30 Nov December 2023 Newsletter
Proposed $3 Million Superannuation Cap – Update
Draft legislation was released on 3rd October for the Government’s proposed $3 million Superannuation Cap. The proposed changes will affect individuals with superannuation benefits of over $3 million at the end of a financial year to be known as Division 296 tax.
Division 296 tax will apply only to earnings related to the portion of an individual’s account balance that is above $3 million; the proposal is for the concessional 15% tax rate to double to 30% on earnings relating to the portion of super balances above $3 million. The draft legislation continues to indicate that unrealised gains will be captured by the new tax.
Division 296 tax is expected to apply from the 2026 financial year but please note that these changes are yet to be finalised or legislated and as a result we are encouraging patience and a detailed analysis prior to considering any changes to your superannuation investments.
We will continue to monitor and provide updates as they become available.
Transfer Balance Cap Reporting
A reminder to our Self-Managed Fund pension phase clients regarding changes to Transfer Balance Cap Reporting that were introduced from 1 July this year.
The following events are required to be reported to the ATO within 28 days after the end of each quarter:
- Commencing a pension
- Commutation of pensions
- Commencing a borrowing arrangement within super
Fringe Benefits Tax (FBT) exemption for eligible electric vehicles
From 1 July 2022 an exemption was introduced so that Fringe Benefits Tax (FBT) is not payable by employers on eligible electric cars and the associated car expenses they provide to employees for private use.
FBT exempt electric cars must meet all the following criteria:
- The car is a zero or low emissions vehicle
- The first time the car is both held and used is on or after 1 July 2022
- The car is used by a current employee or their associates (such as family members)
- Luxury car tax (LCT) has never been payable on the importation or sale of the car. For the 2023/2024 year this would mean that the electric vehicle is valued at less than $89,332.
Small business asset write-off changes
A reminder that although the temporary full expensing of assets ceased on 30 June 2023, small businesses with an aggregated turnover of less than $10 million can still deduct the full cost of eligible assets costing less than $20,000.
Assets costing $20,000 or more can be added to a small business simplified depreciation pool. The depreciation claim for pooled assets is 15% in the first year and 30% for each subsequent year.