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Cap on death benefit ETPs

The cap on death benefit employment termination payments is $195,000 for the current income year and is indexed annually.

The cap limits the amount of death benefit ETPs payable by the same employment termination that is concessionally taxed.

The death benefit ETP cap operates independently of the life benefit ETP cap. This means that any death benefit ETPs the taxpayer receives do not count towards the life benefit ETP cap. Similarly, any life benefit ETPs the taxpayer receives do not count towards the death benefit ETP cap.

For example, the taxpayer’s spouse dies and he or she receives a death benefit ETP from the spouse’s employer. The taxpayer then resigns from their job and receives a life benefit ETP. The $185,000 cap applies separately to each payment.

The whole of income cap for the current year is $180,000.

ETP Death Benefits Tab

Payment to a Dependant: The tax-free component is non-assessable non-exempt income and is tax exempt and not to be included in Taxable Income.

Taxable Component Over the Recipient’s Cap: This is the amount of the Death Benefit that exceeds the ETP Death Benefits cap and is taxed at the top marginal rate of tax plus Medicare levy.

Maximum rate all ages: The maximum rate of tax is 45% plus 2% for the Temporary Budget Repair Levy for the income years ending 30 June 2016, 2017and 2018 regardless of the taxpayer’s age.

Payment to a Non-dependant:

Taxable Component Up to the Recipient’s cap: The amount received up to the recipient’s cap for an ETP Death benefit is taxed at marginal rates with an offset to ensure that tax is not charged at a rate higher than 30%.

Maximum rate all ages: The maximum rate off tax for all ages is 30%.

Death Benefit cap: The Death Benefit cap is a once only life-time cap for each Death Benefit received in consequence of the death of the same person.

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Taxable Component of Lump Sum:

Age 60 and over - Up to the low rate cap: This is non-assessable non-exempt income and is tax exempt and not to be included in taxable income.

Age 60 and over - Up to the untaxed plan cap - Taxed amount: This amount is subject to a tax rate of 15%.

Age 60 and over - Over the untaxed plan cap – Untaxed amount: This amount is subject to a tax rate of 45% plus 2% for the Temporary Budget Repair Levy for the income years ending 30 June 2016, 2017and 2018.

Preservation age:

55 to 59 years - Up to the low rate cap - Taxed amount: This amount is zero tax rated for offset purposes.

55 to 59 years - Up to the low rate cap - Untaxed amount: This amount is subject to a tax rate of 15%.

55 to 59 years - Over the untaxed plan cap - Taxed amount: This amount is subject to a tax rate of 15%

55 to 59 years - Over the untaxed plan cap - Untaxed amount: This amount is subject to a tax rate of 45% plus 2% for the Temporary Budget Repair Levy for the income years ending 30 June 2016, 2017and 2018.

Under 55 years - Up to the untaxed plan cap - Taxed amount: This amount is subject to a tax rate of 20%.

Under 55 years - Up to the untaxed plan cap - Untaxed amount: This amount is subject to a tax rate of 30%.

Under 55 years - Over the untaxed plan cap - Untaxed amount: This amount is subject to a tax rate of 45% plus 2% for the Temporary Budget Repair Levy for the income years ending 30 June 2016, 2017and 2018.

The relevant cap:

Low rate cap: This is the Total Taxable Component the taxpayer may receive in his or her lifetime. This amount is indexed annually.

Untaxed plan cap: This is the Total Taxable Component the taxpayer may receive in his or her lifetime. This amount is NOT indexed annually

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A Lump Sum Payment to a Dependant: The tax-free component is non-assessable non-exempt income and is tax exempt and not to be included in Taxable Income.

Paid to a Dependant:

Income stream – Taxable Component: This element is taxed in the fund is not assessable, not exempt income.

Income stream – Untaxed Element: This element is taxed at marginal tax rates and subject to a 10% tax offset.

Age of Deceased: The age of the deceased is required to work out the Tax-free component.

Age of recipient: The age of the recipient is required so that the correct rate of tax is applied to the Untaxed element.

Deceased 60 and above - Recipient any age – Untaxed amount: This amount is subject to an offset of 10%

Deceased Under 60 - Recipient any age – Taxed amount: This amount is subject to an offset of 15%

Deceased Under 60 – Recipient over 60 – Untaxed Element: This amount is taxed at marginal rates and is not subject to an offset.

Payment to a Non-dependant:

Lump sum – any age – Taxed Element: This amount is taxed at 15%

Lump sum – any age – Untaxed Element: This amount is taxed at 30%.

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Age 60 and over - Taxed amount: This amount is non-assessable non-exempt income and should not be included in taxable income.

Age 60 and over - Untaxed amount: This amount is subject to a tax rate of 10%.

Age 55 to 59 - Taxed amount: This amount is subject to a tax rate of 15%.

Age 55 to 59 - Untaxed amount: This amount is taxed at marginal rates and is not subject to a tax offset.

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Deceased Age 60 and over, dependant any age - Taxed amount: This amount is non-assessable non-exempt income and should not be included in taxable income.

Deceased under 60 and dependant Age 60 and over - Untaxed amount: This amount is subject to a tax rate of 10%.

Both deceased and dependant under 60 - Taxed amount: This amount is subject to a tax rate of 15%.

Any Age up to 60 - Untaxed amount: This amount is taxed at marginal rates and is not subject to a tax offset.

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The HECS-HELP, TSL and SFSS Repayment Rates contain the income thresholds and rates of tax for repayment of HECS-HELP, TSL and Student Supplementary Financial Scheme (SFSS) debt rates of payment.

This section consists of two columns of fields, one for HELP/TSL/SSL repayments and one for the Student Loan Repayment:

Ceiling: This is the amount at which tax at a higher rate is calculated.

% of Income: This is the rate of tax applicable to each income bracket.

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The Medicare Levy table contains the income thresholds and shading-out ranges for single and married taxpayers and Australian Government Pension recipients for the Medicare levy and the Medicare levy surcharge.

Levy rates

Standard Levy Rate: This is the standard Medicare levy payable by all taxpayers who are residents of Australia.

Shading Levy Rate: This is the shading-out rate that applies to taxpayers who have income in excess of the threshold.

Additionally with the introduction from 1 July 2014 of the 2% Budget repair levy, those details are included as the last entry following the family tax thresholds. Where the Adjusted taxable income or the GDP-Adjusted taxable income of the individual exceeds of $180,000, the 2% levy will be raised on the excess over $180,000.Image Removed

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Surcharge Rate

Additional Levy Rate: This is the additional Medicare levy surcharge levied on all Australian resident taxpayers who earn a taxable income above the applicable surcharge income threshold and do not have sufficient private hospital insurance.

Lower limit: This is the threshold of taxable income below which a taxpayer is exempt from the Medicare levy.

Upper limit: If a taxpayer's taxable income falls within the lower limit (defined in the previous field) and the upper limit, the levy is shaded-in at the rate defined in the Shading Levy rate field for the excess amount over the lower limit.

Family Children

Upper and Lower increments: If there are more than 6 dependent children or students, for each additional dependent child or student the lower limit increases by the lower increment and the upper limit increases by the upper increment.

Surcharge income thresholds

The Medicare levy surcharge is based on a three tier system with the maximum rate for those without sufficient private health cover being 1.5% based on their Adjusted taxable income or Combined adjusted taxable income for these purposes.

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Single: Income earners without adequate private patient hospital insurance are liable to an additional levy surcharge. This is the level of notional taxable income above which an unmarried taxpayer with no dependants incurs the additional Medicare levy rate.

Married/Family: Families without adequate private patient hospital insurance are liable to an additional levy surcharge. This is the level of notional income above which the combined taxable income for a family with no dependant's incurs the additional Medicare levy rate.

Extra child increment: Families who are liable to an additional levy surcharge on the basis of their combined taxable income are entitled to increment the surcharge income threshold according to the number of dependent children. This is the amount by which the surcharge income threshold is increased for each dependent child after the first.

This table contains the minimum Health Fund premiums payable in order to be sufficiently covered for Medicare Levy Surcharge purposes:

• Single and Family Income Ceilings

• Dependant Definition

• Minimum Premiums payable table

Dependant Definition

A Dependant needs to be an Australian resident for tax purposes. For a spouse, student or child only, they will be treated as a resident if they have always lived in Australia or they came to live in Australia permanently, unless they have set up a permanent home outside Australia.

Additionally, the dependant would have to be:

• Maintained by the taxpayer, and

• Under 21 years and not a student, or

• A full-time student under 25 years.

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Why Copy a Parameter Table?

The ONLY reason to copy a Parameter table would be to perform What-if Calculations for Tax Planning purposes.

For example

You may have a client who is turning 55 years of age next year, or is thinking of entering the Averaging System (either as a Primary Producer or a Special Professional), or is thinking of disposing of a lot of assets, and you want to know the tax effect of doing such things, then you would copy the 2017 Parameter Table and rename it to 2018, edit the tax rates and use it to calculate 2018 scenarios of tax payable.

To copy parameter tables:

1. Click Maintenance > Parameter Tables.

2. Highlight the PAYG Income year parameter table (in most instances this will be the Master Individual Table) and select Copy. The Add/Edit Parameter Tables dialog is displayed.

3. At the Name field give the Table a description by which you will easily recognise which year’s Tax Rates are being used

4. At the Year field, edit the year from the PAYG year to the current year.

5. You can elect to edit the Tax brackets or any of the values in the Parameter Tables now or at a later stage. Remember if you are editing Tax rates, then you must edit all four Tax Tables (Resident, Non-Resident, Minors and Non-Resident Minors) offered in the Add/Edit Parameter Tables dialog.

6. [F6] or [OK] to save the change.

Your Practice Parameter Table is now available for selection from the Parameter Tables Index.

To 'attach' this Practice Table to one of your What-if calculation scenarios, highlight the particular Calculation and click on the Properties Icon. At the Parameter Tables pane of the Properties dialog, Current field, click [F10] and select the table.

Name: The name of the Practice Parameter Table may be changed at any time. However, it should have a description that allows you to easily recognise which year's rates you are using. For example if you take a 2017 Table to use in 2018 calculations because you want to know what the taxpayer's tax liability might be in 2018 if certain events happen, then give the Table a description something like 2018 What-if Calculations.

The Estimate

The Estimate that is produced will be calculated in accordance with the Tax Rates so far published for the PAYGI income year.

As previously explained, you would not need to place reliance on the PAYGI Instalment Tax calculated as this would also be based on 2017 and not 2018 tax rates.

Description of fields:

Year: This field can be edited only when copying a parameter table. Once a parameter table has been copied, this field cannot be edited.

Edit: Select the table to edit. You may edit the Tax Rates (tax brackets) and the Parameters of Tax Rebates and Offsets now if that is required or close the Table [F6] or [OK] and do any editing required at a later stage. MYOB does not advise editing tax rates unless advised to do so because the Government has introduced new rates during the income year. You may, of course, edit rates in any copy of a Master table that you create for your own purposes.

If you make a mistake and wish to restore a Master table you have edited, select the ‘Copy from Master’ button and highlight the table to be copied and the corresponding Table in the Master Tax Tables dialog offered.

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AutoChange offers a search and replace function for Parameter Tables.

If you have used a Table other than the Master Table for the purpose of calculating the Estimate in several Calculation scenarios, and now want to revert to using the Master Table or another Table, the AutoChange function performs that function.

AutoChange searches through all the calculation scenarios in the Calculations Index and creates another Index which contains all the scenarios that use the same Practice Table rather than the current year Master Parameter table. The Practice Table in the Properties for each calculation may be replaced with the Master Table.

AutoChange deals with one year at a time: Therefore if you have changed Next Year’s table as well, you will need to perform the AutoChange functionality for Next Year as well.

To do this:

1. Click Maintenance > Parameter Tables.

2. Highlight the Practice Table for the current year that is to be replaced with the Master Table for the current year and select AutoChange.

3. At the AutoChange dialog, at the When used as: field select from the list one of the options – in most cases this will be Current Year,

4. At the With: field select either 2017 Year Defaults to re-establish the Default Master Tables or ‘Selected Year if you want to change to another Practice Table.

5. Click [OK].

6. At the Replace Tables Index click [Select] or [Select All].

7. Click [Execute].

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Update from Master allows you to replace the existing default parameter table with the Master table and would be used if you have mistakenly overtyped a rate or there is an incorrect rate which needs to be manually changed.

How to perform the Update from Master Function:

1. Click Maintenance > Parameter Tables.

The

is displayed.

1. Highlight the table to be updated.

2. Click [Update from Master...] to open the Select Master Tables Index.

3. Locate the corresponding table and click [Select].

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The Print Parameter Tables screen is used for selectively printing the parameter tables.

1. Click Maintenance > Parameter Table > Print, or

Click Reports

s.

1. Select one or more rate tables to be included in the report.

• Resident Tax Rates

• Non-Resident Tax Rates

• Resident Minor Tax Rates

• Non-Resident Minor Tax Rates

• Tax Offsets/HECS/Medicare

2. Click OK.

1. If you have started to print from the Reports menu, you will be offered to print a range of parameter tables according to year and description.

2. If required, set the Mask to be applied.
   A mask is a sorting device that allows only the table with the attributes you want to be included in the print run.

3. Click OK to continue.

4. At the Preview/Print screen select the printing options for this report and click OK.

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