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.

New super tax for balances over $3 million

Proposed New Tax for Superannuation Balances over $3 million

 

On 3 October 2023, the Federal Government released draft legislation proposing a 15% additional tax on earnings for individual superannuation balances that exceed $3 million.  The new measure is set to commence on 1 July 2025.

This proposed new tax will impact on individuals that have a total balance in super or more than $3 million (this is across all superannuation accounts held).

The 15% tax will be levied on the member’s account “earnings” which will be calculated as the movement between the member’s opening and closing balance for the year (after adjusting for withdrawals, contributions and other specific exclusions).  It will only apply to the proportion of an individual’s account balance that is above $3 million (so if your balance is only just over the $3 million threshold, only a small proportion of the earnings will be subject to the new tax).

This means that for individuals who have a total superannuation balance in excess of $3 million, a proportion of unrealised gains of the fund will be taxed at 15%.  This may cause a cash flow concern for the member as they will have to pay tax on gains that have not been realised (and may be held within illiquid assets).

Where there have been negative earnings, the loss can be carried forward to offset future “earnings”.  However, there is no provision in the draft legislation for the losses to be carried back to reduce prior year unrealised gains. 

As yet, there is also no provision for the $3 million threshold to be indexed.

The tax will be levied directly to the individual member (and not the superfund).  The ATO will issue an assessment to the member personally and they can elect to pay the liability personally or withdraw funds from their superfund balance to pay the liability.

We will keep you up to date on the progress of the draft legislation.  Please do not hesitate to contact us if you would like to discuss the impact of the proposals on your superannuation fund.

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 – Queensland Grant

Small Business Boost Grants Program

Queensland

 

The Queensland Government have released a new Small Business Grant that opens at 9am on 6 September 2023.

The Grant provides funding between $10,000 and $20,000 for eligible projects.  Applicants must contribute an equal amount to the funding requested under the grant.

The Business Boost grants assist small businesses to enhance their efficiency and productivity.  Specifically, it is aimed at funding 3 project areas:

  1. Future planning
  2. Specialised and automated software
  3. Planning and systems for staff management and development.

For more information about the grant, please refer to the Business Queensland website.

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 trustee.  Where 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.

Maximising Downsizer: A Strategy to Boost your Retirement Savings

Maximising Downsizer:

A Strategy to Boost your Retirement Savings

The Downsizer Contribution enables individuals to contribute additional money into super after selling their family home.

Eligibility

You are eligible to make a downsizer contribution if you meet the following conditions:

  1. You have reached the eligible age:
    • From 1 January 2023 – 55 years or older
    • From 1 July 2022 – 60 years or older
    • From 1 July 2018 – 65 years or older
  2. Your home was owned by you or your spouse for 10 years or more prior to sale (generally calculated from settlement of purchase to settlement of sale);
  3. Your home is in Australia (and is not a caravan, houseboat or other mobile home);
  4. The capital gain/loss on sale would be exempt (or partially exempt) under the CGT main residence exemption;
  5. You have not previously made a downsizer contribution.

How do I make the contribution?

If you meet the above conditions and can make a downsizer contribution, to make the contribution, you must:

  1. Provide your superfund with a Downsizer contribution into super form before or at the time of making the contribution (if you make multiple contributions, you must provide a form for each contribution – up to the maximum contribution limit of $300,000);
  2. Make the contribution within 90 days of receiving the proceeds of the sale (this is generally the settlement date).

How much can I contribute as a downsizer contribution?

You can make a downsizer contribution up to a maximum of $300,000 (each spouse) but the contribution can’t be greater than the total proceeds from the sale of your home.

How does a downsizer contribution differ to other types of super contributions?

The contribution doesn’t count towards any of the contribution caps (so these caps will still be available to you). 

The downsizer contributions will count towards your transfer balance cap.  This cap will be considered when determining eligibility for the age pension.

If I’m eligibility, should I make a contribution to super as a downsizer contribution?

This is a good question, and one that we are often asked as accountants.  Unfortunately, the question of should you make this contribution is one that a financial planner needs to answer for you.  As an accountant, we can give you the facts about whether or not you are eligible and the limits on what you are able to contribute.  However, we cannot advise whether you should do so.  We work closely with several financial planners and we can put you in touch with these planners.  They can provide you with holistic advice for your financial position and whether or not a downsizer contribution is right for you.

What should I do next?

If you are over the relevant age to make the downsizer contribution and you are thinking of selling your home, give us a call or book in a meeting to talk about your eligibility.

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.

ASIC and ATO scam emails

As your appointed tax agent, all official ATO contact about your tax affairs should be with our office.

There have been recent cases of fake ATO emails containing malware with the potential to infect your computer systems and lock access to your own data. Please do not open any emails allegedly from the ATO (or links or attachments in such emails). Contact us for assistance.

Any telephone callers purporting to be ATO officials or ATO debt collection agencies should also be referred to us. Under no circumstances should you give any personal or financial information over the phone. Nor should you transfer any funds as a result of such contact.

There have also been cases of fake ASIC emails. In some cases, these request you to click on a link to renew your company. While the emails look legitimate, they have been confirmed as a scam.

Whenever you are in doubt about email or telephone contact, please contact us immediately to confirm the authenticity.

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,