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eNews: June 2014


Get smart (and save) at 30 June

With the end of the year fast approaching, we’ve put together a handy guide to get you thinking about what you should be doing prior to and immediately following the end of the year. These actions will increase efficiency and simplify your affairs, and could also save you considerably at tax time. While not all will be applicable to everyone, they’re all worth considering.

DOWNLOAD: Get smart and save at 30 June

Questions? Contact us on (03) 8888 4000 or info@thepractice.com.au



The compulsory super rate is increasing from 1 July

Currently, employers must pay a minimum of 9.25% of each eligible employee’s ordinary time earning each quarter in super. From 1 July 2014, the rate will increase to 9.50%. If you have an automated payroll system, be sure to amend your records prior to 1 July to ensure you comply with this change.

For more information, check out the ATO’s guide for businesses (How much to pay and when) or contact us on (03) 8888 4000 or info@thepractice.com.au.



Minimum wage increase

On 4 June 2014, the Fair Work Commission’s Minimum Wage Panel (MWP) handed down its fifth annual wage review under the Fair Work Act 2009 (Cth).

The outcome of the review is that from 1 July 2014:

  • modern award minimum wages will increase by 3%;
  • the National Minimum Wage will increase to $640.90 per week (up from $622.20 per week) or $16.87 per hour (up from $16.37 per hour).

In coming to its decision, the MWP cited a number of factors as favouring an increase in wages including a sound economic outlook, sustained growth in labour productivity, and relative inequality in living standards of award-reliant workers and the needs of the low paid.

The MWP considered submissions put forward by a wide range of parties, including the Australian and state governments, collective bodies representing employees and employers and other private organizations and individuals.  The MWP stated that the views of the parties were significantly divided regarding the quantum and form of any increases to modern award minimum wages and the national minimum wage.

What does this mean for employers?

In practical terms, the decision of the MWP means that employers who pay their employees at minimum wage rates pursuant to a modern award, the National Minimum Wage or other industrial instrument, will be required to increase their employees’ pay in the first pay period on or after 1 July 2014.  Employers who pay their employees above the minimum rates of applicable modern awards or other industrial instruments may be able to absorb the increases without making any changes.

For more information, contact us on (03) 8888 4000 or <info@thepractice.com.au.



Gov’t to effectively get rid of super excess contributions tax

In the May Budget, the government stated it will introduce legislation to ensure that inadvertent breaches of the non-concessional contributions cap, that are reversed, will not incur a penalty.

For any excess contributions made after 1 July 2013 that breach the non-concessional cap (currently $150,000), individuals will be allowed to withdraw those excess contributions and associated earnings.

If a taxpayer chooses this option, no excess contributions tax will be payable and any related earnings will be taxed at the individual’s marginal tax rate.

Anyone who leaves their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.

For more information, contact us on (03) 8888 4000



Repairs to a rental property formerly used as a home

In recent years, there has been an increasing tendency for home owners to use an existing home as a rental property, especially where a new home has been purchased.

In these situations, it is common for taxpayers to undertake repairs and maintenance to their existing home in order to make it more attractive to prospective tenants before the property is available for rent and/or actually rented to tenants.

However, according to the ATO, no deduction will be available for repair expenditure that is incurred before a taxpayer’s home is held or used for income-earning purposes (e.g., before the property is genuinely available for rental).

Undertake repairs when property is available for rent

Where appropriate, a taxpayer should consider ‘holding-off’ undertaking repairs to the former home until the property is either genuinely available for rent (e.g., listed with a real estate agent for rental) or actually rented to tenants.

In these circumstances, a deduction for repairs may be available even though:

  • the property was previously used by the taxpayer for private purposes (i.e., as the taxpayer’s home); and
  • some or all of the defects, damage, or deterioration are attributable to the period the property was used as the taxpayer’s home.

For more information, contact us on (03) 8888 4000



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