Do you know all the concessions that not-for-profit organisations are entitled to?
An eligible not-for-profit (NFPs) organisation may be entitled to claim certain tax concessions (e.g. FBT rebates and exemptions, GST concessions and income tax exemption).
These tax concessions are available if certain requirements are met (e.g. the NFP must be endorsed by the ATO to qualify for a certain concession).
Our reviews of many NFP organisations have found that the concessions in the FBT and GST laws are not being properly claimed resulting in excessive tax costs. Some NFPs are not claiming their rightful tax exemption and others are incorrectly claiming tax exemption. These incorrect applications of the tax laws often occur when staff are replaced or incorrect instructions are passed on to new staff or the new staff simply do not understand the “hand-over”.
Our initial “safety check” reviews may not come at a significant cost and invariably are significantly less than penalties and interest that otherwise would be charged by the ATO following their audit.
Please contact your Nexia Edwards Marshall NT Advisor if you would like us to undertake a “safety check” review. We are always pleased to give you a non-obligation quote.
Change in contribution caps – Check your pre-tax super contribution
As mentioned in previous top tax tips, from 1 July 2017 the concessional cap (i.e. the before tax contributions cap) will be $25,000 for all individuals regardless of age (for this current financial year, the cap is either $35,000 if 49 years or over or $30,000 for under 49 year olds).
This change means that to avoid a breach of the (lowered) concessional cap (and thereby incurring further taxes), an individual’s total concessional contributions (e.g. employer contributions such as the 9.5% superannuation guarantee charges, salary sacrifice and deductible contributions) should not exceed the new $25,000 cap.In particular, this may mean salary sacrifice arrangements may need to be reviewed before 1 July 2017.
Please contact us to discuss various strategies to avoid breaching the $25,000 concessional cap from 1 July 2017.
Super guarantee health check
Employers are obliged to pay superannuation guarantee contributions – currently at a minimum rate of 9.5% of ordinary time earnings – to all eligible workers earning $450 or more before tax in a calendar month. Employees include company directors who receive payments in their capacity as a director, and also contractors in certain circumstances).
Ordinary time earnings are generally what employees earn for their ordinary hours of work (e.g. commissions, shift loadings and allowances, but do not include overtime payments).
Superannuation guarantee contributions are usually made quarterly via SuperStream (i.e. a system whereby contributions are made either through electronic funds transfer or BPAY) and the employer would qualify for a tax deduction for such payments if such payments were made to a complying superannuation fund. Note, to qualify for a tax deduction in the 2017 income tax year, the contributions due by 28 July 2017 must be received by the recipient superannuation fund before 30 June 2017).
The penalties for failing to pay superannuation guarantee contributions are quite severe (i.e. the superannuation guarantee shortfall amounts, interest on those shortfall amounts and an administration fee of $20 per employee per quarter) Please contact us to ensure that the correct amount of superannuation guarantee contributions are paid by the due date.
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall NT Advisor.