Blog Page 3

What is a CGT event?

0

Capital Gains Tax (CGT) events occur when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. The timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect how their tax liability is calculated.

When a CGT asset is disposed of, the CGT event usually takes place when a contract for disposal is entered into. When there is no contract, the CGT event happens when an individual is no longer the owner of the asset.

Cases where a CGT asset is lost or destroyed, the CGT event will happen when the owner of the asset receives compensation for the loss or destruction. If no compensation is received, the CGT event takes place when the loss is discovered or when the destruction happened.

For some CGT events, such as exchanging an asset for a replacement asset, the law permits individuals to defer or rollover any capital gain they make until another CGT event takes place. If more than one CGT event happens, individuals must apply the rules for the one that is most specific to their situation.

CGT events can happen when:

  • Selling or giving away an asset.
  • The destruction or loss (voluntary or involuntary) of a CGT asset.
  • Receiving compensation for the loss, destruction or compulsory acquisition of a CGT asset.
  • The disposal of a depreciating asset used for non-taxable (private) purposes.
  • Capital distributions to company shareholders or unitholders in a unit trust or managed fund.
  • Shares or units being cancelled, surrendered, redeemed or declared worthless.
  • You stop being an Australian tax resident.
  • You enter into an agreement not to work in a particular industry for a set period of time
  • A trustee makes a non-assessable payment to you from a managed fund or other unit trusts.
  • A company makes a payment (not a dividend) to you as a shareholder.

Spring clean your finances

0

When it comes to your money, whether it be loans, insurance, savings or superannuation, having a ‘set and forget’ attitude can be detrimental to your long term finances. Checking in on the different aspects that make up your finances every now and then to see if they need freshening up is a good way to ensure you are getting the most out of your money.

Your budget:
Since a person’s income and expenses will change over time, making sure your budget is up to date can help keep track of your spending and calculate how long it will take to reach your savings goal. This is also impacted more by day to day and surprise expenses you may incur so regular assessment will better your planning.

Your mortgage:
With interest rates constantly changing, checking to see if you are still receiving a competitive rate can end up saving you money; the lower the interest rate, the quicker you can pay off your loan. By finding out your current interest rate and comparing it to other loans on the market, you may find there is a better deal out there for you.

Your savings:
Spring is the perfect time to reconsider the type of savings product you currently have and whether the return you receive on your savings is at the best rate out there. For those with a term deposit that is about to mature, consider whether there is another savings account that pays higher interest or if another term deposit is a better option.

Your superannuation:
To get to know your superannuation better this Spring, find your latest super statement and check the following:

  • If you have multiple super accounts: consolidating all of your super accounts to just one will save you fees and make it easier to keep track of.
  • Investment options: consider the best investment option for each stage of life when choosing super investments. Those who are more than ten years away from retirement may be more suited to an aggressive investment strategy which is likely to deliver higher returns. Those who are closer to retirement may want to use more conservative options to protect their wealth.
  • Contributions: consider how much you are currently contributing to your super; the sooner you start contributing extra, the less you have to give up each week to make a difference in the long-term. Lower income earners may also be entitled to a government co-contribution and mid-high income earners may be able to save tax.

Are they an employee or a contractor?

0

Employers that incorrectly treat employees as contractors can face hefty penalties and charges as well as claims for entitlements and superannuation contributions. Even if employers are only hiring someone for a few hours or a couple of days at a time, it must be established whether they are employees or contractors to get tax and super requirements right.

When hiring an individual, it is the details within the working agreement or contract that determines whether they are a contractor or employee for tax and super purposes. The agreement or contract the business has with the worker can be written or verbal.

Workers such as apprentices, trainees, labourers and trades assistants are always treated as employees. In most cases, apprentices and trainees are paid under an award and receive specific pay and conditions. Employers must meet the same tax and super obligations as they would for any other employees of the business.

Companies, trusts and partnerships are always contractors as an employee must be a person. If a company, trust or partnership has been hired to work, then it is a contracting relationship for tax and super purposes. The people who actually do the work may be directors, partners or employees of the contractor.

Sham contracting arrangements, where an employer attempts to disguise an employment relationship as an independent contracting arrangement, are illegal and breach the Fair Work Act 2009. Under the sham contracting provisions of the Fair Work Act 2009, an employer cannot:

  • Misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement.
  • Dismiss or threaten to dismiss an employee for the purpose of engaging them as an independent contractor.
  • Make a knowingly false statement to persuade or influence an employee to become an independent contractor

Employers who engage in sham contracting arrangements can face serious penalties for contraventions of these provisions. The courts may impose a maximum penalty of $54,000 per contravention.

Pin It on Pinterest

Share This