March Tax Update

Increase In Super Contribution Limits

The concessional contributions cap for everyone aged under 50 has increased from $25,000 to $30,000.

The concessional contributions cap for everyone aged over 50 will be $35,000. At the moment if you are over 60 you can contribute $35,000 but from 1 July 2014 it will include anyone over 50.

The cap on non-concessional contributions (those contributions made from after-tax income) has increased from $150,000 to $180,000. That means that the bring forward rule on non-concessional contributions - that allows you to roll three years of non-concessional contributions into one year - makes the three-year cap $540,000 instead of $450,000.

Please contact us to assist you with tax planning opportunities in relation to increasing your super contributions.

How To Improve Your Credit Rating

A bad credit rating means that it will be hard for you to get finance. The most important thing to know is what is contained in a credit report and what you need to do to fix things if you have a bad credit rating. Here is a list of the information that is usually shown in your credit report.

1. Your personal details including address and employment history;

2. All finance applications (whether approved, in progress or declined) – this will include the current status and relationship with credit providers, overdue accounts and defaults;

3. All commercial credit information including overdue commercial credit accounts such as credit cards and phone bills;

4. Public information such as court judgements and writs, directorship details and bankruptcy information.

All of the above information is used by banks to give you a credit score and determine whether the bank should offer you credit.Therefore, you should get access to the credit report and start reviewing the information on the report. Statistics from the credit agencies have shown on occasions that the information recorded on these reports can be incorrect.

Things to watch out for on the credit report:

1. Fix any known errors on the report. For example, if you know you did not miss a payment with a credit provider but it has been incorrectly reported, then you should write to the specific credit provider or a credit agency such as Dun & Bradstreet or Veda and request them to fix the mistake.

2. Review the overdue accounts and focus on paying them down and talk with your credit providers to work out a payment plan or consolidate your debts so to pay down the debts sooner rather than later. They can assist you in updating the aging of your overdue accounts – the older the accounts the worse your scoring will be.

3. Avoid or reduce your credit card purchases and limits. Higher credit card balances equal adverse credit scoring.

4. Wait and be patient – if you stay on top of your bills and avoid all overdue payments then over time your credit score will eventually improve

If you still have problems after this please contact us to assist you.

New SuperStream Rules

Some of you may have received letters in the mail relating to the new SuperStream rules. The rules are intended to provide a consistent method of transacting data and payments for superannuation funds. The Government has enacted these new rules which most SMSF’s must adhere to.

The new rules are discussed below:

From 1 July 2014:

• employers with 20 or more employees will start using the SuperStream standard to send contribution data and payments electronically

• all super funds (including SMSFs) must receive any employer contributions sent to their fund in accordance with the SuperStream standard.

From 1 July 2015:

Employers with 19 or fewer employees will also be required to send contributions data and payment electronically. However, some may choose to implement SuperStream sooner.

Contributions sent to an SMSF from a related-party employer are exempt from SuperStream and can be made using existing processes. Also, if you are making personal concessional super contributions then these new rules don’t apply to you.

What you must do:

You will need to provide your employer with the following:

• Your SMSF's Australian Business Number (ABN)

• Your SMSF's bank account for receipt of contribution payments (BSB and account number) • An electronic service address for receipt of a contribution data message

If you work for an employer with 20 or more employees, you will need to update your details with your employer by 31 May 2014.

In most cases your employer already has your SMSF’s ABN and bank account details. The issue is that you need to have an electronic service address to receive messages. The ATO has a list of electronic service providers and the web address is listed below

http://www.ato.gov.au/Super/Data-standards/In-detail/Contributions/SMSF-messaging-service-providers/

The company below offers a free service and you may want to register on the website below to receive electronic messages

http://www.superchoice.com.au/smsf/

Please contact us if you require any further assistance.

We hope you have enjoyed the article and please contact us for any help that you may require.

Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.