FBT 2016: 5 Things Every Business Should Know

How do I know if I need to pay FBT? What is exempt from FBT? And what to be aware of come 1 April 2016. 

      

The FBT rate increased from 47% to 49% from 1 April 2016. Employers need to take this new rate into account with current or new salary packages with employees.

How do I know if I need to pay FBT?

Fringe Benefits Tax (FBT) is a tax payable by an employer in respect of various benefits provided to employees. If you are not sure whether your business is providing fringe benefits to its employees, here are some key questions you should ask yourself:

·         Does your business make vehicles owned or leased by the business available to employees for private use?

·         Does your business provide loans at reduced interest rates to employees?

·         Has your business forgiven or released any debts owed by employees?

·         Has your business paid for, or reimbursed, any private expenses incurred by employees?

·         Does your business provide a house or unit of accommodation to employees?

·         Does your business provide employees with living-away-from-home allowances?

·         Does your business provide entertainment by way of food, drink or recreation to employees?

·         Do any employees have a salary package (salary sacrifice) arrangement in place?

·         Has your business provided employees with goods at a lower price than they are normally sold to the public?

Shortly, we’ll be sending out our annual FBT Questionnaire to all our business clients to help you further in identifying if you have a FBT liability.

What is exempt from FBT?

Certain benefits are excluded from the scope of the FBT rules. The following work related items are exempt from FBT if they are provided primarily for use in the employee’s employment:

·         Portable electronic devices that are provided primarily for use in the employee’s employment – further information below

·         An item of computer software;

·         Protective clothing required for the employee’s job;

·         A briefcase;

·         A calculator;

·         A tool of trade.

Two laptops are better than for small business

If you are small business with a turnover under $2M, your business can offer employees more than one work-related portable electronic device, such as mobile phone, laptop and tablet and not have to pay FBT on it even if the device is the same or similar to others already provided in that same FBT year. All other businesses are limited to one device that is identical or similar to another for each employee per FBT year.

Is Salary Sacrificing worth it?

Now is a good time to review any salary sacrifice agreements to ensure they will still achieve their intended goals and not create an administrative burden for little to no benefit with the FBT rate continuing at 49% for another year.  For employees earning above $180k however, the difference in timing between the FBT year and the income year creates a unique planning opportunity between 1 April 2017, when the FBT rate reduces back to 47%, and 30 June 2017 when the 2% debt tax is removed.

Travelling or living away from home – what’s the difference?

The ATO will be looking closely at Australian taxpayers claiming living away from home (LAFH) allowances to make sure they are not accessing FBT concessions incorrectly.  So what is the difference between travelling or living away from home?

If someone is living in say Sydney but are heading to Melbourne on ad hoc trips every other week, they are probably just travelling and would only be entitled to travel deductions, not FBT concessions that apply to LAFHA’s. If that person however sets up a home temporarily in Melbourne and keeps their home in Sydney for their use (unrented), then it’s more likely they can access the living away from home allowance concessions.

Care also needs to be taken where transport is provided to fly-in-fly out workers as special rules apply and it’s important to ensure the travel is exempt from FBT.

Motor Vehicles

Do you have any motor vehicles owned or leased by the business that is used by an employee for private purposes, including the travel between home and work? If you do, then we encourage you to manage the FBT in these instances carefully and closely as the ATO is conducting a data matching program that is aimed at motor vehicles to try and capture benefits that are not currently being reported through FBT.

How we can help you

If you’re not sure if your business has a FBT liability or not, that’s ok. Shortly, we’ll be sending out our annual FBT Questionnaire to all our business clients to help you further in identifying if you have a FBT liability, and provide us with all the information we need to prepare and lodge any FBT returns required. 

The current FBT year ends on 31 March, so be sure to complete and return the questionnaire as soon as possible so as to not miss the lodgement date of 25 June. 

SuperStream Deadline Approaching!

The new way of processing Superannuation Payments is almost here.

      

In its bid to streamline the processing of transaction for superannuation funds, the ATO has introduced SuperStream. The main aim of SuperStream is to ensure employer superannuation contributions are paid in a consistent, timely and efficient manner.

The key component of SuperStream is that it is compulsory to make your superannuation contributions online with products that are SuperStream compliant. The easiest way to become SuperStream compliant is to use software in your business that enables electronic super payments.

When does my business need to become SuperStream compliant?

If you are running a business with 19 or less employees, you have until 30 June 2016 to be making your employer superannuation contributions electronically. If your business has 20 or more employees your cut-off date was 1 November 2015 so you will need to start making these electronic payments ASAP!

How we can help you

If you’re not sure if your business is SuperStream compliant let us know and we can do an assessment for you. We can also help you implement Xero or MYOB, online accounting software, into your business so you can easily make SuperStream compliant superannuation payments for your employees.

Give your Super a Boost!

An alternative way of building up your retirement savings.

        

While most of us will hopefully accumulate enough superannuation throughout our working lives to have a comfortable retirement, many of us simply won’t have the funds there to splurge on something nice every now and then.  

What if we could tell you there's a way to boost your superannuation earnings that reduces the amount of tax you have to pay on your contributions at the same time - would you be interested?

Who wouldn't!

As one option to consider, by purchasing an investment property within a Self-Managed Superannuation Fund (SMSF), you can use the power of leverage to boost the growth of your retirement savings. The interest on the loan is 100% tax deductible which means not only will you be making more money; you'll be saving tax at the same time!

The other benefit of investing in property through your SMSF is diversification. Some people are tired of the share market going up and down like a yo-yo and prefer property as an investment. Investing in property in addition to shares will mean you won't have all your eggs in one basket. This gives you peace of mind knowing a sharp downturn in shares one day won't be the end of your retirement savings.

Sounds good? Absolutely, but it isn’t something you should rush into without discussing your situation with your Accountant or Wealth Advisor first. Investing in property through an SMSF can be complex and you will need to be confident in your numbers before you get started.

We’re here to help you!

Make an appointment with us today to discuss your situation and see if property within an SMSF is right for you.

More Bang for your Buck

Start planning NOW to maximise your tax refund next year!

We do a lot of tax returns. One thing we constantly hear our clients say is “I didn’t know I could claim that!” or “I wish I had kept my receipts!”

What’s the best way to avoid disappointment at tax time? Start planning NOW.

To help our clients we’ve been thinking of what strategies they can implement to maximise their refund next financial year. Here are our top 3 strategies:

1. Keep a Log Book for your Motor Vehicle Expenses

If you use your motor vehicle for work make sure you keep a 12 week log book to work out the work % of your vehicle use. By doing this, you will be able to claim this % of all your expenses during the year including fuel, depreciation, insurance and registration.

2. Prepay the Interest on your Investment Loans

Your deductions are claimed in the financial year they are paid. Therefore, by prepaying the interest on any investment loans means you claim the deduction now instead of waiting to the following financial year.

3. Make sure you have Income Protection Insurance

Protecting your number one asset, your income, is extremely important. It’s also worth noting any premiums you pay outside of superannuation are tax deductible (and when you think about it, the tax refund you receive lowers the out-of-pocket cost of the premium).

The other way we help our clients is by introducing them to MyProsperity, our online wealth portal. MyProsperity has bank feeds linking into it allowing you to “tax-tag” your transactions. Not only do you have a simple way of keeping your receipts but now you print a simple list for your accountant at the end of the year.

Interested in getting More Bang for your Buck? Talk to us about planning now to maximise your tax refund next year.

Keeping your Business Alive

What’s your strategy to keep cash flowing through your business?

High sales and consistent profits are great aspects to have in your business, but without cash rolling in regularly you won’t be able to pay your suppliers, staff, even yourself! Give yourself some security by preparing a Cash Flow Forecast for your business.

What is a Cash Flow Forecast?

A cash flow forecast is a projection of all of your income and expenses for your business over the next 12 months, with an emphasis on when the cash from the income and expenses will be received and sent. This includes when your income locked up in Debtors will be received and when your Creditors will need to be paid.

Once you prepare your 12 month cash flow forecast you will be able to spot weaknesses in the year and plan for it. By taking a proactive approach and planning ahead means you can start making changes now to help you through those tight periods, such as introduce tighter credit policies with your customers or acquire a line of credit to help you through the period in the future.

What’s even better is banks love them! Are you looking to lease some new equipment? If you are looking for finance it’s going to be easier for the banks to approve you if they can see you have capacity to make loan repayments.

Would you like security in your business this year? Are you interested in preparing your own forecasts for the year? If you would like Jacoby Cameron & Co to prepare a 12 month cash flow forecast for your business give us a call or send us an email.

How to present

This month there was a good magazine to read from Michelle Bowden on how to present.

Here is the link to the July edition of the magazine: Link to July how to present magazine 

The minimum wage rises again! Are you ready?

1.8 million Australian employees set to receive a 2.5% pay increase.

From 1 July 2015, the minimum wages in Australia are set to rise by $16 a week.  It has been ruled that all Modern Award minimum wage rates and the National Minimum Wage will increase by 2.5%.

This means Australia’s minimum wage will go from $640.90 per week to $656.90, or $17.29 per hour.

It’s been reported that more than 1.8 million Australians who are paid the National Minimum Wage or an Award Minimum Wage will be directly affected by the ruling of the Fair Work Commission.

As an employer, what do I need to do?

It’s important, with July upon us to adjust your payroll software rates so that the increase will apply to the first full pay period on or after 1 July 2015, for any employees who are receiving the national minimum wage or are under the modern awards.

My employees are paid above the national minimum wage / modern award rates, do I need to worry about the increase?

Yes. Even if you pay your employees a rate above the minimum wage and modern award rates, you will have to check that they never fall below the new minimum wage rates.

The same goes for any employees you employ under an enterprise agreement, you will need to check that the base rates in their agreement remain at least equal to the new minimum Modern Award rates.

As an employee, what should I do?

Check with your employer as to what your current pay rates are, and ensure that when you receive your first full payslip for the period on or after 1 July 2015 any applicable increases that apply to you have been made.

Whether an employer or employee, you can contact us on 02 9267 7355 if you have any queries regarding these changes or if we can help you looking after your all round financial health.