Navigating FBT at Christmas Time

Navigating Fringe Benefits Tax at Christmas

 

Fringe Benefits Tax (FBT) is a tax that employers pay for non-cash benefits they provide to their employees.  Rather than taxing the employees on these benefits, the employer pays fringe benefits tax.

Christmas provides employers with a great opportunity to reward their staff.  Understanding the key FBT considerations during Christmas time is crucial to avoid potential pitfalls and optimise tax outcomes.

Christmas parties

Hosting a Christmas party is also a great way to celebrate the end of the year.  However, there may FBT implications associated with the party.

The costs associated with Christmas parties (for example, food and drink) are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. 

Alternatively, if you hold your Christmas party away from your business premises, the party will be exempt if it costs less than $300 per employee.

Christmas presents

Gifts that are given to employees can attract FBT.  However, if the value of the gift is below $300 per employee, it is exempt. 

Tax deductions and GST

You can only claim a tax deduction and GST on benefits that are subject to FBT.  So, if the benefits you are providing to your employees (gifts and/or Christmas party) are under $300 and exempt from FBT, they will not be tax deductible nor can you claim any GST on the cost.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Lodgement – Penalty Amnesty

Small Business Lodgement – Penalty Amnesty

As part of the 2023-24 Budget the Federal Government announced a small business lodgement penalty amnesty.  This is a time-limited initiative introduced to provide small business owners with the chance to get their tax obligations up-to-date without incurring any late lodgement penalties.  The amnesty is effective from 1 July 2023 until 31 December 2023.

To be eligible you will need to meet the following criteria:

  • You are a small business with an aggregated turnover of less than $10 million at the time the original lodgement was due.
  • You have outstanding income tax returns, business activity statements and/or fringe benefits tax returns that were due between 1 December 2019 – 28 February 2022.
  • Eligible overdue forms are lodged between 1 June 2023 and 31 December 2023.

If you lodge your outstanding returns as part of the amnesty, any late lodgement penalty will be remitted.

The amnesty doesn’t apply to private owned groups or individuals controlling over $5 million of net wealth.

Please contact us if you have outstanding lodgements and would like assistance in getting these up-to-date.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Increased Penalty Units: Implications for Taxpayers

Increased Penalty Units: Implications for Taxpayers


Under tax laws, the ATO can impose administrative penalties if you fail to meet your tax obligations.

From 1 July 2023, the base penalty unit has increased by almost 14% to $313

When the ATO imposes penalties, they can calculate the penalty using either:

  • a statutory formula, based on the taxpayers behaviour and the amount of tax avoided; or
  • multiples of the base penalty unit.
Examples of Tax Penalties

These are some of the examples of penalties that the ATO may impose:

  • Failing to retaining records as required (maximum 20 penalty units = $6,260)
  • Failing to register (or cancel) GST registration when required (maximum 20 penalty units = $6,260)
  • Failure to lodge a return or statement for a small entity (1 penalty unit for each 28 days late, up to 5 penalty units = $313 to $1,565)

Superannuation funds

The increase in penalty units can impact significantly on superannuation funds.  For superannuation funds, the penalty units are imposed per trusteeWhere a fund has a corporate trustee, the penalty will be imposed solely on the corporate trustee.  However, where a fund has individual trustees, the penalty will be imposed on each trustee.  Effectively doubling the penalty where the fund has two individual trustees.

This is another reason that we recommend that a superannuation fund should have a corporate trustee.

It is possible to change the trustee of your superfund to a corporate trustee.  Please contact us if you would like to discuss this further.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Technology Investment Boost

Small Business Technology Investment Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for eligible technology expenditure.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will be able to claim an additional 20% deduction for expenses incurred to support their digital operations.

The boost is available for expenditure incurred between 29 March 2022 and 30 June 2023 and is capped at $100,000 per income year.  The maximum bonus deduction is $20,000 per income year.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

  1. You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
  2. The expenditure is “eligible expenditure” (see below);
  3. The expenditure is deductible for your business under Australian tax law;
  4. The expenditure has been incurred between 29 March 2022 and 30 June 2023.

Eligible expenditure

Eligible expenditure may include (but is not limited to):

  • digital enabling items;
  • digital media and marketing;
  • e-commerce;
  • cyber security.

At the end of this article we have included a table of example expenditure that may be eligible for the boost.

What cannot be claimed?

You cannot claim the following expenses towards the boost:

  • Salary and wages
  • Capital works costs
  • Financing costs
  • Training or education costs (but these may be eligible for the Small Business Skills and Training Boost)
  • Expenses that form part of your trading stock.

Cap on the deduction

There is an annual cap of $100,000 on eligible expenditure (with the bonus deduction capped at $20,000).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your technology expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been incurred to help digitise your business;

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software;

4. Provide us (your accountant) with the details of all relevant costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.

Examples of Possible Eligible Expenditure

Category

Example expenditure

Digital enabling items

Computer and telecommunications hardware

  • Desktop and laptop computers
  • Digital tablets
  • Computer keyboards
  • Webcams
  • Computer mouse, trackpads, stylus
  • Computer cables
  • Powerpacks
  • Electrical and power adapters
  • Repairs and improvement costs to computer hardware and equipment

Digital enabling items

Telecommunications hardware and equipment

  • Landline phones
  • Mobile phones
  • Smart watches
  • Telephone accessories
  • Repair and maintenance costs

Digital enabling items

Software

  • Initial purchase
  • Annual subscriptions (eg. accounting software subscriptions, Office 365, anti-virus, ServiceM8)

Digital enabling items

Internet

  • Usage costs
  • Connection costs
  • Repair costs

Digital enabling items

Computer systems

  • Subscriptions to support digital capabilities
  • Help desk support fees and charges
  • IT support charges
  • Repairs and improvement costs

Digital media and marketing

  • Audio and visual content creation
  • Web page design
  • Web page update costs
  • Search engine optimisation fees
  • Email marketing fees
  • Photo stock fees
  • Music royalty fees

E-Commerce

  • E-commerce website setup
  • E-commerce website optimisation
  • Setup of social media store functionality
  • Costs associated with setting up online methods of payment
  • Photography costs for online display
  • Photostock fees
  • Portable payment devices
  • Digital inventory management
  • Subscription to cloud-based services
  • Advice on digital operations

Cyber Security

  • Cyber security consultant fees
  • Cyber security software (eg. anti-virus)
  • Cyber security installation and implementation costs
  • Cyber security backup management
  • Cyber security monitoring services

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Skills and Training Boost

Small Business Skills and Training Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for expenditure on staff training.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will receive an additional 20% deduction for expenditure on external training courses delivered to employees by registered training providers.

The additional deduction will apply to expenditure incurred between 29 March 2022 to 30 June 2024.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

  1. You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
  2. The training is provided to employees of your business (the boost does not apply to training provided to sole traders, partners in a partnership or independent contractors);
  3. The training is provided either in-person in Australia or online;
  4. The training is provided by a registered training organisation that is not you or an associate of yours – you can check here for registered providers: https://training.gov.au/
  5. The expenditure is deductible for your business under Australian tax law;
  6. The expenditure has been incurred between 29 March 2022 and 30 June 2024.

Expenses you can claim

The boost applies to expenditure on training and also incidental costs (for example: books or equipment).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2023 and 30 June 2024, you claim both the 100% deduction and the 20% bonus in the 2024 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your training expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been provided by a registered training provider (refer: https://training.gov.au/)

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software.

4. Provide us (your accountant) with the details of all relevant training costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Paying ATO liabilities

When dealing with taxpayers and their outstanding liabilities, the ATO have announced that they will be tailoring their communication based on the taxpayer’s previous behaviour and choices. 

The ATO will be using data about the taxpayer’s previous behaviour, obligations and risk profile to tailor how they respond to the late payment.  This will mean:

* The first notification you receive may be different than before;

* The ATO may contact you in different ways, including by letter and phone.  If you have linked your myGov account to the ATO, letters will be sent to your myGov Inbox;

* The ATO may take appropriate action after only eight days.If you are having trouble paying your ATO liabilities, please contact us immediately.  It is important that we communicate with the ATO to ensure no further action is taken.


Xavier Quenon from Go Mortgage (based in Helensvale) recently wrote an article recently about the impact of ATO debt on borrowing capacity.  You can access the article here.

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DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,