Sacrificing Your Salary

Following on from the earlier article regarding Super tips, this article provides a little more detail around the salary sacrificing strategy.

Due to the way tax is applied to superannuation, employees can not only save themselves tax by salary sacrificing but significantly boost their retirement savings.

An employee, by written agreement with their employer, can have money paid into their superannuation fund from their salary before tax is taken out.

These contributions reduce an employee’s personal tax bill as well as boost their superannuation as their superannuation is taxed at 15% rather than their employee’s marginal tax rate.

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Pre-CGT or Post-CGT

I was recently asked to advise on the application of the pre and post Capital Gains Tax (CGT) rules to the sale of a property.

By way of background, CGT was introduced to apply from 20 September 1985.

What this means is that any property purchased prior to 20 September 1985 is not subject to CGT and nothing but the change of ownership will change that. 

However, what is not uncommon is for land that was purchased before 20 September 1985 to have a building constructed on it after this date.

According to the Tax Act, the building is considered to be a separate asset to the land and is subject to CGT

If there is already a building on the land and you have simply made some improvements to it – unless those improvements are “significant” – the land and building will not be considered as separate assets. 

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PPSR - A Real Life Example

Many of you may have heard of the Personal Property Securities Act (PPSA) or the Personal Property Security Register (PPSR) which came into existence on 30 January 2012.

A recent case has highlighted exactly how this new legislation works and is a warning to anyone who lends money or leases assets to another party but fails to register that interest on the PPSR.

By way of background, the PPSA commenced on 30 January 2012 but was subject to a two year transitional period which ended 31 January 2014. 

These rules make reference to three key terms - Secured party, Collateral and Grantor.

The Secured party is the lender or owner of the asset, the Collateral is the security interest in the personal property and the Grantor is the borrower or lessee.

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Super Tips

With 30 June fast approaching, we thought it would be an ideal time to highlight a number of well known and perhaps not so well known tips to boosting your superannuation. 

Salary Sacrifice

As you get older, hopefully your financial commitments start to reduce i.e. no more expenses associated with having children, etc. Therefore, this is an ideal time to consider contributing more to your superannuation.

For the current financial year, you can contribute up to $30,000 a year into superannuation if you are under50 or up to $35,000 if you are 50 and over.

These contributions are taxed at 15% which in most situations is significantly less than your marginal tax rate.

Not only are you boosting to your superannuation, but you are saving tax at the same time!

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