Superannuation contributions splitting

If a person makes a personal contribution to their own super fund and splits part of that contribution to their spouse’s super account, it is important to remember they cannot claim the superannuation spouse contributions tax offset for this contribution.

However, if they make a contribution directly to their spouse’s account they may be able to claim a tax offset, provided the spouse’s assessable annual income plus reportable fringe benefits is less than $13,800.

Capital gains tax and property

Changes have been made so that certain costs relating to property which were not previously included in the cost base and the reduced cost base must now be included.

These include:

* certain incidental costs of buying and selling property,
* costs of owning property in addition to non-capital costs like interest and maintenance, and
* costs of preserving the value of property and not just to increase its value.

These changes only affect property disposed of on or after 1 July 2005, however relevant costs incurred before that date must be included in the cost base and reduced cost base.

Capital returns

In the 2005-06 tax year, more than 850,000 individuals and self managed superannuation funds have received capital returns on listed company shares.

As a result of these capital returns, these shareholders will have to adjust the cost base of their shares and some may make capital gains which must be declared in their 2006 tax return.

The Tax Office will have a number of publications on its website from 1 July 2006 which provide advice on the tax consequences and/or treatment of capital returns from listed shares and share buy-backs including:

* Guide to Capital Gains Tax (which can also be ordered by phoning 1300 720 092)
* Non-assessable payments, and
* Key events for Australian shareholders.

There is also a range of detailed fact sheets on the website on the tax consequences of capital returns relating to specific companies including:

* Aristocrat
* CSR, and
* AMP.

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Share buybacks

During the 2005-06 tax year, listed companies in Australia have also bought back more than 150 million shares worth in excess of $3.5 billion.

Shareholders who have participated in these buy-backs need to calculate any capital gain or loss for inclusion in their 2006 tax return. Dividends paid as part of the buy-back must also be declared in their return.

Publications on the Tax Office website from 1 July 2006 which provide advice on the tax consequences of share buy-backs include:

* Guide to Capital Gains Tax (which can also be ordered by phoning 1300 720 092)
* Share buybacks, and
* Key events for Australian shareholders.

There are also a range of detailed fact sheets on the website on the tax consequences of share buy-backs by specific companies including:

* BHP Billiton
* St George, and
* Westpac.

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