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‘Tis the season to be jolly!  

Fringe Benefits Tax (FBT) can be confusing, especially when there is no separate FBT category for Christmas parties. You may encounter different circumstances when providing these parties for your team and preparing gifts. We understand your struggles and have simplified things for you. 

1, Christmas Parties and Gifts for staffs 

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following explanations may help you determine whether there are FBT implications arising from a Christmas party. 

• Exempt Property Benefits:

  The costs associated with Christmas parties (such as food and drink) are exempt from FBT if they are provided on a working day, on your business premises and consumed by current employees. These costs are an “Exempt Property Benefit”. The property benefit exemption is only available for employees. 

• Exempt Benefits – Minor Benefits:

  The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300. The threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits. 

• Gifts provided to employees at a Christmas party:

  The giving of a gift to an employee at Christmas time may be a minor benefit that is an “exempt benefit” where the value of the gift is less than $300. 

Where a Christmas gift is provided to an employee at a Christmas party, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value each and the other conditions of a minor benefit are met, they will both be exempt benefits. 

2, How about Client gifts? 

As the gift is an expense to your business, it is generally considered to be a tax deduction. The ATO has considered the act of gift making to clients, and several cases exist where the tax treatment has been tested in the courts. If there is an expectation that the gift will either generate future business from the client or motivate them to refer your services to others, it is considered that the expense of the gift was business promotion and is a tax deduction. 

It should be noted that the gift does not constitute the provision of entertainment which is a non-taxable deduction. 

If you are unsure about the FBT implications of your Christmas party or gifts, please contact our expert Accountants today, and they can assist you! 

Australia’s current tax deduction system has been a hotly debated issue in recent months. There have been strong opposing views, with one side claiming that the current system is severely flawed, due to the sheer amount of fraudulent and petty claims occurring. However, many are claiming that the current system should be kept in place, and stating the problem as being with the public not being educated enough when claiming work-related expenses.

Joanne Dunne, director at Accounting firm PwC is strongly in the corner of a reform of the current system, stating that the current tax deduction system is “out of control”. Dunne has claimed that the current system is inefficient, due to “silly expense claims” that are burdening the ATO’s resources. Dunne also stated that the time spent on these trivial claims should be allocated to “more important” work, and also claims that the cost of investigating these false claims outweighs the costs recovered. The proposition of a simple yearly $1000 blanket deduction for each taxpayer has been discussed, with the view of simplifying the system and nullifying any incorrect claims made.

This has proven to be an unpopular recommendation for some; with Ram Pandey from the ATO expressing disapproval of this idea. Pandey has defended the current system, explaining that the actual problem lies with the public’s misunderstanding of what should be claimed. He argued that a complete overhaul of the system would not be practical, and that it should undergo some gradual tweaking and enhancement instead.

We found this debate quite interesting; we believe that any changes in the tax system are definitely worth keeping an eye on for any small business owner. Our taxation accountants are also very knowledgeable in this area, if you’re looking for some specific advice or simply want to speak with an accountant about your tax planning options, call us today to schedule an appointment on (07) 3367-0852.

Post Contributor:
Andrés Pascoe

An interesting tax avoidance scam has been uncovered recently, involving thousands of tradesmen around Australia and hardware chain Bunnings Warehouse. Because of the amount of cash transactions that occur in the trade industry, a large number of these service providers have been able to circumvent the tax system.

Large amounts of contract workers in Australia have been able to beat the system by replacing their own ABN number with Bunnings ABN number on invoices, making the transactions untraceable to their actual recipients. This has created a black economy of sorts for tradesmen as a result of the large amount of unaccounted for payments. Paul Drum, a member of the government’s national tax liaison group has responded to this issue, proposing that the Government implements a system “to make sure we can verify ABNs on a real-time basis”. This new system would ensure that all contractor transactions are accounted for in real time, eliminating the possibility of contractors escaping tax payments and ensuring the Government does not lose out on hundreds of millions of dollars.

Understanding Your Tax Obligations

If there is a chance that you are not fully aware of all of your tax obligations, there are a range of online guides that can help you. The ATO website has a comprehensive guide to what payments need to be reported each year, including details about businesses in building and construction. We recommend giving the website a look by clicking here, as it is a valuable resource designed to help you make sure that you are fulfilling your tax obligations. As always, you are welcome to contact one of our taxation experts on (07) 3367-0852 if there are any further questions you had regarding your tax planning options. We would love to hear from you!

Post Contributor:
Andrés Pascoe

Usually, January 1 is the common new year celebration. We get together with our friends and family to say goodbye to the year that was and welcome the new year with excitement. It’s a chance to set personal goals to improve ourselves in hope that the coming year is greater than the last.

As accountants, we have a second New Year’s celebration on June 30. Traditionally we complete our performance reviews, we detail our work achievements from the previous year, document our career goals for the current year and our 5 year plan. It is the time of the year we focus on our careers and how we personally want to see them advance in the coming year/s.

After all of this, we head to our local watering hole and celebrate all that we have achieved and aim to achieve. It’s never hard to find an excuse for celebration, but Financial New Year is certainly never an occasion we miss.
At this time of year it is quite common to find our clients thinking about how they can improve their business, their income, their investments, particularly after completing the reports for the previous year and seeing results which they wish were better. June 30 seems to be the time of year for people to reassess the financial aspect of their lives. It’s something many of us think about but not necessarily seek assistance with.

We, as Business Advisors, find that this is a great time to put plans into action, make adjustments to current business activities and if necessary, convert to Xero from other accounting software systems. A five year plan is great for business too, as it gives us as business owners, direction and something to aim towards. At the end of all our hard work the income is great, but achieving business goals to encourage growth is a great feeling and form of motivation. It’s just another way to receive more self-satisfaction for something that absorbs so much of our time, making it all worth while.

From all of us here at Rush Associates, we wish you a Prosperous New Financial Year FULL of Achievements and Growth!!!

As a business owner, one question which we continually ask ourselves is, ‘How can I make more money?’ It’s such a broad question… How about we rephrase it to ‘How can I more efficiently use my time to maximize value?’

If you think back over your day, where you spent your time, can you say that it was effective and efficient? For example, are you a Plumber, but kept yourself chained to the office desk for the day to catch up on your bookkeeping because your BAS is due next week? Is that effective? A Plumbers’ hourly charge out rate might be $60/hr. If we multiply that by five hours of bookkeeping that was done, it has cost the business $300 in revenue. Would you believe me if I said there was a more efficient way to utilize the plumbers time? Let’s send the plumber out to site, charging $60 an hour, revenue is then $300 for the five hours. The builder engages a bookkeeper at $40 per hour, (but it takes them 2.5 hours to do what it took the plumber 5 hours to struggle through) costing the business $100. The net effect of this transaction is revenue of $200, much better than losing the plumbers time at the desk.

You may then think, ‘yep, good point, but I do my bookkeeping at night time or on the weekends’, which is a common practice in small business. However, most of the time, our weekends come and go and very rarely do we get all our items crossed off our ‘To Do’ list. We are then forced into a situation of having to do it in a hurry or at the last minute, cutting into our productive time or chargeable time.

The other downside is that, as accountants, we regularly spend time correcting ledgers simply because the person inputting the data is doing the best they can without having expertise in the field. Traditionally, this costs the business money in higher accountancy fees as time is spent correcting ledgers and sometimes, amending lodged activity statements etc.
Perhaps, whilst the initial reaction to employing or engaging a bookkeeper may seem like an unnecessary cost and sometimes maybe even a luxury, if you think about how you manage your books as a business owner, it may actually be a time saver, and as we’ve said before, time is money. A bookkeeper (considering you engage a good one) will ensure your books are up to date, can provide you with reports on a regular basis to help make financial decisions, ensure that all data is correct and ready for the accountant at the necessary time and take away the worry of another item on your ‘To Do’ list.

Another advantage which is of significant value, is your down time and your time with family. Working five or six days a week and quoting and paperwork during off-site or out of hours time can have an affect on your family and, not to mention, your sanity. Finding work/life balance is crucial in our super hectic lives. So we challenge you to consider how and where you spend your time, can it be spent more effectively, do you need to be relieved of one aspect of your business – and if you answer yes, then we can help. Whilst we are accountants, we do offer bookkeeping services at very competitive rates and would love to be a helping hand in your business. Just food for thought….

Recently, Scott Morrison released the second budget for the Turnbull government. As always, there was a lot of information released so we have documented a few of the major points which may be of interest to you.

If you are thinking of purchasing a rental property, keep reading. Any investment property purchased after May 7, 2017, can not claim depreciation for Plant and Equipment embedded in the purchase price, if purchasing a pre-existing property. This eliminates the benefit of having a depreciation report prepared, as investors have done in the past. Don’t panic if you are already claiming deductions from a depreciation report, as any properties purchased prior to this date can continue to claim these deductions as they have done in the past.

Another change to rental property investment deductions is the elimination of travel expenses being deductible for travel costs between home and property. Our current financial year (16/17) is the last year you will be able to claim a deduction for travel to inspect, view or work on your investment property.

There is an increase to the Medicare Levy which will come into play in the 2019/20 financial year, it will increase to 2.5% from the current 2%. Also, the Low Income Threshold for the current financial year is $21,655 for a single person and $36,541 for a family, plus $3,356 for each dependant child or student. Not to forget the increase to the HELP repayments which are set to take effect from July 1, 2018. If you have a HELP debt and your earnings for the 2018/19 year reach $42,000, you will be required to repay 1% of the debt. As your earnings increase, so does the repayment rate, up to 10% of earnings of $119,882 and above.

Great news for small businesses, the 100% deduction of assets purchased under $20,000 will continue through the next financial year, these deductions will be allowed until the end of 2017/2018 financial year.

If you are looking to purchase your first home and eligible for First Home Buyer Grant (FHBG) the government has released a scheme to help savers accumulate their deposit using their superannuation fund. A great initiative to promote self funding as opposed to increasing borrowings.

The final big point which we found attractive is the ability of people aged 65 or more to contribute up to $300,000 to their super from the sale of their principal place of residence. This is available from July 1, 2018, but only if the property has been owned for a minimum of the last 10 years. These non-concessional contributions are in addition to what they are currently making under existing rules and caps and will be exempt from the age test, work test and the $1.6 million balance test. This is definitely something to spark interest amongst our retirement age community.

These are a few of the big points we noted from the budget release. We’d love to hear your thoughts below, or if you want to run some thoughts past one of us or have some questions about the budget, give us a call.

This week we launched our new website!!!  Do I hear you saying, “Why, you already had one?”  We can answer that with two words, “mobile friendly”.   So whilst we think it looks great, all sparkly and new, the best part about it is that it is very effective on your mobile devices.

The need for being ‘mobile friendly’ is simply because we pick up our phones to do a quick search as opposed to sitting down at our desktop computer. Sometimes we do the searches when we aren’t even at home, so the need to have a website that is suitable for mobile devices is vital.

Like many businesses, a large part of our lead generation is from Google.  Making sure we have the correct SEO keywords working and doing all that we can to put our site at the top of the google search results is important.  Gone are the days when we would pick up the yellow pages and look under ‘A’ for ‘Accountant’ – we now type what we are looking for in Google’s search bar, ‘Brisbane accountant xero’, then hit that little ‘search’ button.  However, when the world operates from tablets and mobiles it is vital that our websites are not only visually attractive on these devices but also flexible enough to adjust resolutions to fit the endless screen size variations. First impressions are crucial and if your website is clunky and doesn’t adjust to their mobile devices accordingly those people searching will just flick to the next business on their list of search results.

Technology is something that is hard to keep on top of, but it is crucial to our businesses.  We believe a mobile friendly website is a great aspect for our business growth, and perhaps it would be worthwhile looking into for yourselves, if you haven’t already.