Technical Updates
24 April 2012- Reminder regarding changes to FBT on car benefits
In the 2011 budget, the government announced that the statutory rate applicable to car fringe benefits calculated under the mileage method, or statutory method, will move progressively to a single rate of 20% over the next 4 years. Up until 10 May 2011, different rates applied to different mileage ranges, favouring high mileage over low mileage on a per kilometre basis.
The new rates apply to contracts entered into on or after 10 May 2011 as well as contracts already in existence on 10 May 2011 which have been changed in some way since that date.
The rates for each mileage range and the transitional arrangements are detailed below:
|
Total kms |
Statutory % |
|||
|
From |
From |
From |
From |
|
|
0 - 14,999 |
20 |
20 |
20 |
20 |
|
15,000 - 25,000 |
20 |
20 |
20 |
20 |
|
25,000 - 40,000 |
14 |
17 |
20 |
20 |
|
Over 40,000 |
10 |
13 |
17 |
20 |
If you would like more information on car fringe benefits and FBT generally, please visit our Resources page for Businesses.
19 April 2012 - Proposed changes to Living Away From Home Allowance (LAFHA) regime
On 29 November 2011, the government announced some proposed reforms to FBT legislation and LAFHA. The key elements of the proposed changes are:
- The taxation treatment of LAFHA is to be administered under the income tax system rather than the current fringe benefit legislation. LAFHA will no longer be subject to FBT and will instead be included in the employee's assessable income
- Employees will be able to claim deductions in excess of the statutory amount for actual accommodation and food costs incurred in the course of living away form home as a result of employment commitments
- Employees will have to substantiate their deduction claims for expenses against the amount assessable to them
- Access to LAFHA will be limited to temporary residents who maintain a home for their own use in Australia that they are living away from for work. In other words, LAFHA will be restricted to domestic relocations only. A further condition is that the primary residence must be available at all times to the employee, that is, it cannot be sub-let during periods of absence
The proposed application date is 1 July 2012 and the changes will apply to both new and existing arrangements.
14 February 2012- 2011/2012 ATO compliance program
Each year the ATO puts together its compliance program which details information regarding specific areas where they believe the likelihood of non- compliance is relatively higher. this program forms the basis for determining where review and audit efforts will be focussed for the year ahead, and details of these programs are released as a means of providing transparency to taxpayers and tax agents. For the 2011- 2012 years, the ATO has advised that it will focus its attention on a variety of areas including:
- Contractor arrangements, particularly those where individuals should be set up as employees of a business
- Cash businesses
- The superannuation guarantee obligations of employers, ensuring that these obligations are met
- Businesses operating outside the small business benchmarks
- Lodgment compliance within private groups, particularly those containing high net worth individuals
- Self managed superannuation funds, and in particular ensuring that trustees meet their obligations and that superannuation benefits are not illegally accessed or released
Although the ATO nominates a healthy number of areas to target audit and review activity each year, it will generally dedicate a larger concentration of effort to a few key areas within the list. This year there is evidence that the ATO is ramping up its interest in taxpayers with Personal Services Income (PSI), with taxpayers being selected for audit based on PSI declared in 2010 and 2011 income tax returns. There is an indication that the ATO are in the process of issuing letters to taxpayers and tax agents if they have been selected for audit, and although we have not yet received any such letters, we will be in contact with you regarding next steps if we do. In the meantime, if you would like to refresh your understanding of the PSI rules, please contact us to discuss.
If you would like to read more about the ATO's 2011- 2012 compliance program or their approach to compliance generally, please refer to the link below for further detail:
http://www.ato.gov.au/careers/content.aspx?menuid=47063&doc=/content/00284023.htm&page=1&H1
Small Business Benchmarks
Small business benchmarks are key financial ratios which help you compare the performance of your small business to the performance of similar businesses in your industry. The ATO publishes these small business benchmarks as a tool for small business operators, and as a part of their compliance program they use these benchmarks to provide guidance on what figures they would normally expect a business in a particular industry to report. Those that deviate from the benchmarks can attract attention from the ATO in the form of a review or an audit. If you are a small business operator, it is worth familiarising yourself with these benchmarks as a means of not only helping you measure the performance of your business, but also gauging whether you are likely to attract the attention of the ATO. This serves as a useful reminder regarding the keeping of complete and accurate records.
If you would like to familiarise yourself with the small business benchmarks, they can be found at:
http://www.ato.gov.au/businesses/pathway.aspx?pc=001/003/102
If you would like to read more about the small business benchmarks generally, please refer to the below link for further detail:
30 January 2012
Happy New Year to you all, we trust that you all had an enjoyable Christmas and New Year. We'd like to start the New Year by thanking our clients who took the time to participate in our client survey in December. Your responses contained great feedback and one of the common themes in your suggestions is that we publish more regular updates on our website regarding tax changes and tips, as well as other useful information relevant to your circumstances. From now on you will start to see more frequent alerts on our News page, and we will continue adding to the library of fact sheets and other tools contained in the various resource- based pages throughout the site.
Another exciting initiative we are working on is webcasts. We appreciate that time is a precious commodity and that the technology is available to bring presentations to your desktop to be viewed at a time convenient to you. To complement our seminar program, we will post a number of webcasts on common and current topics on our website throughout the year with links to other material on the website where relevant. We welcome the ideas you may have for topics to be covered in these sessions.
We will keep you posted on other ideas we look to implement throughout the year, and once again we thank you for your valued feed back.
12 December 2011 - Proposed changes to Business Name Registration Process
The Federal Government is proposing a new national system for business name registrations, targeted for implementation in early 2012. The key changes would see business names being registered nationally instead of at a state level, and synchronising the business name registration process with the process of applying for an ABN. For more information, please read the government- prepared FAQ document below:
Business Names Frequently Asked Questions (67 KB)
31 August 2011 – 2011 tax checklists now available
The 2011 Isaacs & Cole Tax Checklists for Individuals, Companies, Superannuation Funds and Trusts are now available on our Checklists & Key Dates page. These checklists are designed to assist you in compiling your tax records each year, and make preparation of your income tax return as efficient as possible.
19 July 2011- Impact of the Carbon Tax
The Federal Government has released an analysis of the estimated impact of the Carbon Tax on 43 iterations of the average household unit, and compares the impact with offsetting arrangements such as the future income tax cuts and increases in government assistance. The "Detailed Household Outcomes" have been prepared using typical individual and family scenarios distinguished by the likes of:
- Number of Income Earners
- Combined Income
- Weighting of Combined Income between the Income Earners
- Number of Children
- Age of Children
http://www.cleanenergyfuture.gov.au/clean-enery-future/our-plan/cameo-tables/
Alternatively, you can complete the Household Assistance Estimator contained in the following link but be aware this estimating tool will only provide a result if your circumstances fit one of the 43 household categories listed in the link immediately above.
http:/www.cleanenergyfuture.gov.au/helping-households/household-assistance-estimator
If you would like to read more about the Carbon Tax, below is a link to a listing of the Treasurer's recent Media Releases. Media Releases 075- 085 inclusive deal with the Carbon Tax and offsetting arrangements such as the proposed tax cuts.
http://ministers.treasury.gov.au/Listdocs.aspx?doctype=0&PageID=003&min=wms
19 July 2011 – Flood levy
To assist affected communities in recovering from the recent spate of natural disasters, the Federal Government has introduced a one-off flood levy applicable for the year ended 30 June 2012. The flood levy applies to individuals with taxable incomes greater than $50,000, and is payable on a sliding scale as follows:
| Taxable income | Flood levy |
| $0- $50,000 | $0 |
| $50,001 - $100,000 | $0.005 for each $1 over $50,000 |
| Over $100,000 | $250 + $0.005 for each $1 over $50,000 |
Your employer will withhold amounts from your gross pay to cover your liability for the flood levy. If you would like to estimate your liability for the flood levy, the link below provides you with access to the ATO calculator which calculates this for you. To use this calculator, you must have an estimate of your taxable income for the year ended 30 June 2012.
