November 2024 Round Up
This month’s round-up covers key updates on the ATO’s approach to unpaid tax and super as well as options to accessing super between ages 60 and 65. Click to read below:
1. Changes to ATO Collection of Unpaid Tax and Super: The ATO has ramped up efforts to collect unpaid tax and super. Stay informed on what’s changing and how to avoid penalties.
2. Accessing Super from Age 60 to 65: From age 60 to 65, your options for accessing super change. Understand the nuances and how to make the most of this stage in your retirement planning.
The ATO is changing their approach to collecting unpaid tax and super
Not paying tax affects everyone, and the ATO are taking a stand to help prevent businesses from putting other small businesses and employees at risk.
Businesses that act early are often better placed to get back on track and sustainably manage their finances.
They’re making it fairer for businesses that do the right thing, as they change their approach to collecting unpaid tax and super. They are now focusing on businesses who refuse to engage with us and continue to ignore their SMS and letter reminders.
This means you may see the ATO taking different steps to those you have seen in the past. This is a deliberate and targeted approach, taking into account compliance history:
- For businesses big and small, that don’t engage with the ATO or set up a payment plan for unpaid GST, pay as you go (PAYG) withholding or employee super, they will move more quickly to firmer actions such as Director Penalty Notices (DPNs) and garnishees.
- Directors of multiple companies who allow amounts of GST, PAYG withholding and employee super to go unpaid, and do not engage with the ATO, can expect them to look at their debts more holistically. These directors can expect to receive DPNs capturing the total value of these amounts across all related entities. If these directors don’t take action, the ATO can recover these amounts directly from them, putting their assets at risk.
As the ATO changes their approach to collecting unpaid tax and super, they’re making it fairer for compliant businesses that do the right thing and fulfil their tax obligations.
To prevent these firmer actions, businesses should take action now to pay in full or set up a payment plan.
If you are experiencing genuine financial hardship, additional options are available, including deferring payment due dates and interest remissions.
The key message the ATO would like you to remember is, if you can pay, please do and if you need more time to pay, don’t ignore it – act now to check if you can put in place a payment plan online or reach out for help.
You can find out more about what happens if you don’t pay here.
Simplified rules for accessing super from age 60 to 65
From 1 July 2024, the rules for accessing superannuation became somewhat simplified: the preservation age when you can begin to access your benefits is now effectively age 60. However, until you reach age 65, there are still potential restrictions on how you can access your super. You’ll need to “retire” before you can make lump sum withdrawals from your super account or move it into the favourable “retirement phase” when investment earnings within the fund become tax-free.
If you’re aged between 60 and 65 and wish to access some of your super, it’s a good time to re-examine the rules.
For anyone born after 30 June 1964, preservation age is age 60. If you are between 60 and 65 years old but haven’t yet retired, you can commence a transition to retirement income stream (TRIS). This allows you to receive a regular income of between 4% and 10% of your pension account balance each year. If you want to access more of your super, or withdraw it as a lump sum, you’ll need to satisfy a further condition of release. This includes reaching age 65, or “retirement”. Meeting these conditions is also relevant for tax purposes. TRIS payments to a person aged 60 or over are generally tax-free – regardless of whether they are retired or not – but the TRIS itself does not move into the “retirement phase” until a further condition such as retirement (or reaching age 65) is met.
To satisfy the retirement condition, an arrangement under which you were gainfully employed must have come to an end. If you’d already reached age 60 when that position ended, there are no further requirements, and your future work intentions aren’t relevant. If you hadn’t yet reached aged 60 when the position ended, the trustee of your fund must be reasonably satisfied that you intend never to again become gainfully employed, either on a full-time or a part-time basis. “Part-time” means working for at least 10 hours per week, so you could intend to work for less than 10 hours per week and still meet the “retirement” condition.
Any withdrawal strategy should be carefully planned to ensure you understand the implications of accessing your super. There are many factors to consider, such as the ongoing requirement to withdraw minimum pension amounts each year if you start a pension, implications for your transfer balance account, and interactions with the Age Pension.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation.
