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Details of tax calculation for $3m threshold a 'mixed blessing

The proposed tax on earnings calculation for balances exceeding $3 million will see some members paying tax on unrealised earnings, says the SMSF Association.

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Treasury has released a fact sheet explaining the details of how tax on earnings will be calculated in the wake of its decision to revise the treatment of super balances above $3 million.

 

SMSF Association chief executive Peter Burgess said the good news was that it meant super funds, including SMSFs, would not be required to calculate the earnings attributable to the member’s balance above $3 million.

“The ATO will use a prescribed formula to calculate the proportion of total earnings which will be subject to additional 15 per cent tax,” Mr Burgess said.

“Negative earnings can be carried forward and offset against this tax in future year’s tax liabilities.

However, on the debit side, the ATO will be using an individual’s total super balance to calculate their earnings, which means it will include all notional (unrealised) gains and losses.

“This essentially means some members will be paying tax on unrealised earnings which is highly unusual,” he said.

Mr Burgess said the association’s preferred approach would have been for the ATO to do a calculation of "notional earnings" using a similar approach to the existing excess contributions tax regime.

The fact sheet states that the ATO will use a set formula to calculate the earnings based on the information it receives from each super fund every year.

This formula will calculate the difference between the member’s total super balance for the current and previous financial year and adjust for net contributions (excluding contributions tax paid by the fund on behalf of the member) and withdrawals, it said.

The ATO already uses super fund reporting to calculate the total amount that individuals have in the super system.

 

 

 

Miranda Brownlee
03 March 2023
accountantsdaily.com.au

 

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Want to join our team? Various opportunities and positions become available from time to time. Currently we have the following positions available:

Accountant

Key Responsibilities will Include:

  • Preparation of Financial Statements and Tax Returns for Individuals, Companies, Trusts, Partnerships and SMSFs.
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Graduate/Trainee Accountant

Key Responsibilities will include:

  • Preparation of Financial Statements and Tax Returns for Individuals, Companies, Trusts, Partnerships and SMSFs.
  • Preparation of BAS/IAS.
  • Liaise with clients.
  • Communicate with the ATO and other regulatory bodies.

You’ll Need:

  • Recently finished or currently studying towards your degree.
  • Motivation to undertake further study.
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  • Eagerness to learn and high work ethic.

We offer full time, part time and casual employment options. All applications are treated with strict confidentiality.

If you are interested in applying for one of these positions, please email resume cover letter to accountant@mckinnonandco.com.au

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Philippa Whitting

Director

Education: Bachelor of Commerce, JCU

Qualifications: CPA, CTA, JP

Philippa commenced work at McKinnon & Co in 1982. In her spare time she enjoys looking after her beef cattle enterprise, equestrian activities, and spending time with family.

Stephen Klaproth

Senior Accountant

Education: Bachelor of Commerce – Major Accounting & Finance, USQ.

Qualifications: CA

Stephen works in our business services areas as well as assisting with Audits. On the weekend he enjoys the Tablelands outdoor lifestyle.

Chloe Bidner

Senior Accountant

Education: Bachelor of Business – Major Accounting, JCU.

Qualifications: CPA, Xero Advisor Certified.

Chloe works part time at McKinnon & Co predominantly in Business Services. When she is not at McKinnons, she works in her family business – FNQ Honey & Bees

Margaret Blakey

Senior Accountant

Education: Diploma of Financial Planning (Financial Services)

Qualifications: JP

Margaret commenced accounting in 1990, and has experience in the accounting, finance, banking and financial services sectors. In her spare time, she competes in dance sport ballroom dancing, as well as spending time with her family.

Leanne Johnston

Accountant. Manager of BAS, Payroll & Bookkeeping Department.

Education: Bachelor of Business – Major Accounting, USQ.

Qualifications: Xero Advisor Certified. Diploma In Accounting.

Leanne has recently completed her accounting degree and is looking to expand her knowledge with further study. In her spare time, she enjoys horse riding and planning travel adventures.

Valerie Orreal

Manager of SMSF Department.

Education: Bachelor of Science, JCU

Qualifications: Diploma of Family History

Valerie looks after all aspects of SMSFs. In her spare time, she enjoys reading, camping and beach trips.

Alison Richardson

Client Service Assistant

Alison started at McKinnon’s back in 1981 and is our longest serving employee, providing integral support to the office and our clients. She loves spending time with her family and spoiling her grandchildren.

Rebecca Setford

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Bec helps manage the day-to-day operations of our front office. She enjoys working hard and learning new skills. Outside of work she is a keen gym enthusiast.

Georgia Barbagallo

Receptionist

Our newest team member Georgia is enjoying learning the running of our front office. She is also studying Education and enjoys spending time with her adorable sausage dogs.

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