TAX DEDUCTION FOR EMPLOYER CONTRIBUTIONS Employers will be entitled to a full deduction for all contributions to superannuation on behalf of employees, even if paid to dependants of the employee or their legal personal representative (LPR) after death. The existing age based deduction limits will be removed, and employers can claim a full tax deduction on contributions paid on behalf of employees under the age of 75.3 The deduction will only be available for superannuation contributions for employees aged 75 and over if they are made under an industrial award, determination or no-show agreement preserving State awards.
SELF EMPLOYED The self-employed may claim a tax deduction on contributions paid to superannuation even where they have received some income as an employee. The deduction must be for the income year in which the contributions were made. To qualify any activities resulting in the person being treated as an employee for the purpose of the Superannuation Guarantee (Administration) Act 1992 must not result in them earning more than 10% of their assessable income plus their reportable fringe benefits, for the income year in relation to these activities. From 1 July 2007 a full deduction can be claimed by the self-employed for concessional contributions up to the contribution cap of $50,000. A notice to the trustee of the intention to claim a deduction is still required, but now must be given by the earlier of the time the person lodges their income tax return, or the end of the financial year following the year the contribution was paid.
ALLOCATIONS BY TRUSTEE MAY BE TREATED AS “CONSESSIONAL CONTRIBUTIONS To ensure the integrity of the concessional contributions cap, regulations may contain rules specifying that additional amounts allocated to an individual by the superannuation provider can also be included. For example an allocation of reserves or distribution of surplus to a member may be included when determining if they have exceeded the concessional contributions cap. This will be the case if contributions made by or on behalf of the member and investment earnings on those contributions exceed the cap and is paid in an attempt to circumvent the cap. Details of the regulations are needed before we are able to fully assess this change. The challenge will be to ensure that the regulations do not inadvertently apply to genuine allocation of reserves or distributions of surplus from the fund, not intended to circumvent the cap on concessional contributions.
PERSONAL INJURY PAYMENTS AND PROCEEDS OF THE SALE OF A SMALL BUSINESS The non-concessional contributions cap commenced from 10 May 2006 and is subject to ongoing exemptions relating to: • •
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payments for personal injuries resulting in permanent incapacity; and
amounts from the disposal of a qualifying small business asset.
T U R KSLEGAL