Blog

Gifting to employees

18 December 2023

Some employers, especially at Christmas time or for birthdays, give small gifts to their employees or the employee’s associates  (i.e. spouses). These gifts typically take the form of bottles of wine, movie tickets, gift vouchers etc. The tax treatment of these gifts from an employer standpoint, depends upon a range of factors including:

  • To whom the gifts are provided (e.g. employees or clients?)
  • Whether the gifts constitute entertainment
  • The dollar value of the gifts, and
  • The frequency with which they are provided.

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Getting the most benefit from fringe benefits

30 November 2023

The most cost-efficient benefit an employer can give an employee is one that is both deductible for income tax purposes and exempt from Fringe Benefits Tax (FBT).

One such type of benefit is the ‘work-related item’ FBT exemption.

Like all concessions, there are some requirements that must be met to take advantage of it.

What is as a work-related item?

For FBT purposes, a work-related item is a portable electronic device, an item of computer software, an item of protective clothing, a briefcase, or a tool of trade.

In practice, most of these are self-explanatory and need no further explanation – the exception being the first category of items, portable electronic devices.

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Is that ute really exempt from FBT?

30 November 2023

Recent media reports suggest the ATO may have concerns that some tradies could be taking liberties with the FBT exemption available for utes and panel vans where private use is claimed to be minimal. Utes have been selling like hotcakes for some time and are now the biggest selling new cars on the Australian market. These vehicles (the dual cabs in particular) often include features that are promoted to make them appealing for family and recreational use.

If you provide vans or utes to employees principally for work related purposes on the basis that such vehicles are exempt from FBT because the employees rarely use the vehicle for private travel and are relying on the ATO’s reduced record keeping concession, here’s a refresher on exactly how the FBT exemption works. Because if things don’t pass muster, it’s the employer who will be on the hook for any FBT found to be payable.

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Are you eligible to make a personal deductible superannuation contribution?

18 October 2023

Personal deductible contributions can allow individuals to claim a tax deduction for contributions they have made to superannuation provided they meet certain requirements. So what are these requirements and what should you look out for?

Eligibility requirements

You will be eligible to claim a deduction for your personal superannuation contributions if:

  • You meet the aged based rules
  • Your taxable income is more than the amount you want to claim as a deduction (ie, your deduction can’t give you a tax loss)
  • You make the contribution to a complying superannuation fund
  • You give a special notice to your fund telling the trustee how much you want to claim
  • You give your fund that notice within strict timeframes
  • Your fund sends you an acknowledgement confirming your notice has been received and is valid

You must meet all of the above criteria otherwise you won’t be eligible to claim a deduction for your contributions.

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Small business skills and training boost

7 October 2023

Looking to boost your employees’ skills and your tax deductions at the same time? Then keep reading to see if you could be eligible for the small business skills and training boost!

If you run a small or medium business and are planning on investing in, or recently invested in, training your employees, taking care to ensure the training is provided by a registered training provider could mean you can claim an additional 20% bonus tax deduction at tax time.

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Superannuation and the right to delegate

17 September 2023

Another key Federal Court case may have a bearing on whether you owe certain workers you engage superannuation guarantee or not.

For background, early last year the High Court made a game-changing decision in determining whether a worker is an employee or contractor at common law. It ruled that this is determined by the employment contract / agreement and whether it contains the usual indicators that tend toward a finding that a worker is an employee at common law including:

  • Does the business have control over the worker (e.g. what hours they work and how they do they do the work)?
  • Must the worker perform the work personally (rather than having the ability to delegate or subcontract the work to an outside party)?
  • Is the worker paid like an employee (e.g. hourly rate)?
  • Does the business supply the tools and equipment for the worker?
  • Does the business bear the risk and liability to outside parties for any defects in the work?

Where the answer to most of those questions is yes, then the worker is an employee at common law.

Up until the High Court’s decision, lower courts were looking at how individual work arrangements were playing out in practice when answering the above questions. The High Court however ruled that you should instead look at the rights and obligations set out in the respective contract between the parties rather than how the situation plays out after the contract is signed. This is provided that the contract was not a sham.

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Superannuation and age pension eligibility

23 August 2023

Come retirement, many folks rely on a combination of their superannuation savings and the age pension in order to financially sustain them moving forward. Accordingly, a front-of-mind issue for individuals is: at what point does your level of superannuation savings and payments impact your eligibility for the age pension?

While you are under age pension age, in relation to any Centrelink payment, Centrelink do not count your or your partner’s superannuation balance in either the income or assets test if your fund is not paying you a superannuation pension. However, if your fund is paying you a superannuation pension, that pension is taken into account.

Once you reach age pension age, Centrelink counts your super both (a) in the assets test and (b) in the income test under the deeming rules. The same rules apply to your partner and their super when they are age pension age, even if they are not in receipt of a Centrelink payment.

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Work-related car expenses updated

5 August 2023

The ATO has announced that the cents per kilometre rate has increased to 85 cents per kilometre for 2023/24.

To recap, there are two methods to claim work-related car expenses as follows:

  1. Cents per kilometre method

This method is easier for record keeping, involves a simpler calculation, and is generally suited to those with less vehicle use.

You simply keep a record of the number of kilometres you’re traveling for work or for business over the duration of the year and you claim these the set rate.

The drawback of this method is that you are limited to a maximum of 5000 work related or business kilometres per year. That gives you a total maximum claim of $4,250. Thus, if you’re using your car a lot for work, you may find that this is method quite limiting.

  1. Logbook method

This method can allow for greater claims depending on how much you’re using your car for work or business.

However, there are more recordkeeping requirements – the main one being that you must keep a 12-week logbook that records all of your trips, both business and private for those 12 weeks.

At the end of the 12 weeks, you calculate your work related or business percentage use, and you can claim that percentage of all deductions for your car.

You also need to keep all receipts for fuel, insurance, registration, interest, and servicing throughout the year.

As mentioned, despite the additional effort, it can often lead to a greater claim if you are using your car a lot for work and business.

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Super guarantee increases to 11%

15 July 2023

The increase to the superannuation guarantee (SG) rate from 1 July 2023 will see more employees (and certain contractors) entitled to additional SG contributions on their pay. But what happens when income earned before 30 June is paid after 30 June 2023 – will employees be entitled to the higher SG rate of 11%?

SG is based on when an employee is paid

On 1 July 2023, the SG rate increased from 10.5% to 11%. In some cases, an employee’s pay period will cross over between June and July when the rate changes.

However, the percentage employers are required to apply is determined based on when the employee is paid, not when the income is earned. The rate of 11% will need to be applied to all ordinary time earnings (OTE) that are paid on and after 1 July 2023, even if some or all of the pay period it relates to is before 1 July 2023.

This means if the pay period ends on or before 30 June, but the pay date falls on or after 1 July, the 11% SG rate applies on those salary and wages. The date of the salary and wage payment determines the rate of SG payable, regardless of when the work was performed.

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Fair Work changes

12 July 2023

Although not related to tax, there are a number of changes on the Fair Work front that employers should be aware of:

Minimum wage increase

The National Minimum Wage applies to employees who aren’t covered by an award or registered agreement.

From 1 July 2023, the new National Minimum Wage will be $882.80 per week or $23.23 per hour.

The new National Minimum Wage will apply from the first full pay period starting on or after 1 July 2023. This means if your weekly pay period starts on Monday, the new rates will apply from Monday, 3 July 2023.

Note that if a worker is covered by a registered agreement, the minimum wage increase may apply to them. This is because the base pay rate in a registered agreement can’t be less than the base pay rate in the relevant award. Check your agreement by searching for it on the Commission’s website: Find an agreement

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