We want to provide an update on the recent announcements made by the ATO regarding work related deductions. Additionally, we summed up important key superannuation data including the income stream tax table – (un)taxed element, the Division 293 tax and taxation of Death Benefits.
Work related deductions
The ATO has announced that it will be closely examining claims for work-related car expenses this tax time as part of a broader focus on work-related expenses.
The ATO is particularly concerned about taxpayers claiming for things they are not entitled to, such as private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.
Assistant Commissioner Kath Anderson said more than 3.75 million people made a work-related car expense claim in 2016-17, totalling about $8.8 billion. Each year approximately 870,000 people claimed the maximum amount under the cents-per-kilometre. The ATO is concerned that some taxpayers mistakenly believe that this is a “standard” deduction they are entitled to, without needing to provide any evidence of having travelled that distance, or even having undertaken any travel at all.
The Assistant Commissioner said that the ATO’s ability to identify claims that are unusual has improved due to enhancements in technology and data analytics.
Key superannuation data
The three-year bring-forward provision allows for non-concessional contributions of $300,000 with transitional arrangements applying from 1 July 2017.
The 10% rule governing which was able to make personal deductible contributions was abolished from 30 June 2017. Individuals under 75 years are able to claim a tax deduction for personal superannuation contributions subject to the $25,000 concessional contribution cap and the work test (40 hours work over a continuous 30 day period during the financial year).
The superannuation guarantee percentage is 9.5% with a maximum contribution base of $52,760 pa.
Income stream tax table – Element taxed in super fund
The tax-free component is not included as this component is not assessable or exempt income.
Income stream tax table – Element untaxed in super fund
The tax free component is not included as this component is not assessable or exempt income.
Division 293 tax
From 1 July 2017, certain concessional contributions of a taxpayer whose income is in excess of $250,000 (previously $300,000) are taxed at 30%. This tax rate includes the normal 15% tax applying to concessional contributions plus the additional Div 293 tax of 15%.
The tax requires a Division 293 Tax Assessment from the Commissioner. The tax is levied on the taxpayer and taxpayers have the option of withdrawing an amount equal to the assessed Div 293 tax amount from their superannuation account.
For Division 293 tax assessment purposes, a taxpayer’s income includes:
- Taxable income
- Total reportable fringe benefits
- Total reportable superannuation contributions
- Net financial investment loss
- Net rental investment loss
- Certain family trust distributions
- Less and superannuation lump sum taxed elements with a zero tax rate