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90/10 Rule

Discussion in 'Accounting, Tax & Legal' started by merlinnn, 30th May, 2010.

  1. merlinnn

    merlinnn Active Member

    Joined:
    1st Nov, 2009
    Posts:
    35
    Location:
    Brisbane
    Hi there,


    I was speaking to a financial adviser the other day and he mentioned something about a 90/10 rule applying to ABN holders as opposed to the current 80/20 rule that applys to company structures etc.

    Is this currently in place or proposed?

    The reason I am asking is I am currently subcontracting with my own company, but am unlikely to pass the 80/20 rule next financial year so I am looking at alternative options as opposed to just being an employee.

    Any thoughts or knowledge on this rule?


    Cheers
     
  2. funkandjunk

    funkandjunk Member

    Joined:
    28th Jun, 2010
    Posts:
    16
    Location:
    Sydney
    Hi

    Hi Merlin,

    Your financial advisor may be referring to the less than 10% rule in relation to making personal tax deductible contributions into superannuation.

    If that is the right context, then the rule states that if you wish to make a tax deductible contribution into superannuation as an individual, then your income attributable to employment + RESC (Salary sacrifice) + RFB (reportable fringe benefits) must be less than 10% of your overall assessable income + RESC + RFB.

    Not sure if I have got the right context here but that's the first thing that jumps to my mind when looking at the more than 10% rule.

    Regards

    Funky
     
  3. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Hey Merlin,

    Funky has covered off well in regards to obtaining a personal tax deduction for superannuation contribution you make on your on behalf.

    In regards to the 80/20 rule, this is one (of the four) PSI (Personal Services Income) tests.

    Rather than repost everything that has previously been written on the PSI rules and their application, please refer to the following Invested post from a few months back:

    http://www.invested.com.au/4/personal-services-income-37493/

    If you have any other questions in regards to PSI and how it applies to you, please fire them out and hopefully myself and other people here at Invested can help.

    Cheers
    SM