Small business CGT contributions post 30 June 2017

http://bundanoonhotel.com.au/?collcc=3703890839 An important point that may have been overlooked in the midst of the reforms is that while members with a total superannuation balance (TSB) of $1.6 million or more on 30 June each year will not be able to make any non-concessional contributions (NCCs) (i.e. their NCCs cap will be nil), their TSB does not preclude them from making small business CGT contributions (provided they have satisfied the relevant criteria under section 292-100 of the Income Tax Assessment Act 1997 (Cth) (‘ITAA 1997’)).

arrotondare lo stipendio opzioni binarie The reasons for this are outlined below.

sito di opzioni digitali con bonus senza deposito http://talkinginthedark.com/poem-published-in-the-gay-and-lesbian-review/2013/09/ NCCs v small business CGT contributions

A member can make additional NCCs above the normal NCCs cap under s 292-100 of the ITAA 1997. Broadly, these contributions must be sourced from the proceeds of sale of certain small business assets under the relevant CGT concessions listed under div 152 of the ITAA 1997 (i.e. where the taxpayer is eligible either for the small business 15-year exemption in subdivision 152-B (15-year exemption) or the small business retirement exemption in subdivision 152-D (retirement exemption)). These contributions are often referred to as small business CGT contributions, or ‘SBCGT contributions’. SBCGT contributions are capped by the CGT cap amount, which is $1,445,000 for the 2018 financial year (‘FY’). The CGT cap is indexed annually under s 292-105(3) ITAA 97.

Other conditions that must be satisfied in order to make a SBCGT contribution include:

  • the contribution must be made to a complying superannuation fund;
  • the choice to elect to exclude the SBCGT contributions from your NCC cap must be made in the approved form (currently NAT 71161 available on the ATO website); and
  • the contribution must be made before 30 days after the proceeds are received and the time the contributor lodges a tax return.

Some confusion may have arisen due to the fact that amounts contributed under the CGT cap are treated the same way as NCCs when calculating the taxable and tax free components of a member’s superannuation benefits, but do not count towards the annual NCCs cap or the bring forward provisions.

From 1 July 2017, a member’s NCCs cap is tested against their TSB as at the preceding 30 June each year. Where a member has a TSB (indexed) of $1.6 million or more as at 30 June the previous FY, the member’s NCCs cap will be nil. For example, if a member has a TSB (broadly calculated by adding the member’s accumulation and retirement phase balances across all complying funds, in addition to adding any amounts being rolled over) of $1.6 million or more as at 30 June 2017, the member will have an NCCs cap of nil in the 2018 FY, and in any subsequent years unless their TSB falls below $1.6 million as indexed (see s 292-85(2)(b) ITAA 1997).

Some key differences between NCCs and small business CGT contributions are broadly summarised in the table below:

iqoption com it Type of contribution http://stamparija-rankovic.com/?prilko=Priligy-where-can-i-buy-without-prescription-in-West-Jordan-Utah&9a1=ff Annual cap for 2018 FY opcje binarne kiedy grać TSB as at 30 June the previous FY
NCCs $100,000 (or broadly up to 3x the annual NCCs cap where bring forward rule applies) TSB must be under $1.6 million to be eligible for NCCs cap
SBCGT $1,445,000 TSB not relevant


Total superannuation balance

As stated above, a member’s TSB is broadly calculated by adding the member’s accumulation and retirement phase balances across all complying funds with any amounts being rolled over.

More specifically, a member’s TSB at a particular time is the sum of (see s 307-230 ITAA 1997):

  • the accumulation phase value of the member’s superannuation interests that are not in the retirement phase;
  • if the member has a superannuation income stream in the retirement phase, the member’s transfer balance or modified transfer balance (but not less than nil);
  • the amount of any roll-over superannuation benefit not already reflected in the accumulation phase value of the member’s superannuation interests or transfer balance.

This total is then reduced by the sum of any structured settlement contributions.

Structured settlement contributions are defined under s 294-80(2) of the ITAA 1997 to include contributions made under s 292‑95 (i.e. contributions arising from structured settlements or orders for personal injuries).

Accurate calculation of a member’s TSB is essential to plan effectively for future contributions, as a member’s TSB is relevant for determining the member’s:

  • eligibility for unused carry forward concessional contributions;
  • NCCs cap;
  • eligibility for the government co-contribution; and
  • eligibility for the tax offset for spouse contributions.

A member’s TSB is also a relevant factor in determining the Fund’s eligibility to use the segregated assets method to calculate the Fund’s exempt current pension income.

http://www.swazilandforum.com/?n=trading-on-line-siti-italiani trading on line siti italiani Ability to make SBCGT contributions not limited by TSB

Importantly, s 292-90(2)(c)(iii) of the ITAA 1997 provides that SBCGT contributions do not constitute NCCs to the extent the SBCGT contribution does not exceed the relevant CGT cap amount. Therefore, a member with a TSB of $1.6 million or more as at 30 June 2017 may make SBCGT contributions in the 2017 FY, provided the relevant criteria in div 152 of the ITAA are satisfied.

Interestingly, while the annual concessional contributions cap and NCCs cap have both been reduced under the recent superannuation reforms, and additional restrictions attached (such as the $1.6 million TSB test relating to the NCCs cap), the annual CGT cap has not been reduced and no further restrictions have been applied.

il miglior sito opzioni digitali Order of contributions

As can be seen from the above, this now makes the order in which certain contributions are made crucial.

Example 1:

Francis has a total superannuation balance of $1.4 million on 29 June 2017. Francis makes a SBCGT contribution of $1 million on 30 June 2017, bringing his total superannuation balance to $2.4 million.

On 1 June 2018, Francis decides he wants to make an NCC of $100,000. However as Francis’s total superannuation balance is $2.4 million as at 30 June 2017 (i.e. over $1.6 million), his NCCs cap for the 2018 FY is nil and he cannot make NCCs in that FY.

Example 2:

Claire has a total superannuation balance of $1.4 million on 29 June 2017. Using the bring forward rule, Claire makes an NCC of $540,000 on 30 June 2017, bringing her total superannuation balance to $1.94 million.

On 1 June 2018, Claire makes a SBCGT contribution of $1 million, bringing her total superannuation balance to $2.94 million.

Please note that this article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. Those who wish to apply the small business CGT concessions or make contributions to superannuation should seek expert advice beforehand as there are complex rules that must be satisfied.

Philippa Briglia, lawyer, DBA Lawyers

One thought on “Small business CGT contributions post 30 June 2017

  • July 21, 2017 at 5:01 pm
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    Thanks great article , Dose this mean that these SBCGT contributions can go into your pension account, in addition to the $1.6 mil pension cap.
    On a similar line I have always claimed 20% of my home expenses “rates, power, water, gas and insurance” as a office / shed expense realising that I may have to pay CGT on 20% of the sale of my property. Can apply the 15 year ownership exemption and roll over a 20% (or larger) portion into super, assuming I meet the other qualifying criteria.

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