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Practice Update
November 2023
🔶 MEDICARE BULK BILLING 🔶
In a significant development, General Practitioners (GPs) in Australia will receive increased financial incentives to bulk-bill vulnerable patients, marking a crucial boost for the healthcare sector. These changes come in response to declining bulk-billing rates, with the new incentives tripling payments for pensioners, concession card holders, and children. The move, expected to cost $3.5 billion over the next five years, provides GPs with a $20.65 bonus in urban areas and nearly $40 in regional areas. Health Minister Mark Butler highlighted the importance of these incentives, stating they address the challenging financial state of the healthcare sector and boost confidence, with the bulk-billing incentive being part of a $6 billion package aimed at improving general practice viability and patient accessibility, making healthcare more affordable for all.
🔶 PROPOSED LEGISLATION ON SUPERANNUATION BALANCES 🔶
The government unveiled a draft legislation on October 3, 2023, aimed at imposing a higher tax rate on individuals with total superannuation balances (TSB) exceeding $3 million. The proposed tax rate is set at 30%, an increase from the current rate of 15%. Importantly, this elevated tax rate applies exclusively to “taxable superannuation earnings,” corresponding to the portion of TSB exceeding $3 million.
It's important to understand that an individual’s TSB encompasses all their superannuation interests, emphasizing that this threshold is assessed on a “per-individual-basis” rather than on a “per-account or “per-fund basis.” Notably, the proposed taxation mechanism is unconventional and may result in individuals paying tax on unrealized capital gains within their super funds.
While the consultation process for this draft legislation has concluded, professional accounting and superannuation bodies have submitted their feedback. As it stands, this is not yet law, but we continue to monitor developments as the draft legislation progresses towards its final release.
🔶 TAXATION OF SUPPORT PAYMENTS FOR BUSINESSES 🔶
Businesses that have received government support grants or payments to aid their recovery from events like COVID-19 or natural disasters should be aware of potential tax implications. Most grants are considered assessable income, but taxpayers may qualify for deductions if they use these funds for specific purposes, such as:
purchasing new assets,
repairing business premises, or
covering other business expenses.
However, some grants are classified as non-assessable, non-exempt (‘NANE’) income, meaning they need not be reported in tax returns if specific eligibility criteria are met. Examples of NANE grants encompass:
COVID-19 business support payments,
natural disaster grants, and
water infrastructure payments.
Taxpayer can only claim deductions for expenses directly related to earning assessable income, excluding expenses associated with obtaining the grant, such as accountant’s fees.
🔶 CAUTION IN SUPERANNUATION BENEFIT PAYMENTS 🔶
For self-managed superannuation fund (SMSF) trustees, careful attention is required when disbursing super benefits. Trustees must confirm that the member has reached their preservation age, met one of the conditions of release, and that the governing rules of the fund, like the trust deed, permit the payment.
Payments made to members who have not met a condition of release are not categorized as super benefits but rather taxed as ordinary income at the member’s marginal tax rate. Unlawfully releasing benefits may lead to significant penalties for the SMSF trustee, the SMSF itself, and the recipient of the early release, with the potential for trustee disqualification.
Furthermore, investment restrictions and other SMSF rules that apply in the accumulation phase continue to be relevant when members transition to receiving a pension from the SMSF. When a member qualifies for a condition of release, the trustee can distribute the benefit as a lump sum or super income stream (a pension). In the case of a member’s death, the trustee typically pays a death benefit to a dependent or other beneficiary following applicable rules.
🔶 NOTICE OF VISA DATA-MATCHING PROGRAM 🔶
The Australian Taxation Office (ATO) is set to acquire visa data from the Department of Home Affairs for the income years 2024 to 2026. This data will include information such as:
address history,
contact history,
visa details, and
international travel movements for visa applicants, sponsors, and migration agents.
The primary objectives of this program are to bolster tax and super reporting compliance and identify potential instances of fraud within the visa system.
🔶 ATO’S CYBERSECURITY ADVISORY: BE CYBER WISE, DON’T COMPROMISE 🔶
The ATO underscores the importance of safeguarding against cyber threats, especially given the alarming statistic of one reported cybercrime every seven minutes during the 2022 income year. To protect against cyber risks, taxpayers are advised to take the following steps:
Regularly update devices and software to maintain robust security. This prevents hackers from infiltrating data.
Implement multi-factor authentication (MFA) for enhanced account protection. This is a security tool that requires a minimum of two proofs of identity to grant access, such as an authenticator app, physical token, email, or SMS.
Back up important files to prevent data loss in case of an attack. Having an external drive is essential to prevent data recovery costs.
Use strong, complex passwords or passphrases to bolster account security. This makes it more challenging for hackers to gain access.
Employing these cybersecurity measures can significantly reduce the risk of falling victim to cyberattacks.
🔶LOSSES IN CRYPTO INVESTMENTS FOR SMSFs 🔶
The ATO has noted instances of SMSF trustees facing losses in their crypto asset investments due to various factors, including:
crypto scams, where trustees were conned into investing their superannuation benefits in a fake crypto exchange,
theft, where fraudsters would hack into trustees crypto accounts and steal all their crypto,
collapsed crypto trading platforms, many of whom were based overseas and
lost passwords resulting in trustees being locked out of their crypto account and being unable to access their crypto.
It is crucial for trustees considering crypto investments to understand these risks. The platform where you avail and sell crypto may not be regulated by Australian Securities and Investments Commission (ASIC) because not all crypto assets are classified as financial products. In this case, no protection may be available if the platform fails, which will cause you to most likely lose all of your crypto.
Given that many crypto assets are not regulated as financial products, trustees may lack protection in case of platform failure or hacking incidents. As a precaution, the ATO advises seeking financial advice before investing in crypto to navigate the complexities and mitigate potential losses.
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