Notably, the draft legislation allows negative earnings to be carried forward and offset against future years. Otherwise the Treasury’s proposal is largely unchanged from the Government’s original announcement with the proposed amendments inserted into the Income Tax Assessment Act 1997 as Division 296 (Better targeted superannuation concessions).

How to prepare

This is an ideal time to undertake a detailed review of your superannuation, particularly if you are over or approaching the $3m threshold. Everybody’s circumstances are different and it is important to take action as soon as you can to ensure that there is sufficient time to action any planning opportunities. Although this is a significant increase in tax, superannuation is still a good investment vehicle.

A brief summary of the proposed tax

• An additional 15% tax is levied on the portion of earnings and growth (both realised and unrealised) of your individual super balance above $3m
• Losses are carried forward to future income years, but are not refunded
• Losses are lost on death
• The $3m threshold is not indexed
• The tax is levied to the individual and can be paid personally or request a release from the super fund
• Structured settlements (e.g. compensation proceeds, but not disability insurance).

For more details on the draft legislation click here.

Actions required

• Obtain copies of your member statements issued by your superannuation fund and/or financial statements for your SMSF
• Ascertain your current member balance(s)
• Confirm latest contributions made to your super fund
• If you have a spouse or partner, ascertain their super balances.

Contact your SW advisor for your tailored strategy or assist you with a comprehensive review of your superannuation to ensure you are maximising it to its fullest potential.

The post Update on $3m super balance tax appeared first on SW Accountants & Advisors.

The Draft is intended to replace 51 separate Legislative Instruments that currently specify recipients, circumstances and requirements that enable RCTIs to be issued.  This consolidation into a single Legislative Instrument is a positive simplification and aims to enable recipients to self-assess their eligibility more easily.

Who can issue Recipient Created Tax Invoices (RCTI)?

Holding a valid tax invoice (including a RCTI) is a prerequisite to claiming input tax credits, so ensuring compliance with these requirements is fundamental to meeting GST obligations for affected taxpayers.  Usually, it is the supplier of a taxable supply (e.g. the service provider) who will issue a tax invoice to the recipient (e.g. the customer). 

However, the Commissioner has the power to specify a class of tax invoices that may be issued by the recipient of the taxable supply, rather than by the supplier. This is relevant particularly in circumstances where the value of the supply is established by the recipient rather than the supplier, including where analysis of goods must be undertaken before their value can be ascertained.

The Draft is expected to have impact on GSTR 2000/10 which sets out generic rules which allow the use of RCTIs, without the need to apply to or notify the Commissioner.  Under the Draft, recipients that may issue RCTIs, subject to satisfying the relevant requirements as set out in the Draft, are:

• a government related entity
• a large business entity
• a business entity.

The requirements that must be satisfied by a recipient depend in part on the category of entity.  Where a recipient falls into more than one category, it only needs to satisfy the requirements applicable to at least one category.

Verification of GST registration

Section 7 of the Draft sets out the relevant requirements.  In broad terms these are largely consistent with current administrative practice. However, one critical change is the requirement for a recipient to take positive action to verify that the supplier is registered for GST. This verification needs to be done each and every time a RCTI is issued. This change is significantly more onerous than the current requirement to be reasonably satisfied of the GST registration of the supplier.

Should the Draft be implemented in its current form, many businesses issuing RCTIs will need to ensure that processes are in place to satisfy this verification requirement and retain evidence to substantiate that this requirement was satisfied. 

How we can help

Submissions in relation to the Draft are required by 16 December 2022 and SW would be happy to take into consideration your comments.

The Draft will take effect the day after the final instrument is registered, which is expected in early 2023. A submission point will be to request a transition period.

However, if you currently rely on one of the existing 51 Legislative Instruments when issuing RCTIs, we advise you to revisit your existing current RCTI arrangements to confirm compliance with the Draft before it takes effect.

If you would like to discuss the Draft, or your current RCTI arrangements, please contact any of the SW tax Directors listed or your primary SW contact.

The post RCTI changes include GST verification for every issue appeared first on SW Accountants & Advisors.