Archives: Investax FAQs

The short answer is yes, but it comes with specific conditions. If you are an overseas student who has arrived in Australia to pursue your studies and are enrolled in a course that lasts more than 6 months, you are generally considered an Australian resident for tax purposes. This status affects how you are taxed and what you need to declare in your TFN declaration to your employer.

Newly constructed property without obtaining an Occupancy Certificate (OC): Renting out a newly built or substantially renovated premises without an occupancy certificate (OC) is generally not permissible. For a property, whether residential or commercial, to be considered ready for use or rental, it must be “lawfully able to be occupied.” This legal occupancy typically is confirmed when an occupancy certificate or a similar approval from the local council is issued.

While there might be brief periods when a property is not available for lease due to minor maintenance or repairs, the fundamental requirement is that the premises must meet all legal and safety standards to be occupied. If a council, relevant authority, or qualified professional deems the property unsafe, it cannot be occupied or rented out.

It’s important to note that the property must adhere to these occupancy standards at all times, whether it’s being leased, hired, licensed, or made available for such arrangements. Compliance with these regulations ensures that the property owner can legally rent out the premises and potentially qualify for certain tax deductions related to the property.

Starting in July 2024, there will be changes to various superannuation rates and caps including the contribution caps. To ensure you have all the necessary updates at your fingertips, we’ve compiled a detailed table outlining the new parameters.

 

Many small to medium-sized business owners ponder the complexity of offering employee benefits such as gym memberships. Apart from keeping employees happy and motivated to work for the business, it can create certain tax liabilities that may be viewed as a benefit for your business. Offering gym memberships to your employees falls under the category of an Entertainment Fringe Benefit. If the annual cost of the gym membership exceeds the minor benefit exemption amount, which is $300 or more per employee, you will need to apply the Fringe Benefit Tax.

Tax Outcome 

• Report Fringe Benefit in the FBT Return 
• Report FBT in Employees PAYG payment Summary report. 

Tax Benefit

The business can claim:

• An income tax deduction and GST credits for the cost of gym memberships 
• An income tax deduction for the Fringe Benefit Tax (FBT) paid. 

Yes, even though you may not have permanent residency or citizenship in Australia, you will still be treated as an Australian resident for tax purposes. Remember, tax residency differs from immigration residency, so don’t let this confuse you. If you are an Australian resident for tax purposes, you can claim the Tax-Free Threshold, which is $18,200. You are eligible to claim it from this payer if one of the following conditions applies:

• You are not currently claiming the tax-free threshold from another payer.
• You are already claiming the tax-free threshold from another payer, but your total income from all sources is expected to be less than $18,200.

The short answer is yes, but it comes with specific conditions. If you are an overseas student who has arrived in Australia to pursue your studies and are enrolled in a course that lasts more than 6 months, you are generally considered an Australian resident for tax purposes. This status affects how you are taxed and what you need to declare in your TFN declaration to your employer.

A bare trust in a Self-Managed Super Fund (SMSF) is a popular structure used to hold an asset, typically a property, when a SMSF implements a Limited Recourse Borrowing Arrangement (LRBA) strategy. A bare trust is a fundamental form of trust arrangement where a trustee is designated to hold property or assets solely on behalf of a clearly identified beneficiary. In this instance, the Self-Managed Super Fund (SMSF) is the ultimate beneficiary. In this type of trust arrangement, the trustee’s role is notably minimal and straightforward, primarily involving the safeguarding and eventual transfer of the trust property to the beneficiary once the loan is paid off, upon the beneficiary’s request.

The trustee, in this context, does not possess discretionary powers or extensive duties beyond this basic obligation. The essence of a bare trust lies in the absolute entitlement of the beneficiary’s’ to both the capital and the income generated by the trust’s assets. For CGT purposes, any disposal of the assets of the trust by a bare trustee will be treated as a disposal by the beneficiary i.e. the SMSF.

Source – ATO – Absolute entitlement 

In the context of a Self-Managed Super Fund (SMSF), a “related party” encompasses a broad range of individuals and entities that have a close association with the members of the SMSF. The definition of a related party for an SMSF, as outlined by the Australian Taxation Office (ATO), includes:

1. Members of the SMSF: Every individual who is a member of the Self-Managed Super Fund.
2. Relatives of Members: This includes a wide array of family relations such as spouses, parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces, nephews, and the equivalent relations by marriage or de facto partnerships.
3. Standard Employer-Sponsors: An employer who contributes to the SMSF for a member under an arrangement between the employer and the trustees of the fund.
4. Partnerships: Where a member or a relative of a member is a partner.
5. Trusts: Where a member or a relative of a member controls the trust.
6. Companies: Where a member or a relative of a member has a significant influence over the company, typically through a substantial shareholding.

The rules around related parties in a Self-Managed Superfund (SMSF) are designed to safeguard the superannuation system.  Essentially, these rules make sure that SMSFs are always working to help members reach their retirement goals, keeping everything fair and above board.

Source – ATO 

An in-house asset for a Self-Managed Superfund (SMSF) typically refers to an investment or asset that is related to, or involves, a member of the SMSF or their related parties. According to the Australian Taxation Office (ATO) regulations, an in-house asset can be:

• a loan to, or an investment in, a related party of your fund
• an investment in a related trust of your fund
• an asset of your fund that is leased to a related party.

The ATO instructs that in-house assets must not exceed 5% of the total market value of the Self-Managed Super Fund’s (SMSF) assets.

This rule is designed to ensure that SMSFs are primarily used for the purpose of providing retirement benefits to their members, and to prevent the misuse of superannuation funds for personal or related party financial dealings. Therefore, the investments and transactions made by an SMSF need to comply with this rule, among others, to meet the sole purpose test and ensure the fund is being used appropriately for retirement savings.

Source – ATO