Accounting & Tax FAQ

Has legislation been introduced which could effect my family trust?

Yes. The Government recently introduced amendments to the Income Tax Assessment Act relating to Trust losses. The amendments set out rules in relation to Family Trust Elections that have to be satisfied before a deduction is allowed for the prior year and current year losses.

Under very limited circumstances, elections can be revoked - contact your accountant to find out more.

How could I be affected with my service company in trust?

In general, the main problem you have under the proposed section is that a Family Trust is defined as existing where an individual and child, or all of his/her family are the only persons capable of receiving the income from capital of a Trust. Most of our clients have a much wider definition of beneficiaries. You should have your existing Trust Deed examined for clarification of the definitions of beneficiaries in your Trusts.

I have also heard that there are significant changes proposed relating to companies acting either in their own right or trustees for the family trusts.

Yes. The obligation of your company (and costs of operating it) will be reduced dramatically when the corporate law simplification is introduced. Provided that the Articles of Association of your company allow it, you will no longer have to hold an annual general meeting or prepare accounts. Also, you will save time and money because your Annual Return to the ASIC. (Australian Securities & Investments Commission) will not need to include key financial securities data.

What is meant by the term "salary packaging" in the hospital environment?

Salary Packaging simply means the ability to rearrange your salary so that a part of it is redirected towards paying certain expenses in pre-tax dollars.

Why does it work?

Because Public Hospitals are Fringe Benefits Tax exempt.

What expenses should I "package" if this is made available to me?

In general, you will have limited choice as to where you can direct the packaged amount, but you must direct the amount involved towards non deductible expenditure, or reduction of any capital debt.

Can you offer some practical tips for "salary packaging"?

Our Consultants are skilled in answering any queries on the direction of the packaged payments. For the best advice, phone Nick Fennessy on (03) 9863 3107 or Steve Wilkie on (02) 9326 2788. Note: The example in the previous chart provides a net saving to the employee of $2,964 after tax. Conclusion: salary packaging is a very worthwhile exercise.

Disclaimer

This website is an information service and does not assume a duty of care. It contains general information only and should not be relied upon for the purpose of influencing, making or recommending a financial strategy. Bongiorno & Partners (Vic) Pty Ltd and Bongiorno Wealth Management Pty Ltd disclaim all responsibility for any loss suffered directly or indirectly by any person acting in reliance upon this information. The information in this website does not take into account your investment objectives, your particular needs or your financial situation. Opinions expressed are subject to change. We recommend you contact you adviser for further information.