October, 2014

Fringe benefits tax exemptions for employees

Although fringe benefits tax will be 49% from 1 July 2015, the following benefits for employees are exempt from fringe benefits tax and may conveniently be salary sacrificed:

  • Briefcases
  • Tools of trade
  • Phones (i-phones, mobiles, smart phones)
  • Calculators
  • Portable electronic devices -
    • Personal digital assistants
    • Blackberries
    • Laptops
    • Notebook computers
  • Subscriptions to trade or professional journals
  • In-house benefits (free or discounted goods) to a maximum of $1,000 per employee per year
  • Taxi trips beginning or ending at work.

 

OTHERWISE DEDUCTIBLE

Any benefits which would, if paid by the employer, be tax deductible to the employee, are exempt from fringe benefits tax if paid by the employer on behalf of the employee.  For example, the following would be exempt benefits:

  • Income protection insurance
  • Interest on investment loan
  • Work related travel
  • Work related self-education expenses.

These and other expenses, being exempt under the ‘otherwise deductible’ rule, may be salary sacrificed, paid from pre tax dollars!

 

SuperStream compliance

Previously, employers of more than 20 employees and superannuation funds were required to be “SuperStream compliant” by 1 July 2014, however this has been deferred until 1 July 2015.  At this time all employers and superannuation funds will need to be SuperStream compliant.

To meet these requirements, employers will need to make superannuation contributions for employees electronically.  The contribution data will be sent electronically to the superannuation fund in a standard message format and the actual contribution payment will be sent through the banking system.  The data and payment will be linked by a reference number for fund reconciliation purposes.

We recommend that you contact your pay-roll service provider and/or bank to assist you in implementing these changes in order to become compliant by the due date.

For more information, go to https://www.ato.gov.au/super/superstream/

Motor vehicle allowances

Employers may wish to provide staff with some form of assistance with the operating costs of a motor vehicle used for business/employment purposes, but not to the extent of providing the employee with a company car.

 A ready solution would be to simply pay a motor vehicle allowance; an administratively convenient payment simply added to the regular payment and noted separately on the PAYG summary at year end.

The employee receives the immediate cash benefit and at year end may still claim for motor vehicle expenses incurred in their taxation return.

Payment of allowances avoids any fringe benefits tax implications which may arise should a company motor vehicle be provided.

ATO payment plans

We have considerable experience in negotiating payment plans with the Australian Taxation Office to the mutual benefit of all concerned when liquidity is temporarily strained, as it may be in these difficult economic times.

It is important there be regular communication with the ATO and, as your tax agent, we are well placed to assist you and facilitate resolution of any income tax or integrated client account debt.  Our access through the tax agent hotline and/or the portal is likely to achieve a faster outcome.

The ATO expects that debt repayment under a negotiated plan will be completed within two years.  Of course, the plan is conditional on future obligations and liabilities, as far as lodgements and payments are concerned, being met as they arise over the life of the payment plan.

It is worth noting that any late lodgements or payments will automatically default the payment plan which then must be renegotiated, usually supported by statements of income, expenses, assets and liabilities etc.

In short, defaulting a payment plan should be avoided; this includes allowing for Bpay processing time of two or three days as even a day late will trigger a default.