working lives, I’ve talked about the need to make sure those tax incentives are targeted,” Mr Morrison said.

Labor’s superannuation spokesman, Jim Chalmers, stood by the ALP plan on retirement savings, which focuses more on lifting the taxes on earnings.

“For some time now … we’ve put on the table a plan, a comprehensive plan, to fix the unfairness in the superannuation system, to raise something like $14 billion over 10 years,” Mr Chalmers said.

“There’s an already-costed, considered plan to fix the superannuation system.”

Federal Government delays tax discussion paper to 2016

The Federal Government has quietly pushed back the release of its next discussion paper on its potential tax overhaul until next year.

A tax green paper was due sometime after June this year, but Mr Morrison today said the Government was working to a new timeline.

“We’ll be putting a green paper out on these and other related issues next year, because remembering this is a package about how you grow the economy — not just how you might seek to change the tax system,” he said.

Mr Morrison said there was no rush for the Government to speed up the process.

“There’s a budget next year, there’s a green paper we would be looking to release next year,” Mr Morrison told AM.

“There are other iterations in this process, but I don’t understand where the rush is here, whether it’s from the Labor Party or the media.

“I recall in New Zealand, when they went down this process, they respected the New Zealand public by allowing them in the discussion that went for almost a year.

“Now I’m not proposing that is necessarily where the Government is going.”

Labor’s assistant treasury spokesman, Andrew Leigh, said the delay “confirms that the entire past two years have been wasted”.

“This decision means the Government will now go into its third year in office without having even released its ideas on tax reform, let alone a real plan,” Dr Leigh said.

The delay takes one report off the Treasurer’s table for what shapes as a busy final two months of the year.

He is due to release a mini-budget — the Mid-year Economic and Fiscal Outlook — and respond to the Harper competition policy review, while he is also contributing to the Government’s innovation statement.

Article source: http://www.abc.net.au/news/2015-11-10/morrison-signals-further-interest-in-superannuation-tax-changes/6928028

TREASURER Scott Morrison has given the clearest signal yet that income tax could be cut to offset a potential rise in the GST, describing it as a “silent tax’’ that penalised working people.

Mr Morrison’s comments came as the Government continued to spell out its case for why the 10 per cent goods and services tax could potentially be increased.

The Treasurer said he did not know if “people have woken up to this yet’’ but the average Australian worker would be paying 37 cents in the dollar from next year due to bracket creep.

“In 2016-17, if you’re on the average wage you’ll be on the second-highest tax bracket,’’ he said.

“And it is an important thing to do to avoid those sort of outcomes in our tax system that penalise people who are getting out working, saving and investing.”

He said while GST was visible to Australians, income tax was rarely seen.

“Income tax has become the silent tax for many Australians, particularly young Australians,’’ he said.

“When they go to the ATM to draw out their cash, they do not see, as they do with the GST on their sales receipt, the 19c or 32.5c or 37c or 45c that has been deducted in income tax — let alone the extra 2c for the Medicare levy.’’

Mr Morrison told the Melbourne Institute/The Australian Outlook conference in Melbourne that Australia relied more on income tax revenue than any other OECD nation, except Denmark.

He said income tax bracket creep would be part of a broad, considered review of the tax system and warned: “We have no intention to rush to failure.”

The 2015-2016 Budget papers show the Government expects to reap $196 billion in income tax this financial year.

The most recent figures available from the Australian Taxation Office showed that in 2012-2013, Australia’s 12.7 million taxpayers paid $154 billion in income tax.

The majority of these taxpayers earned between $37,000 and $80,000 (4.7 million people) and $18,200 to $37,000 (3.1 million).

The Government is considering at least four options for raising and/or broadening the base of the GST, and taxation is looming as the key battleground in next year’s federal election, as the Government looks to kickstart the economy as the mining boom dries up.

Earlier, Prime Minister Malcolm Turnbull told the conference fairness was “absolutely critical” for tax reform.

“Any package of reforms which is not, and is not seen as, fair will not and cannot achieve the public support without which it simply will not succeed,’’ he said.

Article source: http://www.heraldsun.com.au/news/treasurer-scott-morrison-describes-income-tax-as-australias-silent-tax/news-story/4fdb174d782334f553c599efd1154942

Malcolm Turnbull’s plans to reform Australia’s tax system is facing a pushback from his own side with Liberal MPs demanding long-term structural reform and tax cuts to compensate for a potential rise in the GST to 15 per cent, or broadening of the tax to cover new items such as fresh food.

Debate within the Coalition about tax reform has ramped up against the backdrop of spiralling state health and education costs, $80 billion in cuts over a decade in these key areas from the 2014 budget and an ongoing federal budget deficit.

Reflecting fears in the Coalition government that tax reform could actually increase the overall tax take, an anathema to many Liberals, Senators Cory Bernardi and Ian Macdonald and MPs Angus Taylor and Bert van Manen warned off senior colleagues from simply raising the GST from 10 to 15 per cent.

The quartet all advanced the view, shared by economic dries across the Liberal party room, that any change to the GST must be accompanied by cuts to personal or business taxes.

Senator Bernardi said, “Tax reform means lowering taxes and every justification that I’ve seen for tax reform thus far entails an overall increase in government revenue. That’s not reform, that’s gouging.”

“There should be a flat rate of tax. Say, for example, a personal income tax that would not exceed 35 per cent … We need to have a higher tax-free threshold, lower marginal tax rates and ensure government ends the money churn,” he said.

Mr Taylor welcomed “genuine debate” about tax reform but cautioned the end goal had “to be about tax reform, not a tax hike and that means changing the tax mix, not increasing the tax burden, with some combination of personal and business tax cuts”.

“We should look at payroll and stamp duty too, we need to move from less efficient to more efficient ones,” he said.

Mr van Manen said tax reform was critically important but “we need long-term structural reform of the tax system for the benefit of the country, just focusing on the GST is not going to solve our problems”.

Senator Macdonald told ABC radio he was “opposed to any increase beyond 10 per cent of the GST rate” and suggested broadening the base instead.

The comments from the back bench come despite the Prime Minister promising last month that any change to the GST “certainly has to be a part of a suite of measures, it’s not doing it, no one I think is seriously suggesting doing it in isolation”. Mr Turnbull on Monday pledged any tax changes would be fair and there would be “no disadvantage to the most vulnerable Australians”.

Mr Turnbull and Treasurer Scott Morrison have left a raft of options for tax reform on the table, but Mr Morrison has shut down a proposal from the Queensland and Victorian Labor governments to instead increase the Medicare levy, which would raise about $18 billion.

The Grattan Institute has estimated that a GST rise from 10 to 15 per cent would raise an additional $30 billion a year in revenue, with state premiers including NSW’s Mike Baird and South Australia’s Jay Weatherill suggesting that money could, at least in part, be used to fund the rising cost of health care or to fund income tax cuts.

Victorian Premier Daniel Andrews and Queensland’s Annastacia Palaszczuk have publicly stated their opposition to a GST rise from 10 per cent to 15 per cent and instead backed a Medicare levy rise.

But privately, key political allies of the two Labor premiers confirmed to Fairfax Media on Monday the two state governments would respect Mr Turnbull’s mandate if he won the next election.

Article source: http://www.smh.com.au/federal-politics/political-news/malcolm-turnbulls-tax-reform-plans-facing-pushback-from-trio-of-liberal-mps-20151103-gkpela.html

The Reserve Bank of Australia has left interest rates on hold at the historic low of 2 per cent, but opened the door for a rate cut.

The RBA left the official cash rate where it has been since May, saying in a statement that prospects for an improvement in the economy had strengthened a little in recent months, and leaving interest rates on hold was appropriate for now.

But the board said a soft inflation outlook may leave room for a further rate cut if needed.

“At today’s meeting the board judged that the prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate at this meeting,” Reserve Bank governor Glenn Stevens said.

“Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.”

Last week, the September quarter Consumer Price Index (CPI) showed annual headline inflation was running at just 1.5 per cent, which was weaker than expected and below the RBA’s forecasts.

Despite this soft inflation outlook, most economists had bet the central bank was unlikely to hand down a Melbourne Cup day rate cut, but said it was a very close call, given recent variable mortgage rate rises from the big banks.

They expect the central bank to revise its inflation forecasts in its upcoming Statement on Monetary Policy (SOMP) later this week.

The Australian Retailers’ Association (ARA) was “disappointed” with the RBA’s decision, saying it had come at the cost of much-needed Christmas spending for retailers.

“The ARA has been calling for a reduction in interest rates for some time, and we are disappointed that this has fallen on deaf ears,” executive director Russell Zimmerman said in a statement.

“An interest rate cut would have provided consumers with more discretionary dollars in their pockets and higher confidence, which generally leads to a greater willingness to spend.

“With one more meeting of the RBA before the end of calendar 2015, the ARA will be hoping for a last minute interest rate reprieve in December.”

The dollar jumped on the announcement and at 5:00pm (AEDT) was buying 72 US cents.

Article source: http://www.abc.net.au/news/2015-11-03/interest-rate-on-hold-at-2-per-cent/6907870