Tax and Superannuation

The 2023 New Year

Now into February we seem to be working our wary back to a post Covid normal.

The environment has brought new challenges including inflation, higher interest rates and little relief from government imposts of regulation and taxes.

In this Newsletter we touch on a few of the matters that we are exercising our support of clients as the year gets underway.

Interest Rates

Many borrowers took the opportunity to lock in low interest rates on fixed terms which are expected to expire in 2023.

Some banks are difficult to engage with and we find ourselves helping clients with the favourable re arrangements of their finance facilitates. We are licensed to assist with the process.

Received a business support grant?

You may have received a business support grant recently to help your business through tough times.

Remember, when it comes to tax time, it's important to check if you need to include the payment in your assessable income.

Grants are generally treated as assessable income.

However, some grants are formally declared non-assessable non-exempt (NANE) income. This means you don’t need to include these in your tax return if you meet certain eligibility requirements.

If you did include a grant that's considered NANE in your 2020–21 tax return, you can amend your return.

Remember, you can only claim deductions for expenses associated with NANE grants if they relate directly to earning assessable income. Assessable income includes things like wages, rent and utilities. You can’t claim expenses related to obtaining the grant, such as accountant fees.

Do you know how to classify a worker?

Do you know if your new worker is an employee or a contractor? When you employ a worker, it's important to correctly classify them because it affects:

• tax, super and other obligations, such as workers compensation insurance
• workers' entitlements.

Correctly working out whether a worker is an employee or contractor is important because significant penalties apply for non-payment of entitlements particularly for Supernation Guarantee Charges.

Electric Vehicles 

As an employer, you previously needed to pay Fringe Benefits Tax (FBT) on cars provided to employees. From 1 July 2022, the provision of electric cars  will now be exempt from paying FBT on benefits provided for electric cars that meet all the following criteria:

• the car is a zero or low emissions vehicle
• the first time the car is both held and used is on or after 1 July 2022
• the car is used by a current employee or their associates (such as family members)
• luxury car tax has never been payable on the importation or sale of the car.

The exemption is only for three years.

Registration, insurance, repairs, maintenance and fuel expenses provided for eligible electric cars are also exempt from FBT.

Note that despite the exemption, determination of  the taxable value of the benefits provided is still required  and its  inclusion  in the employee's reportable fringe benefits amount (RFBA).

You need to report the RFBA on the employee’s income statement or payment summary.

Remember, registered tax agents and BAS agents can help you with your tax.

Superannuation

The general Transfer Balance Cap (TBC) is the cap that determines how much an individual can transfer into retirement phase and is scheduled to increase from the current $1.7m to $1.9m on 1 July 2023. This is the second time that the general TBC would have been lifted.

This is an announcement only and its application would be impacted by legislative change.