Christmas and the Taxman

28 November 2021

When do employee gifts and celebrations attract fringe benefits tax (FBT)? And when are they exempt?

Christmas is traditionally a time of giving – including employers showing gratitude towards staff for a job well done. However, Christmas parties and gifts can attract the attention of the Taxman.

In certain circumstances, an employer can hold a Christmas party for staff and the cost of the party be exempt from Fringe Benefits Tax (FBT).

Take, for example, an employer who holds a Christmas party at a restaurant for employees and their partners and, apart from perhaps the Melbourne Cup, it is the only social function they provide for employees each year.  Where this is the case, the party is very likely to be exempt from FBT provided the per-head cost (dinner and drinks) is kept to less than $300 per person. To enjoy this exemption, the employer must use the “actual method” for valuing FBT meal entertainment.

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New laws to improve the way super is divided in divorce

7 November 2021

A new law will level up the playing field for divorcing couples to ensure both partners have fair and equitable access to superannuation, particularly during acrimonious family court proceedings.

For many Australians, superannuation is their second biggest asset aside from the family home. In a divorce situation, it’s important that both partners, including those with lower superannuation balances who may have taken time out of the workforce to care for children, get their fair share of available super.

In the case of an amicable divorce where both partners are being open and honest, splitting super is relatively straightforward. Yet it can be much harder to split when there is animosity between the divorcing couple, family law proceedings are occurring, and one partner is being dishonest or evasive about how much super they have.

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Avoid common mistakes in your business return, and include appropriate income

26 October 2021

We know you want to get your tax right, so it may help you this tax time to know how to avoid making what the ATO has found are the most common tax mistakes.

To do this make sure you have:

  • declared all income, including cash and online sales, dividends, interest, capital gains or one-off transactions such as selling equipment
  • accurately recorded the value of goods taken for private use and directors’ fees or other money drawn out of your business
  • correctly apportioned expenses that are used both privately and in your business, including adjusting your rent expenses if you store personal assets at your business premises
  • only claimed expenses you’re entitled to claim (for example capital improvements can’t be written off as a repair)
  • correctly claimed any business losses.

It’s important to have good records that are up to date. It can help to have a dedicated business bank account to help keep business transactions separate from your other finances.

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On the road: How to treat work-related travel and living away from home costs

6 October 2021

The ATO has released new guidance to help clarify the tax treatment of costs and allowances incurred when an employee travels – or spends time living away from home – for work.

Certain conditions need to be met to ensure an allowance can be considered a travel allowance:

  • None of the individual absences from the employee’s usual place of residence exceed 21 days.
  • The employee is not present in the same work location for 90 or more days in an FBT year.
  • The employee returns to their usual residence once their period away ends.

See the table below for a breakdown of the characteristics of travel allowances versus living away from home allowances.

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The ATO’s eligibility requirements for SMSF trustees or directors

26 September 2021

All members of a self-managed super fund (SMSF) must be individual trustees or directors of the fund’s corporate trustee. Anyone 18 years old or over can be a trustee or director of a super fund as long as they’re not under a legal disability (such as mental incapacity) or a disqualified person.

But other eligibility factors should not be overlooked. To knowingly act as a trustee, a trustee director or an office holder of a corporate trustee (such as secretary), while being a disqualified person, is an offence.

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What the new Your Future, Your Super means for you

5 September 2021

Recent legislative reforms to the superannuation arena are set to change the retirement savings landscape for many Australians.

The Federal Government says the Your Future, Your Super reforms will help ensure superannuation works in the best financial interests of all Australians by removing unnecessary waste, increasing accountability and transparency, and providing more flexibility for families and individuals.

The legislation increases the maximum number of allowable members in self-managed superannuation funds (SMSFs) and small APRA funds from four to six from 1 July 2021.

The reforms also extend the bring‑forward arrangements to people aged 65 and 66 for non-concessional contributions made on or after 1 July 2020. This change is on top of a previous reform that allowed people aged 65 and 66 to make contributions without meeting the work test.

The excess concessional contributions charge, which currently applies to contributions in excess of the concessional contributions cap, is to be removed from 1 July 2022, thereby ensuring people saving for their retirement are not financially disadvantaged by inadvertent breaches of the cap.

Australians will also be supported to make additional contributions to their superannuation to make up for amounts that they may have withdrawn due to COVID-19. From the 2021-22 financial year, individuals who released superannuation under the COVID-19 early release scheme will have the option of recontributing these amounts as non-concessional contributions, over and above the existing caps.

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COVID-19 Additional Business Support Grants

13 August 2021

The Government of South Australia has announced an additional COVID-19 Business Support Grant. This is available for industry sectors that are significantly impacted by the COVID-19 density and other trading restrictions applicable from 28 July 2021.

Grants of $3,000 for employing businesses and $1,000 for non-employing businesses will be available for businesses in eligible industry sectors (those that have been significantly impacted by the restrictions) that have experienced a decline in turnover of 30% or more as a result of the COVID-19 health trading restrictions introduced from 28 July 2021.

A further grant of $1,000 will be available for eligible businesses (both employing and non-employing) with a commercial premise in the Adelaide CBD. This recognises that an increased number of employees have been working from home (in line with health advice) and the flow on impact this has on businesses operating in the CBD.

This grant builds on the COVID-19 Business Support Grant – July 2021 which was announced in July and is supporting thousands of South Australian small and medium sized businesses that suffered a loss as a result of the restrictions (and subsequent lockdown) imposed on 20 July 2021. Businesses that received the COVID-19 Business Support Grant – July 2021 are eligible to receive the additional COVID‑19 Business Support Grant, subject to meeting all the eligibility criteria.
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Evidencing SMSF property valuations

11 August 2021

The ATO recently clarified the evidence that is required to support real property valuations within SMSFs, particularly in light of the unique challenges brought about by COVID-19.

Under SMSF regulations, assets must be valued at market value in an SMSF’s accounts and financial statements each year. SMSF auditors need to be in possession of sufficient appropriate audit evidence to support the value of a fund’s investments.

It’s worth noting that in 2018, the most common contravention identified by auditors and referred to ASIC was about such valuations. Before a change to regulations in July 2012, the compliance burden was less onerous; fund assets were only required to be valued every three years (except where the fund was paying a pension or it held in-house assets).

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COVID-19 Business Support Grant

22 July 2021

In response to the current stay at home order in South Australia, the State Government has announced a $100m emergency payment scheme to provide relief to businesses affected by the 7 day lockdown.

This is in the form of an emergency cash grant of $3,000 for employing businesses or $1,000 for those businesses who do not employ staff.  To be eligible for the grant a business needs to meet all of the following criteria at the start of the restriction period of 12:01am Tuesday 20 July 2021:

  • Be located within South Australia.
  • Have an annual turnover of $75,000 or more in 2020-21 or 2019-20, and be registered for GST.
  • Have a valid and active ABN (Australian Business Number).
  • Must employ people in South Australia.
  • Have an Australia-wide payroll of less than $10 million in the 2019-20 financial year.
  • Experienced at least a 30 per cent reduction in turnover in the week of Tuesday 20 July 2021 – Monday 26 July 2021 (inclusive) (compared to the prior week) due to restricted trading conditions.

To be eligible for the $1,000 grant non-employing businesses will be subject to the eligibility criteria outlined above, excluding the requirement to employ people.

For further information including information on substantiation requirements in relation to proving the decline in turnover please click here.

To register your interest click here.

Further grant guidelines and the application portal will be available shortly with applications expected to open within the next two weeks.  Applications for the grant will close on 30 September 2021.

Please note that the government will consider further support should the lockdown be extended beyond seven days.

Individual support – COVID-19 Disaster Payment

The Commonwealth Government has also extended its national support scheme to individuals (including employees) who have lost income during the lockdown. The SA government has extended access to the scheme to all eligible South Australians and not just those living in Commonwealth declared hotspots.

Should you not meet the turnover criteria to receive the business support grant, there may be an opportunity to apply for the COVID-19 Disaster payment instead if you can pass the general eligibility rules.

Applications for this payment will not open until 28 July 2021.

For more information click here.

For those in other states affected by lockdowns, we will be in contact with relief potentially provided to you and your businesses.

The team at i2 Advisory will be working from home during the lockdown and will therefore be available to support you during these times. Your advisor can be contacted by their email or mobile phone.

Let’s stay positive and look after each other.

New Director Identification Number regime could be just around the corner

18 July 2021

The Director Identification Number (DIN) regime may have been lost in many business owners’ peripheral vision, or even dropped off the radar completely, as it has been on the horizon for some time. But it is worth keeping in mind the ramifications of the measure, as the details could become important sooner than many realise, even before this year is out.

The legislation putting the regime in place has already been passed in June last year, but the scheme is not yet in operation. This is initiated by “proclamation”, which is required to happen within two years of the legislation becoming law.

The regime is part of the government’s “modernising business registers” program, which is intended to lessen corporate phoenix activity – the process of continuing business activity of a company that has been liquidated to avoid its debts — with the DIN regime increasing accountability by making directors traceable.

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