May 2013 – Federal Budget 2013 Summary

Click here for Smith Feutrill’s Federal Budget 2013 Summary Newsletter which summarises the various changes impacting income tax, social security and family tax assistance and various other tax news.

2013 – FBT – Myths & Opportunities

Click here for Smith Feutrill’s 2013 - FBT Mythys & Oportunities Newsletter which explores the myths and opportunities regarding Fringe Benefits Tax (FBT) for businesses and how some employers get it wrong.

2013 – The Best Way To Buy

Click here for Smith Feutrill’s 2013 – The Best Way to Buy Newsletter which has some important information for what small business need to know about simplified depreciation.

2013 – The Year Ahead

Click here for Smith Feutrill’s 2013 – The Year Ahead Newsletter which has some important information for you to consider.

In this edition, we look at 2013 and what we expect for business, individuals, and superfunds.

Christmas Parties and Entertainment

Food & Drink Costs at Christmas Parties and Christmas Gifts !
With the festive season almost upon us it is worth considering the Fringe Benefits Tax (“FBT”), income tax and GST consequences of expenditures at this time of the year on Christmas parties and gifts.  With careful planning you can provide employees with end of year benefits in the most tax effective way.  This area of the law is extremely complicated and we cannot deal with every possibility in this short article so if you are unsure or wish to confirm any issues, please do not hesitate to contact us to discuss.

Christmas Parties and FBT
Employers who elect ‘50/50’ method for Meal Entertainment
Irrespective of who attends the party (employees, clients or both) or whether the party is on employer premises or off site, under this method 50% of the expenditure on Food and Drink will be subject to FBT, will be tax deductible and also eligible to claim GST credits.  The other 50% will not be subject to FBT, not tax deductible and no GST credits can be claimed.  If the 50/50 method is used, the $300 Minor and Exempt benefits exemption referred to below will not be available.

Employers on ‘Actual’ method
For employers that use the ‘Actual’ method, the expenditure needs to be split between employees and non employees (including clients/customers). FBT is payable on the expenditure applicable to employees only.  If the expenditure can be kept to <$300 per employee (on a per person basis) it should be exempt from FBT but not tax deductible and no GST credits can be claimed .  We suggest if giving gifts to employees that this be done separately to the Christmas party so that the value of the gift is not included in the $300 exemption.

Gifts
The two main types of gifts are those considered to be entertainment (for eg. cinema and theatre tickets, sporting event tickets etc.) and those not considered to be entertainment (hampers, alcohol, gift vouchers etc.).

Gifts under $300 and considered to be entertainment are eligible for the $300 Minor and Exempt benefits exemption and should escape FBT but are not tax deductible and no GST can be claimed.

Gifts under $300 and not considered to be entertainment are eligible for the $300 Minor and Exempt benefits exemption and should not only escape FBT but also will be tax deductible and the GST component can be claimed.  This makes non-entertainment gifts far more attractive to employers!

We hope this snap shot assists you in determining the optimal way to spend your Christmas funds but as mentioned above this is a complicated area so if you have any questions in relation to this matter, please do not hesitate to contact us.

Merry Christmas !!!

Director Penalties Alert!

Reporting deadline for unpaid super is 28 November 2012!

Have you complied with your obligations as a company director to pay superannuation?

If not, Directors will be personally liable if they fail to report unpaid superannuation guarantee obligations to the ATO by 28 November 2012.  After that, it is too late!

Speak to us now to ensure you are protected or click here for for further information.

Tax Deductible Superannuation Contributions

Reduced $25,000 Limit for everyone.

The superannuation concessional contributions cap is now $25,000, regardless of age.

On 1 July 2012 the $50,000 cap, for people aged 50 or over, ended and was replaced by a $25,000 limit across the board.

 We encourage those clients on salary sacrifice arrangements to check that their current arrangements will comply with the new limits.

Click here for further information in detail.

Please also note annual limits are assessed using the date the contributions are received by the superannuation fund, not the date the employer “paid” the contribution. 

In planning for 2012/13 please be aware of any contributions deposited into funds in early July 2012.  These contributions will be treated as part of the 2012/13 cap of $25,000 even though they may have been 2011/12 superannuation contributions according to employer records. 

If you have any questions concerning this matter, please do not hesitate to contact us. 

Building & Construction Industry – Client Identification

The ATO have recently introduced additional reporting requirements relating to businesses in the building and construction industry with regard to payments made to contractors and subcontractors.

If your business fits the ATO criteria of “building & construction industry” you may be affected by these reporting rules.

Click here for further information in detail.

It is important for businesses with numerous payments to contractors and subcontractors to begin planning for these rules from now.

If you have any questions concerning this matter, please do not hesitate to contact us. 

Tax Tip – Private Health Insurance Rebate changes for FY 2013

The Private Health Insurance Rebate will be means tested from 1 July 2012.  Many individuals and families will have their rebate cut or substantially reduced.  If you are currently paying premiums net of the rebate of say $3,600 pa, then the value to you of the current 30% rebate is $1,543 pa (i.e. the total cost would otherwise be $5,143 pa).   

The new Private Health Insurance Rebate regime will be based on income tiers depending on whether you take out ‘Singles’ or ‘Family’ cover.

From 1 July 2012, if your income exceeds $84,000 as a ‘single’ or $168,000 as a ‘family’, your rebate entitlement will reduce by at least 10% (click here for new income tiers).

As a one-off planning opportunity, if your earnings in 2012/13 as a ‘single’ will exceed $97,000 or as a ‘family’ exceed $194,000, you should give serious consideration to prepaying private health insurance premiums before 30 June 2012 as you will still be eligible for the higher rebate.

Some health funds are only allowing prepayments of up to 12 months whilst others allow up to 30 months.  To be able to take advantage of this opportunity, you should contact your health fund now to ascertain how you can prepay your premiums for 2012/13 and potentially beyond. 

If you have any questions concerning this matter, please do not hesitate to contact us. 

Note: people with private health insurance hospital cover do not pay the Medicare Levy Surcharge.  If you do not have hospital cover, or cancel your cover, you will pay the new Medicare Levy Surcharge based on the tiered income tests of up to 1.5% of your taxable income.

2012/13 Federal Budget News

Click here for Smith Feutrill’s 2012/13 Federal Budget Newsletter which outlines how the recent announcement effects you.

In this issue:

- Company tax cut not proceeding
- Changes to the Net Medical Expenses Tax Offset
- Phasing out of the Mature Age Worker Tax Offset
- Non-residents – changes to tax rates and removal of the CGT discount
- Superannuation
- Better targeting of the ETP tax offset
- Company Loss Carry-back
- FBT – further reform of living away from home allowances and benefits