Proposed Changes to Stage 3 Tax Cuts Announced
CoggerGurry • February 16, 2024
It’s been hard to miss news of the Government’s broken promise on stage 3 tax cuts, legislated to take effect from 1 July 2024. Cost of living pressure has driven the change to redistribute the savings to direct more into the hands of low- and middle-income earners.
For those earning approximately between $40,000 and $145,000 you will be better off under the proposed cuts. An average income earner of $80,000 would receive $1,679 in savings versus the already legislated cuts of $875. The impact on high income earners is more pronounced with earnings above $200,000 will have their tax saving almost halved from $9,075 to $4,529.
If you are concerned about the impact on your position or want to know more contact us a CoggerGurry today.
| What was originally legislated from 1 July 2024 | ||
|---|---|---|
| Taxable Income | Marginal Tax Rate | Tax Amount |
| 0 to $18,200 | Nil | Nil |
| > $18,201 to $45,000 | 19% | 19c for each $1 over $18,200 |
| > $45,001 to $120,000 | 32.50% | $5,092 plus 325c for each $1 over $45,000 |
| > $120,001 to $180,000 | 37% | $29,467 plus 37c for each $1 over $120,000 |
| $180,001 and above | 45% | $51,667 plus 45c for each $1 over $180,000 |
| New Updated Propose Stage 3 Tax Cuts | ||
|---|---|---|
| Taxable Income | Marginal Tax Rate | Tax Amount |
| 0 to $18,200 | Nil | Nil |
| > $18,201 to $45,000 | 16% | 16c for each $1 over $18,200 |
| > $45,001 to $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| > $135,001 to $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and above | 45% | $51,638 plus 45c for each $1 over $190,000 |
If you’re nearing retirement and looking for ways to boost your superannuation savings, downsizer super contributions might be the perfect solution for you. These allow eligible Australians aged 55 and over to contribute proceeds from selling their home into their superannuation fund. A downsizer contribution allows an eligible individual to contribute an amount equal to all or part of the sale proceeds (up to $300,000 each) from the sale of their home into their superannuation fund. The contribution must not exceed the sale proceeds of the home. The great advantage is that downsizer contributions aren’t restricted by any other contribution caps or your total superannuation balance; there are no work tests; and there’s no upper age limit. It’s one of the rare ways you can contribute large amounts to your super even after the age of 75. Eligibility To make a downsizer contribution, you must: • be 55 years or older at the time of contribution; • have owned the home for 10 years or more (the owner can be you or your spouse); • sell your home that is in Australia and is not a caravan, houseboat or mobile home; • ensure the sale is exempt or partially exempt from CGT for you under the main residence exemption; • make the contribution within 90 days of receiving the sale proceeds (usually settlement date); • not have made a downsizer contribution previously from another home; and • provide your super fund with the Downsizer contribution into super form either before or at the time of making the contribution. Failure to submit the Downsizer contribution into super form on time may result in your fund rejecting the contribution or treating it as a standard non-concessional contribution, which could have adverse tax implications. The 90-day deadline from the date of settlement is also strict. If you need more time (Eg due to delays in purchasing a new home), you must apply to the ATO for an extension. Extensions are granted only in limited circumstances, such as settlement delays due to council approvals. If you are considering selling your home and wish to further explore a potential downsizer contribution, please do not hesitate to get in contact with our office (03)55710111
The government has announced major reforms to Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws . This is the biggest update in nearly 20 years. These reforms aim to modernise how Australia combats financial crime and bring us into line with international standards. While not every business will be affected, some sectors will face new or expanded reporting and compliance obligations. Sectors likely to be impacted include: Accountants and bookkeepers Real estate agents Lawyers and conveyancers Dealers in precious metals and stones The activities you undertake, such as managing client funds, setting up companies or trusts, or handling large transactions, will determine if these new rules apply to you. AUSTRAC’s national awareness campaign will help businesses understand what’s changing and how to prepare, with guidance and tools rolling out over the next year. 👉 We’re here to help. If you’re unsure whether these reforms could affect your business, contact our team to discuss what it means for you. You can read more here - https://www.austrac.gov.au/national-reforms-awareness-campaign-launch
Vouchers and GST in your business If your business sells or buys vouchers, it’s essential to understand how to account for and report GST correctly. A voucher is a document or an electronic record that represents a right to receive goods or services. This includes physical gift cards, digital vouchers and even prepaid phone cards. When your business sells a voucher, you’re essentially providing the recipient with a promise to supply goods or services in the future, and it’s at this future point that the GST implications come into play. The ATO recognises two distinct types of vouchers. Face value vouchers Face value vouchers can be redeemed for a reasonable choice of goods and services – for example, a $50 supermarket gift card that works across all store locations. The voucher sale isn’t considered a GST taxable supply, so you don’t charge GST at the point when you sell the voucher. Instead, you account for GST when the voucher’s redeemed and the goods or services are supplied. For instance, if you sell that $50 gift card, you don’t charge GST on the gift card sale, but when the gift card’s redeemed to purchase goods worth $50, you charge GST on the supply of those goods. Non-face value vouchers Non-face value vouchers are restricted to specific goods or services – like a voucher specifically for a spa treatment, purchased for $100. With these, you account for GST (eg on the $100 price) at the time of sale, but only if the voucher is redeemable for taxable supplies. If the voucher is only redeemable for GST-free or input-taxed supplies, there’s no GST to account for. Note on expired vouchers Here’s something business owners often overlook: if you’ve sold face value vouchers that expire or remain unredeemed, and you write back the unused amount to your current income for accounting purposes, you need to make an “increasing adjustment” on your Business Activity Statement (BAS). This adjustment is 1/11th of the unredeemed balance. Keep accurate records To account for GST on vouchers you sell, you need to keep accurate records including dates of sale, redemption and/or expiration, and the amounts of GST payable. Importantly, specific rules and exceptions apply to certain types of vouchers. For example, if you sell vouchers that can be redeemed for a combination of goods and services, you need to apportion the GST accordingly. You may also need to issue a tax invoice to the customer when a voucher’s redeemed and \keep a copy of this invoice for your records. And finally, of course, you need to report GST on vouchers in your BAS in accordance with ATO guidelines.
