I caught up with accountant, Allan Mason, who was Kerry Packer’s accountant and is the best-selling author of “Tax Secrets of The Rich”. As the tax year looms, its important to take charge of your tax affairs, and we discuss some of the main issues to consider.
I caught up with accountant, Allan Mason, who was Kerry Packer’s accountant and is the best-selling author of “Tax Secrets of The Rich”. As the tax year looms, its important to take charge of your tax affairs, and we discuss some of the main issues to consider.
The ATO published the latest data on Self-managed superannuation funds to 2016. The number and balance of funds continues to grow and contributions are growing faster than to retail or industry funds. More property is held and under limited recourse borrowing arrangement.
In 2015–16, estimated average return on assets for SMSFs was positive (2.9%), a decrease from the estimated returns in 2014–15 (6.0%). This was the same as the investment performance for APRA funds of more than four members (2.9%) and remains consistent with the trend for APRA funds over the five years to 2016.
We also see a rise in property investment within SMSFs, with 7% of SMSFs reported $25.4 billion assets held under limited recourse borrowing arrangement (LRBAs), which is slightly higher than in 2015 (6%). The majority of these funds held LRBA investments in residential real property and non-residential real property.
The estimated average total expense ratio of SMSFs in 2016 was 1.21% and the average total expenses value was $13,700. This would be lower than the typical costs in a retail fund.
SMSF’s make up 30% of all superannuation assets which in total are worth $2.3 billion. There were 597,000 SMSFs holding $697 billion in assets, with more than 1.1 million SMSF members as at 30 June 2017. Over the five years to 30 June 2017, growth in the number of SMSFs averaged almost 5% annually.
At 30 June 2016 the average SMSF member balance was $599,000 and the median balance was $362,000, an increase of 26% and 32% respectively over the five years to 2016.
The average member balances for female and male members were $511,000 and $641,000 respectively. The female average member balance increased by 30% over the five-year period, while the male average member balance increased by 22% over the same period.
Over the five years to 2016, the proportion of members with balances of $200,000 or less decreased from 42% to 32% of all members.
In 2016, the majority of members had balances of between $200,001 and $1 million.
53% of SMSFs have been established for more than 10 years, and 16% have been established for three years or less.
For the 2015–16 income year, the average assets of SMSFs were just over $1.1 million, a growth of 25% over five years and 3% from 2015. Total contributions to SMSFs increased by 21% over the five years to 2016. This is significantly higher than the growth of total contributions to all superannuation funds (16%) over the same period. The majority of SMSFs continued to be solely in the accumulation phase (53%) with the remaining 47% making pension payments to some of or all members.
At 30 June 2017, 57% of all SMSFs had a corporate trustee rather than individual trustees.
Of newly registered SMSFs in 2015 to 2017, on average 81% were established with a corporate trustee.
At 30 June 2017 there were 1.1 million SMSF members, of whom 53% were male and 47% female.
The trend continued for members of new SMSFs to be from younger age groups. The median age of SMSF members of newly established funds in 2016 was 47 years, compared to 59 years for all SMSF members as at 30 June 2017.
SMSFs directly invested 80% of their assets, mainly in cash and term deposits and Australian-listed shares (a total of 54%).
In the five years to 2016, cash and term deposits decreased (by 7%) to 25% of total SMSF assets.
In 2016, 7% of SMSFs reported $25.4 billion assets held under Limited recourse borrowing arrangement (LRBAs), which is slightly higher than in 2015 (6%). The majority of these funds held LRBA investments in residential real property and non-residential real property. In terms of value, real property assets held under LRBAs collectively made up 93% or $23.7 billion of all SMSF LRBA asset holdings in 2016.
The estimated average total expense ratio of SMSFs in 2016 was 1.21% and the average total expenses value was $13,700.
The average ‘investment expense’ and ‘administration and operating expense’ ratios were consistent at 0.65% and 0.56% respectively.
The Australian Tax Office is ramping up scrutiny of the rental property market in a bid to stamp out tax rorts, reports The Australian.
In one of a series of interviews with The Australian about ATO priorities, tax commissioner Chris Jordan said the ATO will be looking closely at the practise of declaring rented properties vacant. He said the tax office will go so far as to monitor real estate agent, electricity and gas records to identify fraudulent claims.
Over the last few months, the Australian Taxation Office has already investigated 100,000 rental properties to ensure they are not involved in black-market activity or misclaiming of negative gearing.
The size of the rental market in Australia means it must be watched extremely closely for rorts, said Jordan.
Jordan told The Australian that ATO data shows deductions claimed for rental property exceed the rental income earned for privately owned rental properties in Australia.
“In the rental income space, there’s $40.1 billion of income and $43.6 billion of expenses,” he said.
With the 2016 census showing that 11 per cent of Australian properties, or 1.1 million homes, were unoccupied, rental income in Australia should be much higher, said Jordan.
Jordan said he is concerned about the growing amount of rental income disappearing into the cash economy.
“It appears that many landlords are not declaring their rental income, and many more are overstating their deductions,” he told The Australian.
The ATO is already using data-matching to check if properties are unoccupied. For example, Jordan said the ATO can match utility records, such as for electricity and gas, against the addresses of properties that owners claim are unoccupied.
The Australian reports that from next year, auditors will begin approaching real estate agents to request information about landlords.
The Australian Taxation Office has put the hard word on ride-sharing drivers and the wider gig economy, reminding drivers working for platforms like Uber about the importance of meeting their GST obligations next tax time.
The tax office determined in 2015 that ride-sharing and ride-sourcing drivers should be classified in the same way as taxi drivers for GST purposes, meaning they must register for an Australian Business Number and for the GST even if they are under the $75,000 threshold.
However, the tax office says the message isn’t getting through, with ATO assistant commissioner Tom Wheeler saying in a statement that the tax office has notified over 120,000 ride-sharing drivers over the past 18 months regarding their tax obligations.
“We know that most drivers do the right thing, and we are now focusing attention on the minority of drivers that are not currently meeting their obligations,” Wheeler said in a statement this morning.
“Our message to taxpayers is that if you have a ride-sourcing enterprise you must get an Australian Business Number and register for GST as soon as you start driving. You also need to include the income on your tax return at tax time.”
Wheeler notes the ATO is sourcing information “directly” from banks and facilitators, and warns “we know who you are, and we know if you aren’t correctly meeting your obligations”.
“This isn’t a black economy issue,” says Lisa Greig, SME and start-up tax specialist at Perigee Advisers.
“The money’s going through Uber and into a bank account, [and] it will be found.”
Companies should remind workers of GST obligations
Wheeler says if ride-sharing drivers who have not registered for GST continue to ignore the ATO’s prompts, the tax office will register the drivers itself and then backdate the registration to their first ride-sharing payment.
“[The drivers] will be required to lodge and pay all outstanding tax obligations. Penalties and interest may also be applied,” he says.
Greig tells SmartCompany she believes many of these outstanding cases would be drivers who maybe did a few trips for a ridesharing app over a couple of weeks, made around $60 dollars, and then haven’t driven again.
“Those people still have to be registered for GST,” she says.
Businesses who employ a significant number of these ride-sharing type contractors – such as Uber – should have a “duty of care” to inform workers of their GST obligations, believes Greig.
SmartCompany understands Uber drivers are directed to the ATO’s ride-sharing information page and notified of their obligation as part of the signup process, but Uber is unable to sign them up when a driver registers on the platform, because Uber not a registered tax agent.
Other companies working with similar types of contractors should take a similar course in informing them about GST obligations, because companies should make it “as simple as possible” for workers.
However, one reason the ATO is having to chase people now might come down to the slackness of the drivers, Greig says, suggesting that signing up for an ABN and GST would likely take less time than signing up to drive with Uber.
“People who forget to register for GST are like those people who forget an old bank account has $2 of interest in it when it comes to tax time.”
Looking to the future of tax reporting, Greig says it won’t be surprising if Uber driving income is automatically detected by the tax office in future.
“But with where this is all going, in the future all your ride-sharing data will just get populated in MyTax come tax time and you won’t have to worry.”
We continue our series on the latest ATO data with a look at the ACT, using the recently released 2015 taxable income data from the ATO, as a drill down on the all Australia data we previously posted. Blue shows the higher taxable income areas. [Yes, there does appear to be lots of blue!]
We continue our series on the latest ATO data with a look at Greater Adelaide, using the recently released 2015 taxable income data from the ATO, as a drill down on the all Australia data we previously posted. Blue shows the higher taxable income areas.
We continue our series on the latest ATO data with a look at Greater Perth, using the recently released 2015 taxable income data from the ATO, as a drill down on the all Australia data we previously posted. Blue shows the higher taxable income areas.
We continue our series on the latest ATO data with a look at Greater Melbourne, using the recently released 2015 taxable income data from the ATO, as a drill down on the all Australia data we previously posted. Blue shows the higher taxable income areas.
We continue our series on the latest ATO data with a look at Greater Brisbane, using the recently released 2015 taxable income data from the ATO, as a drill down on the all Australia data we previously posted. Blue shows the higher taxable income areas.
