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FBT and car logbooks

15 April 2023

With the end of the FBT year now here, are your car logbooks in order?

The operating cost method is used by many employers to calculate their car FBT liability. This method is particularly effective where the business use of the vehicle is high. Keeping a logbook is essential to use the operating cost method.

Employees need to prepare a logbook for any vehicle that you provide them with where there is an element of private use. The logbook period is for 12-weeks, which must be representative of typical usage. For example, a period where an employee is taking a block of annual leave is not representative.

Where employees share a vehicle during a year, each employee will need to prepare a logbook to substantiate their respective business use percentage.

Logbooks are valid for five FBT years (including the year the logbook is prepared), provided there is no significant change in the vehicle’s business use.  Once the five-year period expires, a new logbook will need to be kept if you wish to continue using the operating cost method. Therefore, if a logbook was last prepared in 2017/18, a new logbook is required for this FBT year (2022/23).

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Alliott Global Alliance Expands in Australia Through Appointment of i2 Advisory

27 March 2023

Alliott Global Alliance (‘AGA’), one of the largest and fastest-growing global multidisciplinary alliances with 215 member firms in 95 countries, has expanded its Australasian alliance by signing an agreement with Adelaide based i2 Advisory Chartered Accountants (‘i2 Advisory’).

Founded in 2012 and based in South Australia’s capital city, Adelaide, i2 Advisory is a seven-partner firm that offers accounting, tax compliance, business, and tax advisory, superannuation financial planning (i2 Wealth) and bookkeeping services.

The firm’s experienced partners are all ex-Deloitte and are supported by a team of professionals with backgrounds in property syndicate advising, business investment and long-term partnerships. Key sectors they provide services to include manufacturing, agribusiness, retail, health, high net worth individuals, hospitality & tourism, property, and private investors.

After achieving an impressive 13% growth over the last two years, the firm is looking to continue to expand its business consulting, property, and manufacturing services in the immediate future. Business is conducted at the firm in the Italian, Cantonese, Mandarin, Urdu, Hindi, Marathi, and English languages.

Partner David Inglis comments:

“By joining Alliott Global Alliance, we see an opportunity to allow us to maximise upon and build new trusted relationships with members in the region and globally, share best practices, expand on current client opportunities, and find support for our growing list of clients’ multijurisdictional needs that stretch beyond Australian borders.”

“For AGA and its members, we can add tangible value in this important and major global economy, and we are delighted to be AGA’s accounting and tax representative in South Australia.”

Alliott Global Alliance’s CEO, Giles Brake adds:

“Australia is the gateway to many international markets and is highly attractive to corporate and high net worth investors. Our growth strategy in the region is to appoint leading local accounting and law firms to represent us in the key business hubs. We are therefore delighted to welcome one of Adelaide’s fastest-growing firms, i2 Advisory. They join a growing group of well established, independent firms in the region that need to service their clients beyond their state and national borders. A very warm welcome to the i2 Advisory team.”

Through affiliation with AGA, local independent law and accounting firms can offer clients global reach and access to an extensive range of professional services that enable them to compete head-on with the larger international firms in their jurisdictions. Across the Asia Pacific region, AGA has member firms in China, Hong Kong, Bangladesh, Singapore, Indonesia, Malaysia, India, Australia, Papua New Guinea, New Zealand, Japan, South Korea, Nepal, Pakistan, Thailand, Taiwan, the Philippines, and Vietnam.

About i2 Advisory Chartered Accountants:

As Alliott Global Alliances’s accounting and tax member firm in Adelaide, the team at i2 Advisory are dedicated to working closely with individuals and business owners locally and internationally to improve productivity, cash flow and importantly the life of those involved and has delivered impressive results since commencing practice in 2012.

With no issue too big or too small, i2 Advisory offers an extensive range of tax and business advisory services with a focus on providing clients with optimum results to develop wealth and continue to build success. Open, regular communications ensure there are no surprises, assuring clients peace of mind.

Seven experienced directors and a team of over twenty diversely trained and enthusiastic professional staff are the key to i2 Advisory’s success and their expanding client base, with the firm’s proud differentiator being their hands on approach and ability to assist organisations with key steps involved with the implementation and strategic management of operating their businesses.

About Alliott Global Alliance:

Founded in 1979, and with 215 member firms in 95 countries Alliott Global Alliance is an international alliance of independent, law, accounting, and specialist advisory firms, working across the world Together as One.

Each of our members share a common goal: to learn and share knowledge, resources, and opportunities to make the world smaller and their businesses stronger.
We work with a spirit of generosity and openness — so that together, we can continue to fulfil our ambitions, gain greater experience, and drive mutual success.

Alliott Global Alliance is expanding fast, and the alliance has its sights set firmly on growing its legal and accounting membership to 100 countries. Opportunities are available to independent professional firms in specific countries in Africa, but also in Europe, China, the ASEAN region, Australasia, the Gulf Cooperation Council region, Central and South America and in North America. For information about membership email membership@nullalliottglobal.com.

Super in 2023

18 March 2023

Already rolling into March…2023 is flying by!

From a superannuation standpoint, following are just some of the changes you can expect this year:

Super guarantee increase

Employers face an increase to their SG liability this year. The rate of SG will increase from 10.5% to 11% from 1 July 2023, before gradually hitting 12% on 1 July 2027.

SG is payable on ordinary time earnings (which therefore excludes overtime payments) and may be payable to contractors as well as employees. A liability to a contractor will arise where the contract they work under is wholly or principally for their labour or skills.

The increased rate of 11% will need to be applied to any payments of ordinary time earnings made on and after 1 July 2023, even if some or all of the relevant pay period relates to work performed before 1 July.

A cap to end all caps

As  was announced on 28 February by the current government, a cap on the amount you can have inside superannuation taxed at 15% (not just in a tax-free retirement account) may be imminent. At present, the amount of super on which earnings are taxed at just 15% is unlimited. The government has announced that this 15% rate of tax will be limited to $3 million. Earnings on amounts exceeding that, will be taxed at 30% from 1 July 2025, the government has announced. However, even  if this cap finds its way into law,  99.5% of individuals will not be impacted as they hold less than $3 million in their super fund

An extra $200,000 into super this year

Although indexation has adversely contributed to the cost of living, it does have a superannuation upside!

The massive 7.8% inflation rate has triggered what’s called a double indexation in super – and means that the amount of money that can be put into tax-free super is going to turbocharge super contributions.

From July 1, the amount an individual can have in super where the earnings are tax-free when commencing retirement phase will jump from $1.7 million to $1.9 million. This is a significant change – the tax-free limit has only moved higher once since it was introduced in 2016 (moving by $100,000, from $1.6 million to $1.7 million). The $200,000 increase is a formality unless the government announces an indexation freeze in the upcoming May federal budget.

New work from home record keeping requirements

4 March 2023

Are you one of the five million Australians who claim work from home deductions? If so, stricter record-keeping rules may now apply.

For this financial year and moving forward, there are now only two methods to calculate your work from home claim:

  1. Revised fixed rate method (with new rules applying)
  2. Actual costs method (unchanged).

The actual costs method has never been all that popular because you need to keep records of every expense incurred and depreciating asset purchased, as well as evidence to show the work-related use of the expenses and depreciating assets. By way of example, to claim electricity expenses, the ATO suggests that you need to find out the cost per unit of power used, the average amount of units used per hour (power consumption per kilowatt hour for each appliance) and the number of hours the appliance was used for work-related purposes.

For this reason, the fixed rate method has been preferred (or in recent years the COVID shortcut method where you could simply claim 80 cents for each hour worked from home. Note, however, that the COVID-method is no longer available).

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Reduction in downsizer eligibility age

The eligibility age for downsizer contributions reduced from 60 to 55 years from 1 January 2023. This means if you are age 55 or older, you could invest the proceeds of the sale of your family home to your superannuation outside of your standard contribution caps.

Downsizer contributions

From 1 January 2023, if you’re aged 55 years or older you may be eligible to make a downsizer contribution of up to $300,000 (or $600,000 for a couple) to your superannuation fund from the proceeds of the sale of your home where specific requirements are met.

Downsizer contributions can be a great way of boosting your superannuation after retirement. As well as the extra capital they introduce, the contributions can also earn investment income that is either tax-free if you commence an income stream with the funds or be taxed at a concessional tax rate of as low as 15% whilst in accumulation phase.

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ATO New-Year Resolutions

4 February 2023

The ATO has released its new year resolutions…and there is not a gym in sight! According to the ATO the five new year’s resolutions to keep if you want to stay on top of your tax and super in 2023 are:

  1. Know if you’re in business or not

Are you earning an increasing income from a side-hustle?

If you answer yes to a few of the following questions, the more likely it is your activities are a business:

  • Do you intend to be in business?
  • Do you intend and have a prospect of making a profit from your activities?
  • Is the size or scale of your activity sufficient to make a profit?
  • Are your activities repeated and continuous?
  • Are your activities planned, organized, and carried out in a business-like manner? For example, do you:
    • keep business records and have a separate business bank account?
    • advertise and sell your goods and services to the public, rather than just to family or friends?
    • operate from business premises?
    • maintain required licences or qualifications?
    • have a formal business plan or budget?
    • have a business name or an ABN?

We can help you make this call as to whether your side-hustle may be a business.

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FBT exemption for electric vehicles

13 December 2022

Electric vehicles are set to become more affordable for both households and businesses after the government sealed a deal with crossbench Senators on legislation to exempt low and zero emission cars from fringe benefits tax (FBT).

The new law introduces an electric car discount in the form of an FBT exemption. This allows for car fringe benefits comprising the use or availability for use of an eligible car that is a zero or low emissions vehicle to be exempt from FBT. Specifically, a car benefit will be an exempt benefit for a year of tax if:

  • the car is a zero or low emissions vehicle (note the scheme has been extended to include plug-in electric and internal combustion hybrids until 1 April 2025)
  • the value of the car at the first retail sale was below the luxury car tax threshold for fuel efficient vehicles (currently $84,916), and
  • the car is first held and used on or after 1 July 2022.

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New work from home deduction rules

13 December 2022

The ATO has issued new draft guidelines around a new method (the revised fixed rate method) of calculating work-from-home running expenses from 1 July 2022 (as an alternative to calculating the actual work-related portion of all running expenses).

The new revised fixed rate method will replace both:

  • the 52 cents fixed-rate method set out in paragraph 5 of Practice Statement PS LA 2001/6 (for electricity and gas expenses, home office cleaning expenses and the decline in value of furniture and furnishings), and
  • the short-cut (COVID-19) 80 cents method (for all additional running expenses).

You are eligible to use the revised fixed-rate method from 1 July 2022 if you:

  • work from home to fulfil your employment duties or to run your business (a separate home office or dedicated work area is not required)
  • incur additional running expenses that are deductible, and
  • keep and retain records of the time spent working from home and of the additional running expenses incurred.

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On-boarding employees for the holiday rush

10 December 2022

Hiring additional employees to help with surging end-of-year demand? A New employment form,   accessed through ATO online services, will help reduce your compliance time.

It’s an easy way for your employees to provide you and the ATO with the information that the ATO need. If your new employee has a myGov account linked to the ATO, once signed in they can:

  • access ATO online services
  • go to the ‘Employment’ menu
  • select ‘New employment’ and complete the new form.

Your employees will need your ABN to complete the form. When they submit the form, their tax file number (TFN) declaration details are sent straight to the ATO, so you as their employer do not need to do this. The form will then enable them to print and give you the summary of their tax details. You’ll need the summary so you can input the data into your system.

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Xmas gifts from employers

5 December 2022

Christmas is traditionally a time of giving, including employers showing gratitude to their workers for a job well done throughout the year. However, depending on the nature and value of the gift, and also who it is gifted to, such magnanimity can potentially attract unwanted tax consequences. So how as an employer do you gift most tax-effectively this festive season?

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