Downsizing and its effect on Superannuation
Fiona McKinlay • January 9, 2019
As of this financial year, a new scheme has come into effect that could really benefit those that are over the age of 65.
As of this financial year, a new scheme has come into effect that could really benefit those that are over the age of 65.
While you could still be working but want to try to simplify your lives and sell the family home, you can make a downsizer contribution to your preferred superannuation of up to $300,000 from selling your home.
This contribution is on top of any existing contributions that you are already making. It does have some regulations around it. For instance, the home that you are selling can’t be a houseboat, even though it does have “house” in the name. It also can’t be a caravan or mobile home. However, any other type of residence should be recognized.
This is only a new initiative as we mention that came into effect as of the 1st of July 2018, so there are still a lot of questions to be answered. This is why a number of clients we serve on the Sunshine Coast have been coming to us at
Balanced Bookkeeping and Business Solutions to see their options.
Other things of note, even those the term downsizing implies that you are buying a smaller residency, you don’t actually have to purchase anything. The contribution is calculated on you selling, not buying.
There is a window of activity as well, as you have t make the contribution within 90 days of closing the sale on your home. Plenty of time if you want to do what I do and put all the money in a paddling pool and roll around in it.
You don’t have too, but when are you going to get that chance again?
One of the big misconceptions out there about the downsizer contribution is that you can claim it as a tax deduction. This is not true, it will have to be claimed on your taxes.
Of course, if you are thinking about claiming this, it is best to get all your personal options from the experts than reading a few general blogs about it. One of the things you should keep in mind is that claiming this scheme could affect your pension if you are currently on one.
Best to talk to the bookkeeping experts at Balanced Bookkeeping and Business Solutions for your best options.
Bookkeeping Services in Sunshine Coast & Surrounding Areas
And then there are employee payment summaries and the summary of income and expenses in a profit and loss statement, the record of debtors and creditors, asset purchases and expenditure on improvements, depreciation expense claims and capital gains tax, income tax returns and yearly reports, returns for PAYG withholding, fringe benefits tax (FBT), Goods and Services Tax (GST), and the taxable payments reporting system, meeting superannuation requirements… the list goes on and on.
With so many great software options including XERO, MYOB and Reckon. It’s vital for Balanced Bookkeeping and Business Solutions to be on top of them all. Our expert team can help tailor fit any software your business needs. We proudly keep the Sunshine Coast on top of their accounts. Ask us how we can help you today.
Balanced Bookkeeping and Business Solutions is a local Sunshine Coast company that provides a complete bookkeeping service and solutions for small to medium businesses and can cope easily with both the ATO and ACNC, so that you can pursue the far more rewarding and philanthropic business of fund-raising and distributing to the deserving foundation or trust of your choice.
Balanced Bookkeeping and Business Solutions is a local, Sunshine Coast business that provides a complete bookkeeping service and solutions for small to medium businesses. The principal of Balanced Bookkeeping and Business Solutions has worked in the accounting industry for over 20 years and is a qualified accountant and registered BAS agent, which means that you can discuss the pros and cons of casual and full time and part time employment, knowing that you will receive practical, constructive, valuable advice.
So, what is Fringe Benefits Tax? Simply put, it’s an extra tax that you cover for your employee that is for the benefit of the employee in lieu of paying them more money. The tax is calculated on the value of what is being used for FBT.
The fact is the Australia Goods and service tax, while it’s not going to just go away, has been around for a long time and people are still getting it wrong when they are doing their books.