FBT Issues on ATO Radar
With the date for lodging and paying FBT approaching (21 May), on Wednesday 1st May, the ATO reminded employers that the following mistakes attract the ATO’s attention:
to report car fringe benefits, incorrectly applying exemptions for vehicles or
incorrectly claiming reductions for these benefits
* mismatches between the amount reported as an
employee contribution on an FBT return compared to the income amounts on an
employer’s tax return
* claiming entertainment expenses as a
deduction but not correctly reporting them as a fringe benefit, or incorrectly
classifying entertainment expenses as sponsorship or advertising
* incorrectly calculating car parking fringe
* not applying FBT to the personal use of an
organisation’s assets provided for the personal enjoyment of employees or
associates (e.g. spouses) and
* not lodging FBT returns (or lodging them
late) to delay or avoid payment of tax.
Many lodgement and payment deadlines are looming for business including those relating to Activity Statments, Superannuation, and more….
12 May – 3rd Quarter 2018/2019 Activity Staterments – due for lodgement and payment if lodging electronically
21 May – April 2018 monthly Activity Statements – due for lodgement and payment
21 May – FBT annual tax return – due for lodgement and payment for self-preparers
28 May – Due date for lodgement and payment of the Superannuation Guarantee Charge Statement if you failed to pay Superannuation Guarantee on time for the January-March quarter. Superannuation Guarantee Charge is not deductible
21 June – May monthly Activity Statements – due for lodgement and payment
25 June – 2019 FBT annual tax return – due date for lodgement and payment if using a Tax Agent who lodged electronically
30 June – Superannuation Guarantee payments must be received by Superannuation funds by this date in order to be deducted in 2018/2019
30 June – End of the 2018/2019 financial year
Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day.
The Senate has now passed legislation to extend Single Touch Payroll (STP) to employers with 19 or less employees from 1 July 2019.
These businesses can also of course opt in early to STP.
The passage of legislation follows months of uncertainty for small business after STP was officially rolled out for employers with 20 or more employees from 1 July 2018.
The ATO still intends to allow micro-businesses (less than 5 employees) to adopt low-cost, alternative STP solutions.
Introduced in 1999, Farm Management Deposits are seen to be an important part of risk management for primary producers. What are they and do they work? This article takes a close look at the Farm Management Deposits Scheme, some of the commonly asked questions and works through a case study to determine the answers.
In simple terms, the Farm Management Deposit (FMD) scheme is intended to allow Primary Producers the opportunity to shift “before-tax’ income to a later year where they may offset losses due to unfavourable climatic or market conditions. FMDs are considered an important risk management tool for the Primary Producer to ‘even out’ what could otherwise be extremely uneven income years.
The scheme works by allowing Primary Producers to claim an income tax deduction for an actual cash deposit into an FMD scheme in the year the deposit is made. As a result, this reduces the Primary Producer’s taxable income in the deposit year and hence any income tax payable on the deposit amount. In a later income year, when the Primary Producer’s income may be low due to a downturn in market or climatic conditions, the Primary Producer can apply to the FMD scheme for a withdrawal. The amount is then included in the Primary producer’s assessable income for that year and taxed accordingly.
The scheme is cash-flow driven; in a bountiful year, the surplus cash is deposited in a FMD held with a financial institution. In a lean year the cash is withdrawn from the FMD to assist the Primary Producer to pay for business expenses.
The owner of an FMD is a person on whose behalf the deposit is made. The owner must be a Primary Producer at the time the deposit is made. The owner cannot be a joint ownership or a Company but, rather, the scheme is restricted to ownership by individuals (including Partners in a Partnership). The only exception of this rule is where a Trustee is acting on behalf of a beneficiary who is presently entitled to a share of the income of a Trust estate, but is under legal disability (for example, a minor under the age of 18 years)
You must make your deposits with an FMD Provider that is an authorised deposit-taking institution or an entity that has a Commonwealth, State, Territory guarantee for deposits. This includes any bank, building society or credit union. You can make deposits with more than one of these institutions.
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Happy New Financial Year!
Deficit Levy to be abolished – thus resulting in a 2% tax cut for individuals with taxable income in excess of $180 000.
On 6 June 2017, the Fair Work Commission handed down its annual wage review. The decision varied the following:
- Minimum wage rates in Modern Awards – increased by 3.3% from first full pay period commencing on or after 1 July 2017 (rounded to the nearest 10 cents)
- National minimum wage – increased by 3.3% to $694.90 per week, or $18.29 per hour
- Wages for juniors, apprentices – most rates are expressed as a percentage of nominated adult rate so they receive a proportionate increase to the adult rate
- Wages for trainees and piece workers – most trainees are covered by the National Training Wage system that is included as a schedule in most awards. National Training Wages will also be increased by 3.3% from the first pay period on or after 1 July 2017. Piece rates will increase in accordance with the relevant provisions in the modern award, pay scale or transitional award.
- Supported wage system – employees with a disability: these employees are paid a percentage of the relevant adult wage, based on their assessed capacity. The 3.3% increase will also flow through to these employees.
Rental Property Deduction Crackdown
First Home Saver Scheme to Commence
Voluntary super contributions made from 1 July 2017, will be able to be withdrawn as a deposit for a first home. More information.
Single Touch Payroll
Available for some employers
With the end of financial year fast approaching, be mindful that Payment Summaries must be provided to employees by 14 July for 2016/2017. This date is not just a guideline but is actually stipulated by law (Section 16- 155 of the Tax Administration Act). Two of the most common errors made in preparing the Individual Non-Business Payment Summary for employees are:
- Misstating reportable employer superannuation contributions – ensure that you exclude Superannuation Guarantee amounts from this label. Salary sacrificed superannuation amounts must however be included.
This year there are special rules for Working Holiday Makers. A reduced tax rate applies for employers who registered with the ATO from 1 January 2017 — 15% up to $37,000 and 32.5% from $37,001. For registered Working Holiday Makers who worked both before and after 1 January 2017, two Payment Summaries must be issued, with the two different tax rates applying to the gross payments, depending upon the time of payment.
On the other hand, employers who did not register with the ATO for the reduced tax rate and continued to withhold at the foreign resident rate of 32.5% are required to issue the standard single Payment Summary per employee.
The Payment Summary for 2016/2017 includes a new section for overseas workers. In the Gross Payments Type box you must now indicate a type – this will be either S (salary), or H (registered Working Holiday Makers).
If like many taxpayers you intend on using the services of a Tax Agent to prepare your upcoming 2016/2017 Income Tax Return, you should ensure you are on their lodgement list by 31 October 2017. If you are not on a Tax Agent’s Lodgement List, your tax return will be due on this date, and you will not enjoy the extended due date that you usually would when you lodge with a Tax Agent. Other points to be mindful of when using a Tax Agent include:
- Ensure they are registered with the Tax Practitioners Board (go to //www.tpb.gov.au/search-register)
- Ensure that you provide the Tax Agent with all of your relevant tax records for 2016/2017 (receipts etc.). Failure to do may result in delays in lodging your return, and you possibly paying more tax than you are liable for. Ask your Tax Agent for a checklist of the records that you need to provide.
- Tax return preparation fees are tax deductible, so ensure that you retain evidence of payment.