Can staff celebrations attract FBT With the holiday season coming up, employers may be planning to celebrate with their employees. Before they hire a restaurant or book an event, employers should make sure to work out if the benefits they provide their employees are considered entertainment-related, and therefore subject to fringe benefits tax ('FBT'). This will depend on: the amount they spend on each employee; when and where the celebration is held; who attends — is it just employees, or are partners, clients or suppliers also invited? the value and type of gifts they provide. Employers who do provide entertainment-related fringe benefits should keep records detailing all of this information so they can calculate their taxable value. Reminder of December 2024 Quarter Superannuation Guarantee Employers are reminded that employee superannuation contributions for the quarter ending 31 December 2024 must be received by the relevant super funds by 28 January 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 11.5% for the 2025 income year. SMSFs cannot be used for Christmas presents There are very limited circumstances where taxpayers can legally access their super early. Generally, taxayers can only access their super when they: reach preservation age and 'retire or turn 65 (even if they are still working) To access their super legally before then, taxpayers must satisfy a 'condition of release'. SMSF members who illegally access their benefits may be liable for additional income tax and administrative penalties, and they could be disqualified as a trustee. For taxpayers who have illegally accessed their super, returning it to the fund may be considered a new contribution. Depending on their contribution caps, this may result in additional tax on excess contributions. Taxpayer’s claims for various home business expenses rejected In a recent decision, the AAT rejected in full a taxpayer's claims for "several classes or categories of deductions." For the relevant period of 1 July 2021 to 30 June 2022, the taxpayer was (according to his employer) a 'technical architect'. However, the taxpayer also claimed he worked from home 6 am to 11 pm seven days a week, 365 days of the year (as he was ‘always on call’), and his income tax return for the 2022 financial year claimed a wide range of deductions, totalling approximately $40,000. The AAT separately considered each category of deductions claimed, and rejected each in turn. In relation to his home office 'occupancy expenses' (e.g., for home insurance, council rates, waste disposal, water rates, and repairs), the AAT noted that the 'home office' rooms (comprising floorspace occupying 31% of the dwelling’s total floor area) were not physically separate from the remainder of the dwelling, which the taxpayer shared with four other members of his family. Home office running expenses (e.g., gas, power and internet) were disallowed on the grounds that the taxpayer had "not properly established an entitlement to such deductions or otherwise appropriately apportioned them between private or work-related activities." The AAT found his 100% claim for the internet, on the basis that the other members of the household did not use the internet connection, "very difficult to accept". In relation to plant and equipment expenses, the evidence was "largely non-existent." In relation to consumable expenses, the AAT noted that they appeared to be for goods or services of a private or domestic nature (including medications, toilet paper, milk, tea, sugar and insect spray). The AAT also rejected the taxpayer's claim for "payments made to his spouse for tax management, office cleaning and document management/storage", noting that the services provided were generally of a private or domestic nature, and that the rendering of invoices by the spouse "has a degree of artificiality to it". ATO reminder about family trust elections Making an FTE provides access to certain tax concessions (assuming the relevant tests and conditions are satisfied), although there are important things to consider. In particular, once the election is in effect, family trust distribution tax ('FTDT') is imposed when distributions are made outside the family group of the 'specified individual'. FTDT is a 47% tax, payable by a trustee, director, or partner, as the case may be (depending on the entity). Taxpayers should review FTEs and IEEs annually to ensure they remain appropriate. Taxpayers can only revoke or vary FTEs and IEEs in limited circumstances and subject to certain conditions. Before making a distribution or annual trust resolutions, trustees should identify the members of the specified individual's family group. This will help avoid FTDT liabilities. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

Hiring employees for the festive season As the festive season approaches, employers that hire new employees to help with their business should remember the following when it comes to their employer tax and super obligations: Employers should make sure they are withholding the right amount of tax from payments they make to their employees and other payees, especially as this will help their employees meet their end-of-year tax liabilities; Employers must pay super guarantee (currently at 11.5%) to all eligible employee's super funds in full and on time to avoid paying the super guarantee charge; and If employers are still not reporting through single touch payroll ('STP') and they do not have an approved exemption, deferral or concession in place, they should start reporting now. If they have just started a business or recently employed staff, they will need to report through STP from their first payday. Lodging and paying business activity statements The ATO is reminding taxpayers that it is important to lodge BASs and pay in full and on time to avoid penalties and interest charges. The BAS for the first quarter of 2024/25 is generally due on 28 October, but taxpayers will receive an extra: four weeks if they lodge through a registered tax or BAS agent; or two weeks if they lodge online. The cost of managing tax affairs is tax deductible for taxpayers, and a registered agent's help will allow them to focus on running their business. Deductions for financial advice fees The ATO has provided guidance about when an individual not carrying on an investment business may be entitled to a deduction for fees paid for financial advice. An individual is entitled to a deduction for fees for financial advice to the extent that the loss or outgoing is incurred in gaining or producing assessable income, unless the loss or outgoing is of a capital, private or domestic nature. Fees for financial advice an individual incurs may also be deductible to the extent that the advice relates to managing their 'tax affairs' (e.g., fees for advice in relation to salary sacrifice arrangements). However, fees for financial advice on a proposed investment prior to the acquisition of an asset, or about how to invest additional funds to grow an investment portfolio, will not be deductible. The individual must also have sufficient evidence of the expenditure to claim the expense as a deduction, such as a properly itemised invoice.  ATO's notice of government payments data-matching program The ATO will acquire government payments data from government entities which administer government programs for the 2024 to 2026 income years, matching data on government payments made to service providers against ATO records, including service provider identification details and payment transaction details. The ATO estimates that records relating to approximately 60,000 service providers will be obtained each financial year, including approximately 9,000 individuals, with the remainder consisting of companies, partnerships, trusts and government entities. FBT on plug-in hybrid electric vehicles From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under fringe benefits tax law and will not be eligible for the electric car FBT exemption. However, an employer can continue to apply the electric car exemption if: use of the PHEV was exempt from FBT before 1 April 2025; and they have a financially binding commitment to continue providing private use of the vehicle to an employee or their associate on and after 1 April 2025 (note that any optional extension of the agreement is not considered binding). If there is a change to a pre-existing commitment on or after 1 April 2025, the FBT exemption for the PHEV will no longer apply from the date of that new commitment. An employer is not entitled to an exemption from FBT after 1 April 2025 if there was no binding financial commitment to provide the car to a particular employee in place before then. Eligibility for compassionate release of superannuation The ATO has been responsible for the administration of the early release of superannuation on compassionate grounds since 1 July 2018. It will only approve a release of superannuation on compassionate grounds if the applicant meets all the conditions set out in the regulations, including that the applicant has no other means to pay the expenses. The five main grounds of eligibility are: medical treatment or transport (i.e., to treat a life-threatening illness or injury, or alleviate acute or chronic pain or mental illness) for the applicant or their dependant; accommodating a disability for the applicant or their dependant; palliative care for a terminal illness for the applicant or their dependant; funeral expenses for a dependant of the applicant; or preventing foreclosure or forced sale of the applicant's home. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

Pre filling information is now updated With millions of pieces of information now pre-filled, including information from banks, employers, government agencies and private health insurers, the ATO has given the 'green light' to lodge your tax returns. The ATO reminds taxpayers that the rules regarding how and when you can claim a deduction can change, including in relation to car expenses and working from home costs. Therefore, you should not just 'copy and paste' your deductions from last year, and speak with our accountants for your claims. The ATO notes that taxpayers using a registered tax agent normally have the extended due dates. Business self-review checklist: GST classification of products GST classification errors can lead to significant under-reporting of GST for some taxpayers. The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products. The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist. The checklist provides practical, step-by-step guidance for entities to: self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and assess the robustness of their business systems, processes and controls that directly impact their GST classification systems. Small business food retailers with turnover of $2 million or less may use one of the 'GST simplified accounting methods' to account for GST instead. Receiving payments or assets from foreign trusts Additional tax liabilities may arise when money or assets of a foreign trust are paid to a taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust. These can include: loans to them by the trustee directly or indirectly through another entity; amounts paid by the trustee to a third party on their behalf; amounts that are described as gifts from family members, but are sourced from the trust; and distributions paid to them or trust assets transferred to them by the trustee. Taxpayers who receive money from a foreign trust may need to ask further questions to determine whether the amount must be included in their assessable income, including: whether they are a beneficiary of the foreign trust; where the foreign trust obtained the money; and why the money was paid to them, e.g., is it a payment for services, a gift, a distribution or a loan. Record keeping for work-related expenses Taxpayers need to consider what work-related expenses they will be looking to claim in the new financial year, and what records they will need to substantiate those deductions. Records can be kept as a paper version, an electronic copy, or a 'true and clear' photo of an original record. Working from home deductions Taxpayers can use two different methods to calculate their working from home deductions, and they each have different requirements: With the fixed rate method, taxpayers will need a record of the actual number of hours they worked from home for the whole financial year, and at least one record for each of the additional running expenses they incurred that the rate includes (e.g., an electricity bill). To use the actual cost method, taxpayers must also keep records for any additional running expenses they incurred, and the depreciating assets they bought and used while working from home, and show how they apportioned work-related use for their expenses and depreciating assets. Please contact our office if you need any assistance with your record keeping requirements, such as logbook requirements for car expenses. Tax incentives for early stage investors The ATO is reminding investors who purchased new shares in a qualifying 'early stage innovation company that they may be eligible for tax incentives. These tax incentives provide eligible investors who purchase new shares in an ESIC with: a non-refundable carry forward tax offset equal to 20% of the amount paid for their eligible investments – this is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year; and modified capital gains tax ('CGT') treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than 10 years may be disregarded – capital losses on shares held less than 10 years must be disregarded. The maximum tax offset cap of $200,000 does not limit the shares that qualify for the modified CGT treatment. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.