Making Super contributions after 1 July in 2021 comes with a nice surprise since the concessional and non-concessional caps have been indexed with the increases to the Transfer Balance Cap and Total Super Balance Cap. So what it is all about?
Increment in the contribution caps from 1 July 2021
| Cap | Current Cap | Cap From 1 July 2021 |
| Concessional Contributions Cap | $25,000 | $27,500 |
| Non-Concessional Contributions Cap | $100,000 | $110,000 |
It implies that the maximum non-concessional contributions that could be made under the Bring forward rule over 3-year period is now $330,000. It must be noticed that a person’s cap under this rule is based on the value of the standard cap that applied when they triggered the bring-forward rule.
So the individuals that triggered the Bring-forward period in 2019-20 or 2020-21 will not be benefitted from the higher non-concessional cap till the bring-forward period gets expired. The non-concessional contributions caps and bring-forward periods and thresholds both pre and post 1July are as below:
1 July 2017- 30 June 2021 After 1 July 2021
| Total Superannuation Balance (TBA) | Contribution and bring forward available | Total Superannuation Balance (TBA) | Contribution and bring forward available |
| Less than $1.4m | $300,000 | Less than $1.48m | $330,000 |
| $1.4m-$1.5m | $200,000 | $1.48m-$1.59m | $220,000 |
| $1.5m-$1.6m | $100,000 | $1.59m-$1.7m | $110,000 |
| Above $1.6m | Nil | Above $1.7m | Nil |
Benefits of Working from Home and COVID-19
The fact sheet released a fact sheet to assist the employers in analyzing the FBT consequences of any support they may have provided to employees in the connection with working from home. The fact sheet can cover many advantages that are provided and the exemptions or the concessions that could be applicable.
As the advantages related to items like laptops, other portable electronic devices and tools of trade could be exempted from FBT, the provision of other general office items like chairs, desks, stationary or computer monitors might give rise to an FBT liability, it depends upon how they are used.
Even though not strictly specific to work from home situations, the fact sheet give some assistance on the provision of counselling services related to wok that might also be exempted from FBT. It refers to counselling that seeks to enhance or maintain the quality of an employee’s work performance and related to matters like health and safety, stress management, relationships, retirement, and any other similar matters.
It involves the counselling session that are taken via online platforms or telephone when the employee works from home.
Since this area will affect huge number of clients, the practitioners must take care to assure that FBT issues that could arise from modified business practices over last year are considered adequately.
Voluntary JobKeeper repayments
The ATO has given some assistance on the tax treatment for businesses who intend to repay the amounts received under the JobKeeper scheme. This follows the decision by big employers to repay the JobKeeper payments to the ATO. The STO then confirms that the repayments don’t lower the amount that is required to be included in the assessable income from the receipt of the JobKeeper payments.
When it is about analyzing whether the amounts repaid to the ATO could be claimed as a deduction, the ATO indicates that the voluntary repayments of JobKeeper amounts could be deductible in some circumstances if the payment is appropriate to achieve.
It broadly implies that the repayments must be connected with maintaining the goodwill or are publicised to advertise the business.
To exemplify, the deduction could be available if the payment is made to:
- Prevent a reduction in business activities
- Publicise and promote the business in short-term
LRBA and Division 7 A loan rules
The ATO has given the guidelines how such benefits would approach the situations in which the private companies have made the loans to related SMSFs and where the loan is subject to a limited recourse borrowing arrangement and also a complying Division 7A loan agreement.
The ATO notes that temporary repayment relief may be offered in relation to the existing loan arrangements because of the financial effects of Coronavirus.
The ATO notes that capitalizing interest on the loan must not trigger direct Division 7A implications; this does not count as a payment in analyzing whether the yearly minimum repayment has been met for Division 7A purposes. SMSFs in this positions could be applied for Division 7A administrative relief if they were unable to make minimum yearly repayments by the relevant due date.
The ATO also acknowledges that there is a view that interest cannot be capitalised on such loans given their Division 7A nature. Therefore, for the 2020 and 2021 income years, where an LRBA between an SMSF and a lender is subject to repayment relief but unpaid interest is not capitalised the ATO won’t take compliance action to determine if the NALI provisions apply as long as the following conditions are met:
- The LRBA is subject to a complying Division 7A loan agreement
- The SMSF has met the minimum yearly repayment or applied for Division 7A administrative relief in which it has been not able to meet the minimum yearly repayment.
- This temporary repayment relief is due to the financial effects of COVID-19 on SMSF
- The repayment relief is on same terms to that offered by the commercial banks
Share Capital Account Tainting Rules
Some brief guidance on the operation of share capital account tainting rules has been released on the website of ATO. Such rules are aimed at preventing the companies from transferring profits to their share capital account and further distributing those amounts to the shareholders disguised as non-assessable capital distributions.
The share capital account of the company is tainted where there is a transfer of an amount to the account that is not “excluded amount”.
The excluded amounts involve the amounts that can be identified as share capital. Such amounts that are transferred under debt or equity swaps, or some amounts that are transferred from an option premium reserve, some amounts that are transferred in connection with the demutualization of non-insurance and insurance companies.
Get our Assistance!
If you need any assistance to understand new announcements made by the ATO, or implementing such grants given by the Government to the businesses, you may contact now Reliable Melbourne Accountants. We ensure that you will avail the maximum benefits provided by the Government.