2024 04 April Client Newsletter

Welcome to our April 2024 edition of the StewartBrown newsletter. We hope to keep you informed of the important tax developments and issues affecting businesses in Australia today and throughout the year ahead.

Click here to download a PDF copy of the April 2024 StewartBrown newsletter.

DIRECTOR IDENTIFICATION NUMBERS – PROSECUTION

On 19 March 2024, a company director was formally charged with one count of contravening section 1272C(1) of the Corporations Act 2001 by failing to have a director ID.

All directors are required by law to verify their identity with Australian Business Registry Services before receiving a director ID. Directors must apply for their director ID before being appointed.

The maximum penalty for an offence against section 1272C(1) of the Act is 60 penalty units which currently equates to a maximum penalty of $13,320.

TAX PLANNING

As we approach the end of the financial year, it's the perfect time to discuss how strategic tax planning can benefit you or your business. Our goal is to ensure you are positioned to make informed decisions that enhance your financial well-being.

Why is tax planning important?

Tax planning is an essential element of financial health, enabling individuals and businesses to minimize their tax liabilities while maximizing potential returns. Effective tax planning ensures that you take full advantage of all deductions, allowances, and credits that are available under Australian tax law.

Benefits of tax planning:

Reduce Tax Liability: Proactive planning helps in identifying lawful opportunities to decrease the amount of taxes payable.
Cash Flow Management: By understanding your tax commitments ahead of time, you can better manage your cash flow, avoiding surprises and ensuring that funds are available when needed.
Investment Decisions: With a clear understanding of your tax implications, you can make smarter investment choices that align with your long-term financial goals.
Regulatory Compliance: Stay up-to-date with the latest tax laws and regulations, reducing the risk of penalties or audits.
Future Security: Planning for your taxes is planning for your future, helping to secure a stable financial environment for you and your family.

Our approach:

Our team is dedicated to understanding your specific needs and providing customised advice tailored to your unique financial situation.

We invite you to schedule a consultation with one of our Managers or Partners at your earliest convenience. During this meeting we can discuss your financial position and explore the various strategies that could be beneficial to you.

NOT FOR PROFT ENTITIES – TAX REPORTING

From 1 July this year, non-charitable not-for-profits (NFPs) with an active Australian Business Number (ABN) will be required to lodge a new annual NFP self-review return to the Australian Taxation Office (ATO) to confirm their income tax exemption status.

This applies to around 150,000 NFPs who currently self-assess as income tax exempt.

The new reporting requirement was introduced in the 2021–22 Federal Budget to enhance transparency and integrity in the tax, super and registry system by ensuring only eligible non-charitable NFPs are able to access income tax exemption.

Failing to comply with this new annual reporting requirement could result in the loss of tax exempt status for these NFP entities.

The first return is for the 2023–24 tax year and NFPs will need to prepare and submit their annual self-review between July and October 2024.

Non-charitable NFP’s should start taking steps now to ensure they are ready to lodge their annual NFP self-review return ahead of the due date in October. Non-charitable NFPs who have an active ABN can get ready now by:

conducting an early review of their eligibility.
checking all their details are up to date, including authorised associates, contacts and their addresses are current.
reviewing their purpose and governing documents to understand the type of NFP they are.
setting up myGovID and linking it to the organisation’s ABN using Relationship Authorisation Manager.

You are a certain type of government entity.
You are an Australian Charities and Not-for-profits Commission (ACNC) type of entity.
You are a taxable NFP.

The Tax Office are recommending that NFP’s should take the time now to review their purpose and governing documents to understand the type of NFP they are and to ensure they are still operating within their constituent document guidelines. Each NFP must self-assess every year to declare that they still qualify for tax exempt status. In the past this has been a passive self-determination. From this financial year onwards it needs to be assessed and recorded on an annual form and sent to the ATO.

These self-review returns can be lodged (from 1 July 2024) by the NFP entity using online services for business (assuming your NFP has the necessary access) or the NFP could use a Tax Agent such as StewartBrown Chartered Accountants to lodge on their behalf.

If you are responsible for a non charitable NFP entity and need any assistance in understanding or meeting these new reporting requirements please reach out to your StewartBrown Manager or Partner for assistance.

2024 03 StewartBrown FBT Newsletter

FRINGE BENEFITS TAX (FBT)

The FBT year ended on 31 March 2024 and each employer is required to calculate their liability for FBT. Where a liability for FBT exists an annual return is required to be lodged and any tax paid by 21 May 2024. However, if the return is lodged electronically by a Tax Agent the due date of lodgement and payment is 25 June 2024.

In addition, there may still be specific COVID-19 related concessions available, some of which are noted below.

2024 02 StewartBrown Land Tax Newsletter

Click here to download or view a PDF version of the following StewartBrown Newsletter - 2024 Land Tax edition.

WELCOME

Welcome to the Land Tax edition of our client newsletter for 2024 where we hope to keep you informed of the important Land Tax compliance issues affecting owners of land in Australia. You may recall that Land Tax is a State tax and different rules apply in each State. In this newsletter we have summarised the position in NSW. If in any doubt about your particular Land Tax circumstances, please contact your StewartBrown Manager or Partner.

2023 12 December Client Newsletter

Welcome to our December 2023 edition of the StewartBrown newsletter. Below are several important points to note as we close out the calendar year from a tax and business perspective.

Click here to download a PDF copy of the December 2023 StewartBrown newsletter.

STEWARTBROWN – CHRISTMAS CLOSURE

We advise that the StewartBrown offices will be closed during the holiday period as follows:

Office closes from 5.30pm Wednesday, 20 December 2023
Office reopens on Monday, 8 January 2024

The Partners and staff of StewartBrown take this opportunity to wish all our clients and business associates a very merry Christmas and a joyful New Year.

FRINGE BENEFITS TAX AND CHRISTMAS PARTIES

It is that time of year again and we thought a reminder on the tax consequences of Christmas celebrations and gifts would be timely. Income tax, FBT and GST are all relevant considerations where these costs are involved.

Christmas parties

The tax consequences will depend on a number of factors including the following:

whether the employer is a tax-paying body, tax rebatable or tax exempt
whether the party is held at your business premises or off-site
the cost per person
the fringe benefits tax method used by the employer (actual or 50/50 split method)
whether or not the minor benefit rule applies where food and drink at the function is less than $300 per head (i.e. the benefit is an “exempt benefit”). (N.B. Where the minor benefit rule applies to entertainment expenditure, the employer will not be entitled to claim a tax deduction or to claim GST input tax credits in respect of the expense).
who attends the party (clients, employees, associates of employees)

To determine the tax consequences, employers need to identify all function-related costs.

Christmas party held on the employer’s premises

A Christmas party held on the employer’s business premises will be treated as follows for the various attendees:

Employees: exempt from FBT and not deductible for income tax. GST input tax credits cannot be claimed.
Associates of employees: subject to FBT and deductible for income tax. If FBT applies, GST input tax credits can be claimed. However, if the cost of the food and drink is less than $300 per person, the minor benefit exemption can apply. If the exemption applies, no tax deduction will be allowed and GST input tax credits cannot be claimed.
Non-employees/non-associates: not subject to FBT, no tax deduction and GST input tax credits cannot be claimed.

Christmas party held off-site

A Christmas party held at restaurants or similar venues will be treated as follows for the various attendees:

Employees and associates of employees:
The expenditure will be subject to FBT and deductible for income tax. If FBT applies, GST input tax credits can be claimed. However, if the cost of the food and drink is less than $300 per person, the minor benefit exemption can apply. If the exemption applies, no tax deduction will be allowed and GST input tax credits cannot be claimed.
Non-employees/non-associates:
The expenditure will not be subject to FBT, there will be no entitlement to a tax deduction and GST input tax credits cannot be claimed.

Christmas travel and accommodation provided in connection with Christmas parties

The definition of “provision of meal entertainment” includes accommodation or travel in connection with providing entertainment. Travel and accommodation costs incurred in connection with the Christmas party must be included by the employer as part of their meal entertainment expenditure.

Recreation provided at Christmas parties

Recreation expenditure (eg live shows, theatre etc.) must be separated from the meal entertainment expenditure as it may have a different FBT treatment to the meal entertainment expenditure. You need to use the actual method to deal with recreation expenditure, as follows:

Employees and associates of employees:
The expenditure will be subject to FBT and deductible for income tax. If FBT applies, GST input tax credits can be claimed. However, if the cost of the recreation is less than $300 per person, the minor benefit exemption can apply. If the exemption applies, no tax deduction will be allowed and GST input tax credits cannot be claimed.
Non-employees/non-associates:
The expenditure will not be subject to FBT, there will be no entitlement to a tax deduction and GST input tax credits cannot be claimed.

Christmas gifts

Again, the tax treatment will depend on:

the recipient of the gift
if the gift is provided at the Christmas party
whether the gift is in the nature of entertainment
whether or not the minor benefit rule (less than $300) applies

Gifts provided at the Christmas party to employees

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

If the gift is in the nature of entertainment (e.g. theatre tickets), whilst the $300 minor benefit rule may apply to exempt the benefit from FBT, as the gift is in the nature of entertainment, the cost of the gift will not be tax deductible and GST input tax credits cannot be claimed.

If the gift is not in the nature of entertainment (e.g. a bottle of perfume or alcohol), the cost of the gift will not be subject to FBT, it will be tax deductible and GST input tax credits can be claimed.

Gifts provided to non-employees/non-associates

Where a Christmas gift is provided to clients or suppliers, and the gift is not in the nature of entertainment (e.g. a bottle of alcohol or perfume), the cost of the gift will be tax deductible. The cost of gifts in the nature of entertainment (e.g. theatre tickets) provided to clients or suppliers will not be tax deductible and GST credits cannot be claimed.

2023 06 StewartBrown 2023 Year End Tax Planning Checklist

For the information of clients we enclose this checklist which you may find helpful in planning your year-end tax strategies. Careful planning (and in many cases timing) is always important when tax planning is concerned. This document is not exhaustive and your individual circumstances must be considered. Please contact your StewartBrown Manager or Partner should you need any assistance with understanding or applying the below.

Here’s a quick summary of what you need to consider for yourself and your business before the end of the financial year:

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