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The 2017/18 Federal Budget has recently been revealed this week.
Some continuation across the board from last budget, with small businesses continuing to benefit from lower tax rates resulting in more cash flow being available for investment & expansion. Bad news for those with student / HELP loans unfortunately and a lot more funding being given to the ATO for audits targeting the black economy.
Fringe Benefits Tax is essentially a tax on employers in respect of mostly non-cash benefits provided to employees in addition to, or in place of a cash salary.
For FBT, employees included company directors, office holders, common law employees & recipients of compensation payments.
Clients, Customers, Shareholders & Suppliers are excluded from FBT.
Generally where the expenditure is subject to FBT, it becomes deductible to the employer under s8-1 of ITAA97. Both the tax deduction for the expense AND the fringe benefits tax paid will be deductible.
Where the expenditure is not subject to FBT, no tax deduction or GST can be claimed (eg. expenses provided to clients)
There are a number of options available to employers which can help minimise their FBT obligations as well as provide other useful income tax deductions as set out below.
With the upcoming election looming, there's a huge tax impact that I haven't seen covered in the media all too much.
Both the Labor Party & Greens are planning to make changes to the existing negative gearing tax concessions.
Not only will this impact your tax returns, but you can be sure that it will have a huge impact on property prices as well.
Many households rely on negative gearing each year to help minimise the impact of mortgage payments on their post-tax income as well as their day to day living.
Changes to the existing negative gearing concessions could result in many houses being repossessed by the banks and of course, with less demand, prices will fall.
Over the past few years, the ATO has been expanding it's data matching program to ensure compliance for taxpayers lodgments.
Currently the ATO is obtaining information from:
- Banking Institutions (obtaining interest earned amounts)
- Private Health Insurance Providers (obtaining annual statements)
- Employers (Matching Taxable Payments Annual Reports to ABN Holders declared Income)
- Share Trading Sources (Dividend Information)
Other key areas the ATO is targeting are:
As the end of financial year approaches, there are a number of actions you can take as a business owner to save you $$$'s on your upcoming tax obligations.
It is important to note that any action taken needs to be implemented prior to 30 June to have any impact in the current financial year.
Some of these initiatives include: