If you are aged 65 years or older, you are currently able to make downsizer contributions of up to $300,000 into your superannuation fund from the sale of your main residence (as of 1 July 2018).
The Federal Budget recently announced that the age limit for downsizer contribution payments will be reduced from 65 to 60 once the relevant legislation has been passed.
This means that you can increase your super fund’s balance without impacting on your contribution caps (as it is not a non-concessional contribution), and this contribution can still be made even if your superannuation balance exceeds $1.6 million. It does however count towards your transfer balance cap, which is currently set at $1.6 million (increasing to $1.7 million for most people on 1 July 2021).
The downsizer contributions scheme can only be accessed once, so it can only apply when you sell or dispose of one home, including selling a part interest in a home. It is a one-time deal essentially and is not a tax-deductible amount.
You can however make multiple downsizer contributions from the proceeds of a single sale, but the total of the contributions cannot exceed $300,000 less than any other downsizer contributions that you have made.
You and your spouse can (in certain circumstances) both make downsizer contributions from the sale of the home even if the house was only owned by one of you, provided you both meet all the requirements.
These contributions will also come into account for determining whether or not you are eligible to receive the age pension.
If you would like more information on how to proceed with downsizer contributions, are looking to sell your home and wanting to continue with downsizer contributions from the sale, or just looking for guidance, we can help. Come speak with us.
Managing a trust comes with its share of responsibilities, especially regarding tax compliance.
To assist trustees and administrators, the ATO has provided a checklist that can be used to streamline the tax process. This is a crucial tool for ensuring that the trust’s affairs are managed efficiently and effectively in accordance with tax regulations.
Let’s delve deeper into what the Resolutions Checklist entails:
Distribution Resolutions: One of the primary tasks is to determine how income will be distributed among beneficiaries for the financial year. This resolution must be documented and finalised before 30 June to optimise tax outcomes for the trust and its beneficiaries. Trustees must consider each beneficiary’s tax position and financial circumstances when making distribution decisions.
Trustee Resolutions: Trustee decisions throughout the year, such as acquisitions or disposals of trust assets, loan agreements, or changes to the trust deed, need to be documented and ratified through resolutions. These resolutions serve as formal acknowledgments of the decisions made by the trustees and provide a clear record of the trust’s activities.
Trust Income Allocation: Trust income comprises various components, including assessable income, exempt income, and deductions. Trustees must accurately determine and record each component to ensure compliance with tax laws. Proper recording and reporting of income and expenses are essential for tax purposes and may impact the tax liabilities of both the trust and its beneficiaries.
Capital Gains Tax (CGT) Considerations: Trustees must review any CGT events during the year and determine the distribution of capital gains or losses among beneficiaries. CGT decisions can significantly affect the tax outcomes for both the trust and its beneficiaries, making careful consideration and documentation are essential.
Streaming Resolutions: Some trust deeds allow for income streaming, which involves allocating specific types of income to beneficiaries based on their individual tax preferences or circumstances. Trustees need to make resolutions to implement income streaming effectively, considering the trust deed provisions and tax implications.
Minutes and Records: All trustee resolutions and decisions must be documented in writing, including minutes of meetings and any supporting documentation. Proper record-keeping is crucial for demonstrating compliance with tax regulations and providing an audit trail of the trust’s activities.
Trust Deed Review and Update: Regular review and, if necessary, updating of the trust deed are essential to ensure that it remains compliant with current laws and regulations. Trust deeds should accurately reflect the intentions of the trustees and beneficiaries and provide a solid legal foundation for the trust’s operations.
Trustees can streamline the tax compliance process and minimise the risk of errors or oversights.
However, seeking professional advice is essential if you’re unsure about any aspect of trust management or tax obligations. With proper planning, documentation, and compliance, trustees can ensure that their trusts operate smoothly and remain compliant with tax laws.
Why not start a conversation with us today to find out how we could assist you with your trust documentation?
