Tax savings for your business Bring forward the purchase of assets If there are large assets your business needs to buy (or upgrade), you have until 30 June 2023 to use the temporary full expensing rules. These rules enable businesses with an aggregated turnover of up to $5bn to fully deduct the cost of the asset upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. The temporary full expensing rules are of benefit if your business would like to reduce the tax it pays in 2022-23, and the purchase of the asset is not going to put a strain on cashflow. If the business does not have tax to pay, and you utilise the rules, this will often give rise to a tax loss that can be carried forward to future years, although companies have access to some loss carry back rules for the 2022-23 year. Timing is important. The asset needs to be “first held and ready for use” by the 30 June 2023 deadline to qualify for an immediate deduction in the 2023 tax return. Just having a contract in place won’t qualify if you have not taken possession of the asset. If you are buying a work vehicle which is classified as a car and is mainly designed to carry passengers then remember that there are rules which limit the deductions that can be claimed if the cost of the car is above the car limit ($64,741 in 2022-23). From 1 July 2023 until 30 June 2024, small businesses with an aggregated turnover below $10m will be able to immediately deduct assets costing less than $20,000 in the year of purchase using the instant asset write off. For other businesses, assets will be depreciated using the general depreciation rules over time. Declare dividends to pay any outstanding shareholder loan accounts If your company has advanced funds to a shareholder or related party, paid expenses or allowed a shareholder or other related party to use assets owned by the company, then this can be treated as a taxable dividend. The regulators expect that top-up tax (if any applies) should be paid by shareholders at their marginal tax rate once they have access to these profits. This is unless a complying loan agreement is in place. If you have any shareholder loan accounts from prior years that were placed under complying loan agreements, the minimum loan repayments for the 2022-23 income year need to be made by 30 June 2023. It may be necessary for the company to declare dividends before 30 June 2023 to make these loan repayments. Commit to directors’ fees and employee bonuses Any expected directors’ fees and employee bonuses may be deductible for the 2022-23 financial year if you have ‘definitely committed’ to the payment of a quantified amount by 30 June 2023, even if the fee or bonus is paid to the employee or director after 30 June 2023 (within a reasonable time). You would generally be definitely committed to the payment by year-end if the directors pass a properly authorised resolution to make the payment by year-end. The employer should also notify the employee of their entitlement to the payment or bonus before year-end. Write-off bad debts You can claim a bad debt as a deduction if the income is brought to account as assessable income and you have given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June. If you don’t maintain a debtors’ ledger, a director’s minute confirming the write-off is a good idea. Review your asset register and scrap any obsolete plant Check to see if obsolete plant and equipment are sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the plant has become obsolete, scrap it and write it off before 30 June. Small business entities can choose to pool their assets and claim one deduction for each pool. This means you only have to do one calculation for the pool rather than for each asset. Bring forward repairs, consumables, trade gifts or donations To claim a deduction for the 2022-23 financial year, consider paying for any required repairs, replenishing consumable supplies, trade gifts or donations before 30 June. Pay June quarter employee super contributions now Pay June quarter super contributions this financial year if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2023. However, some employers choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months. Realise any capital losses and reduce gains Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes. Raise management fees between entities by June 30 Where management fees are charged between related entities, make sure that the charges have been raised by 30 June. Where management charges are made, make sure they are commercially reasonable and documentation is in place to support the transactions. If any transactions are undertaken with international related parties then the transfer pricing rules need to be considered and the ATO’s documentation expectations will be much greater. This is an area under increased scrutiny. Protecting against risk: Is it a business expense? Really? For a few years now, very generous provisions have been in place that allow businesses to claim the cost of assets used in the business in the year of purchase instead of having to deduct them over time. But, this has led to some serious problems where some products have been promoted as being tax deductible without proper consideration being given to the way the tax rules operate. Artwork is one example. If your business buys artwork to display in areas of your office where it would be viewed by clients, then assuming it is used in connection with your business and is likely to decline in value, the business can generally claim depreciation deductions for tax purposes. Depending on the situation, it might be possible to claim an immediate deduction. If, however, the artwork is displayed in a home office then the risk of the ATO querying this is much higher. If the artwork is an investment piece and you expect it to appreciate in value, then it’s unlikely to be a depreciating asset and would not normally qualify for an immediate deduction. Another scenario is a boat used for “marketing purposes”. If your business buys a boat, claims the cost of the boat and the expenses, the ATO will expect to see the benefit to your business of this and will be checking to see if the boat has been used privately by employees or shareholders (yes, they do look at your social media). If there is private usage of the boat then this can give rise to a range of complex tax issues. For example, this could trigger an FBT liability or a deemed unfranked dividend under the rules in Division 7A. It gets very messy. In general, the ATO is likely to review any expense where the cost outweighs the likely value to the business of acquiring it, particularly for assets that people are likely to want for their own pleasure. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Meet Riley Gollan, a versatile accountant with a passion for sport and the great outdoors Riley enjoys the challenge and variety that comes with working in tax and values the progressive culture at Collins Hume. But what inspired Riley to pursue a career in accounting? Not having a specific pathway in mind, he took an internship in Lismore to see what accounting was about and found that he enjoyed tax and set his sights on public practice. Now responsible for doing tax returns and BAS, providing bookkeeping assistance and preparing financial statements, Riley is developing relationships with business owners and individual taxpayers. He is an accounting and tax jack-of-all-trades, especially since he is also currently studying for his CPA qualification, exposing him to a variety of accounting scenarios. Riley is proud to be part of Collins Hume, “The Partners are young and I can see they have lives outside of work, they’re not just living in the office. Our firm is progressive with a great culture so I get exposed to a wide range of work.” Outside of work, Riley loves being outdoors and active. He is a competitor in the Ballina basketball competition and also plays for the Byron Beez rep team. Riley has recently taken on a new challenge by adopting a kelpie x papillon dog. If you're in the Ballina area, you might even spot him training his new pup, Melo. Before joining Collins Hume in 2020, Riley had roles in audit and tax for firms in Lismore and Murwillumbah and is now an integral part of Jamie's and Peter's teams. He holds a Bachelor of Business (Accounting and Finance) from Southern Cross University, as well as a Diploma of Sport Development from Victoria University. He is also a Xero Certified Advisor. Connect with Riley https://www.linkedin.com/in/rileygollan/. Copyright 2023. Collins Hume Ballina and Byron Bay

Please take a few moments to watch our video update about pricing changes from June 2023 and let us know if you have any queries.

The NSW state government has released details of its much-anticipated revamping of NSW state taxes in the 2022–23 state budget. From 16 January 2023, the First home buyer property tax option will enable first home buyers to choose between: paying an upfront stamp duty, or an annual property tax. Originally, the option was to replace stamp duty with the annual property tax in New South Wales. This announcement came as part of the 2020–21 NSW state budget. The property tax option will be available to first home buyers on purchases of land worth up to $1.5 million, or $800,000 in the case of vacant land. Also, if the first home buyer chooses to pay the stamp duty instead of the annual property tax, other stamp duty concessions may still be available. Transitional arrangements are also available for contracts entered into from 11 November 2022 (date of announcement) and 15 January 2023. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

‘Ace in the Hole’ Budget 2023-24 The ‘ace in the hole’ of the 2023-24 Federal Budget was the $4.2bn surplus; the first in 15 years. The surplus was driven by a surge in the corporate and individual tax take. High commodity prices, inflation, and high employment have all pushed up corporate and individual tax receipts. But the gains can't be relied on long term. The Budget is expected to deliver a deficit of $13.9 billion in 2023-24, and a $35.1bn deficit in 2024-25. Social initiatives dominated the Budget: Energy bill relief for some households and small business Encouraging doctors to offer bulk billing by tripling the incentive for children under 16, pensioners and other Commonwealth card holders Increases to commonwealth rent assistance Increases to JobSeeker and other income support payments Expanding access to the single parenting payment The legislated stage 3 tax cuts legislated to take effect on 1 July 2024 remain in place. Stage 3 radically simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000. For small business, the instant asset write-off will enable multiple assets of up to $20,000 to be written-off in the year of purchase. What wasn’t in the Budget? There was no mention of the loss carry back rules for companies, suggesting that these rules will expire on 30 June 2023, along with the temporary full expensing rules. The loss carry back rules allow eligible companies to apply tax losses against taxable profits made in certain previous income years, rather than carrying them forward to future years. There is no mention of the simplification of Division 7A. Division 7A captures situations where shareholders access company profits in the form of loans, payments or the forgiveness of debts. The 2016-17 Federal Budget proposed changes to reduce the compliance burden of Division 7A. These changes were initially meant to apply from 1 July 2018 but were deferred a number of times, before the Government announced that any changes would commence from the start of the income year following the date on which the changes receive Royal Assent. Aside from a Treasury discussion paper released back in October 2018, this issue remains in limbo. The Budget also doesn't refer to either the Skills and Training Boost or the Technology Investment Boost. These measures, announced by the previous Government, would provide a bonus deduction equal to 20% of qualifying expenditure if the legislation containing these measures is passed in its current form (Treasury Laws Amendment (2022 Measures No. 4) Bill 2022). The Technology Investment Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2023. The Skills and Training Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2024. If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know. As always, we’re here if you need us!

Getting the best outcomes from a home care package for an elderly parent Know if you are getting what you are entitled to by the selected aged care provider. You are busy but you have been able to get Mum a home care package and find a provider to deliver the service. The hard yards have been done right? Surely at this point, you can relax and feel confident that Mum is getting the care and support she needs. Indeed, initially, it may have felt like this was the case. However, you are starting to notice when you visit Mum that she doesn’t seem to be going as well as she was… you may notice she is a bit frailer, or having difficulty with activities she used to do easily. Maybe she is forgetting more things or her personal appearance is changed. Surely you think, someone from the Home Care team will have recognised and responded to this? But as time rolls by there doesn’t seem to be any change and Mum continues to deteriorate. What should you do? Call the Care Coordinator We would recommend that in the first instance, you contact the home care provider and you want to speak with the Care Coordinator who oversees your Mum’s home care package. A great provider will have systems in place where they have staff who recognise the deterioration and have a system in-house to escalate and respond to these concerns and reach out proactively. A great provider will be available to listen to your concerns and review your Mum’s care plan and adjust accordingly. An unsatisfactory home care provider will not listen and not follow up with you, requiring endless calls on your part and may be unhelpful or unwilling to make changes to your Mum’s care service requirements. Check the statement We also recommend regularly checking the statement from the home care provider. They are obliged to provide a monthly statement which should clearly show what services have been delivered in the month, the cost of the services and the balance. There have been changes to how the government pays the home care packages to help reduce the large accrual of funds that had been occurring. When you are checking the statement, review the services that are reported as attended and ensure that indeed they were. Also consider if that is still relevant to your Mum’s current needs … or does Mum need more or something different now? The Care Plan should NOT be put on the shelf If Mum has had a change in needs, then the home care provider should review the Care Plan with you and Mum to determine what the new need(s) might be. These reviews should be done regularly regardless of any changes in care needs… but they should certainly be done if a change has been identified. You should then be provided with a copy of the Care Plan. Great home care providers should be proactive with this process and keep you informed and involved. Great providers will respond to your prompts for review and provide a copy of the Plan when asked. Inadequate home care providers won’t provide you with an opportunity to review the care needs and update the care plan or provide you with a copy. It is important to remember the Care Plan is the document that guides what you can use your home care package on. There needs to be an “assessed need” for a home care provider to approve and facilitate a service/product. There are rules around what these can be… but it is essentially a Consumer Directed Care model so if a need can be demonstrated and is important to Mum, then the provider should work with you to meet that need within the scope of the package. The provider should also be able to willingly and clearly explain to you why they cannot meet some requests if that is the case. To find out more about Family Aged Care Advocates and the valuable work they do, please visit familyagedcareadvocates.com.au and, in particular, their Aged Care Insights on their blog.

A guide for owners We look at the flow of money in and out of a company and the problems that trip up business owners. When you start up a business, inevitably, it consumes not just a lot of time but a lot of cash and much of this is money you have already paid tax on. So, it only seems fair that when the business is up and running the business can pay you back. Right? There are myriad ways owners look for payback from a company they have invested their time and money into it from dividends, salary and wages, jobs for sometimes underqualified family members to cash advances and personal expenses like school fees and nights out picked up as company expense. But, once the cash is in the company, it is company money. Repaying money loaned to the company If you have lent money to your company, you can draw this money back out as a loan repayment. The loan repayment is not deductible to the company but any interest payments made to you will be as long as the borrowed money has been used in the company’s business activities (assuming interest has actually been charged on the loan). Conversely, any repayments made by the company on the loan principal are not income for tax purposes but you will need to declare any interest earned in your income tax return. All loans, including the loan term and repayments, should be documented. Dividends: Paying out profits Dividends basically represent company profits being paid out to the shareholders of a company. If the company has franking credits from income tax it has paid, the dividends might be franked and the credits can often be used by the shareholder to reduce their personal tax liability. When a dividend is paid by a private company it must provide a distribution statement to the shareholders within four months after the end of the financial year. This gives private companies up to four months after the end of the financial year to work out the extent to which dividends will be franked. If any of the shares in the company are held by a discretionary trust then there are some additional issues that will need to be considered, including whether the trust has a positive amount of net income for the year, whether the trust has made a family trust election for tax purposes and who will become entitled to distributions made by the trust for that year. Repaying share capital Many private companies are set up with a relatively small amount of share capital. However, if a company has a larger share capital balance then there might be scope for the company to undertake a return of share capital to the shareholders. Whether this is possible will depend on the terms of the company constitution and there are some corporate law issues that need to be addressed. From a tax perspective, a return of share capital will normally reduce the cost base of the shares for CGT purposes, which means that a larger capital gain could arise on future sale of the shares but there won’t necessarily be an immediate tax liability. Having said that, there are some integrity rules in the tax system that need to be considered. The risk of these rules being triggered tends to be higher if the company has retained profits that could be paid out as dividends. Shareholder loans, payments and forgiven debts: Using company money There are some rules in the tax law (known as Division 7A) that determine how money taken out of a company is treated. Division 7A is a particularly tricky piece of tax law designed to prevent business owners from accessing funds in a way that circumvents income tax. While amounts taken from a company bank account by the owners are often debited to a shareholder’s loan account in the financial statements, Division 7A ensures that any payments, loans, or forgiven debts are treated as if they were dividends for tax purposes unless there is a loan agreement in place which meets certain strict requirements. These ‘deemed’ dividends cannot normally be franked. If you have taken money out of the company bank account then the main ways of avoiding this deemed dividend from being triggered are to ensure that the loan is fully repaid or placed under a complying loan agreement before the earlier of the due date and actual lodgement date of the company’s tax return for that year. To be a complying loan agreement the agreement requires minimum annual repayments to be made over a set period of time and there is a minimum benchmark interest rate that applies – currently 4.77% for 2022-23. For example, if your company is paying school fees for your kids, or you take money out of the company bank account to pay down your personal home loan, if you don’t pay back this amount or put a complying loan agreement in place then this amount is likely to be treated as a deemed unfranked dividend. That is, you need to declare this amount in your personal income tax return as if it was a dividend and without the benefit of any franking credits. This means that even though the company might have already paid tax on this amount, you will be taxed on it again without the ability to claim a credit for the tax already paid by the company (causing double taxation of the same company profits). The rules are very strict when it comes to loan repayments. If a repayment is made but the same amount or more is loaned to the shareholder shortly afterwards then there are some special rules that can apply to basically ignore the repayment. There are some exceptions to these rules and the position needs to be managed carefully to avoid adverse tax implications. Collins Hume's purpose is to inspire business owners to achieve success in powerful and meaningful ways. Let us know if any topics covered here are of particular interest to you. Call our team in Ballina or Byron Bay on 02 6686 3000.

Wills, estate planning and testamentary trusts Having a valid will ensures that your assets and possessions are distributed according to your wishes after your passing. However, simply creating a will is not enough — it's essential to update it regularly to reflect any significant changes in your life circumstances or the law. The last time you updated your will may depend on a variety of factors. There are several life events that can trigger a will update, including: Entering Into or Ending a Personal Relationship: marriage, divorce or starting or ending a de facto relationship for example Birth or Adoption of a Child: Having a new child in the family may prompt changes to your will to ensure that your child is provided for in the event of your death Death of a Beneficiary, Executor or Trustee: If someone named in your will as a beneficiary, executor or trustee passes away, you may need to update your will to reflect this change Change in Finances: Changes in your financial situation, such as a large inheritance or the sale of a property, may prompt a need to update your will to reflect your current assets Relocation: Moving to a new state or country may require changes to your will to ensure that it conforms to the laws of your new jurisdiction Changes in Tax Laws can impact your estate plan and you may need to update your will to reflect these Change in Personal Wishes: As your life circumstances change, your personal wishes and preferences may change as well. You may need to update your will to reflect these changes. It's recommended that you review your will every few years, even if your circumstances haven't changed significantly. This ensures that your will accurately reflects your current wishes and that any outdated information or provisions are updated or removed. With the recent increase in property prices your financial situation may be significantly different. Many leading estate planning lawyers are now recommending that Testamentary Trusts are incorporated into your estate plan. What are the benefits of a Testamentary Trust? A Testamentary Trust is typically prepared as a discretionary family trust established under the terms of a will. The assets that form part of the estate will be held in trust for a potential beneficiary until the termination of the trust (for example, in the event the beneficiary reaches a nominated age). Benefits of establishing a Testamentary Trust under the terms of a will include: Tax savings: For example, children under the age of 18 years who receive income from a testamentary trust are taxed on that income as adults, and therefore enjoy the normal tax-free threshold and marginal tax rates which apply to adults An inheritance may be protected against creditors in the event of a beneficiary’s bankruptcy In the event the beneficiary becomes part of divorce proceedings, an inheritance is less likely to be distributed pursuant to a Family Court order in property settlement proceedings if the trust is established and managed correctly Offering protection against future business dealings of the beneficiaries Families can ensure adequate funds are provided for a beneficiary and at the same time protect the funds by keeping them out of the beneficiary’s control They assist in shifting wealth to future generations in tax effective manner and may save capital gains tax and even stamp duty. Other issues to consider The Trustees of the Testamentary Trust do not have to be the executors of your estate The guardian of your infant children will need to work with the Trustees, so choose people for these roles who don’t have obvious conflicts of interest You can make specific gifts of property to beneficiaries that take effect before the balance of your estate goes into the testamentary trust Your creditors will be paid out of the estate before any assets go into the testamentary trust. Tax considerations for planning your estate In Australia, there are several tax considerations that should be taken into account when planning your estate. Here are four key points to consider: Capital Gains Tax (CGT): When assets such as property or shares are sold, CGT may be payable on the increase in their value since they were acquired. In the context of estate planning, CGT can be a significant issue if beneficiaries are left with assets that have appreciated in value, as they may be liable to pay CGT if they later sell those assets. However, there are various strategies that can be used to minimise CGT, such as gifting assets during the owner's lifetime, or utilising trusts or other structures to hold assets. Stamp Duty: In some states, stamp duty is payable when assets are transferred as a result of a will or intestacy. The amount of duty payable varies depending on the value of the assets being transferred and the state in which the transfer occurs. Estate Tax: Unlike some other countries, Australia does not have a specific estate tax. However, assets in an estate may be subject to income tax, CGT or other taxes which can reduce the value of the estate that is ultimately distributed to beneficiaries. Superannuation: Depending on how your super is structured, it may be subject to tax upon the owner's death. It is important to consider the tax implications of super when planning an estate, as it can have a significant impact on the value of the estate that is ultimately distributed to beneficiaries. When it comes to estate planning, considering a trust and its tax implications always seek professional advice from Collins Hume as part of your decision-making process. Please contact Collins Hume today if you wish to discuss your estate plan with a specialist adviser.

Numbers are just a different way of telling a story Meet Kim Roy, an Accountant with a passion for helping business owners understand their numbers and create better businesses. With a Bachelor of Business (Communications) from QUT in Brisbane and Certifications in Xero and Xero Payroll just to name a few, Kim has a broad range of skills and expertise. Before joining Collins Hume, Kim held various roles in public relations, internal communications and general management in the not-for-profit sector. After leaving the big smoke and returning to Tenterfield, Kim joined a friend's accounting firm in an admin support role, where she learned the ropes doing tax returns. She eventually became an accountant, leveraging her natural communications ability and primary production upbringing to help her clients. Kim's typical day involves serving small and medium-sized businesses, with a particular focus on cloud accounting technology and troubleshooting. She is also Collins Hume’s specialist go-to bookkeeping gun on Xero, MYOB and QuickBooks user queries. With a flair for problem-solving and drilling into the detail, Kim excels at figuring out the root cause of accounting and bookkeeping issues and finding ways to resolve them. “My husband had his own painting business so I did all of his bookkeeping and BAS for about 12 years which makes it very easy for me to relate to small business owners with cash flow issues or trying to find enough time to manage the paperwork,” says Kim. Kim also assists Partner, Kelly Crethar on Collins Hume’s people and culture initiatives, with her project expertise proving invaluable following two years of managing JobKeeper and COVID-19 support. One of the things Kim loves about working at Collins Hume is the degree of flexibility the firm offers. “The Partners are open to new ideas and are not afraid of change, making it an interesting and dynamic workplace,” says Kim. “I am constantly learning and improving, which I enjoy immensely.” When she's not working, Kim enjoys stand-up paddleboarding and indulging in her crafty side by crocheting and drawing. She is famously the brains behind the design and construction of our handmade Christmas tree using 100 per cent recycled and renewable materials, which generated loads of positive buzz in 2022. Kim's message to business owners is to make use of their accountant’s expertise and know-how. “Accountants are there to help, and investing time in business improvement is never a waste of time,” Kim added. “I see us an investment in their business, not a cost.” “You can't avoid tax, but you can understand it and make the best decisions with confidence.” Copyright 2023. Collins Hume Ballina and Byron Bay

What information on sellers will the ATO know? From 1 July 2023, a new reporting regime will require platforms that enable taxi services (including ride-sourcing) and short-term accommodation to report their transactions to the ATO each year. From 1 July 2024, the regime will expand to include all other platforms. While the legislative instrument for the reporting regime is still in draft (see LI 2022/D27), it is expected that platform providers will report their transactions to the ATO every six months. The platforms will submit data on the sellers for transactions on their platform including: ABN and business / trading name (where applicable) First, middle and surname/family name (for individuals) Date of birth (for individuals) Residential or business address Email address and telephone numbers Bank account details. And, for platforms facilitating short-term accommodation: Listed property name Listed property address Number of nights booked. In addition, the platforms will provide aggregate quarterly data on the value of transactions, industry types, total gross income etc. The reporting regime does not include platforms that simply match suppliers to sellers and are not engaged in the transaction such as quotes for hiring tradies where the job is not accepted through the website. Collins Hume's purpose is to inspire business owners to achieve success in powerful and meaningful ways. Let us know if any topics covered here are of particular interest to you. Call our team in Ballina or Byron Bay on 02 6686 3000.

Just in time for the Fringe Benefits Tax (FBT) year that started on 1 April, the ATO has released new details on electric vehicles. The FBT exemption for electric cars If your employer provides you with the use of a car that is classified as a zero or low-emissions vehicle there is an FBT exemption that can potentially apply to the employer from 1 July 2022, regardless of whether the benefit is provided in connection with a salary sacrifice arrangement or not. The FBT exemption should normally apply where: The value of the car is below the luxury car tax threshold for fuel-efficient vehicles ($84,916 for 2022-23) when it was first purchased. If you buy an EV second-hand, the FBT exemption will not apply if the original sales price was above the relevant luxury car tax limit; and The car is both first held and used on or after 1 July 2022. This means that the car could have been purchased before 1 July 2022, but might still qualify for the FBT exemption if it wasn’t made available to employees until 1 July 2022 or later. The exemption also includes associated benefits such as: Registration Insurance Repairs or maintenance, and Fuel, including electricity to charge and run the vehicle. But, it does not include a charging station (see How do the tax rules apply to home charging units? below). While the FBT exemption on EVs applies to employers, the value of the fringe benefit is still taken into account when working out the reportable fringe benefits of the employee. That is, the value of the benefit is reported on the employee’s income statement. While you don’t pay income tax on reportable fringe benefits, it is used to determine your adjusted taxable income for a range of areas such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and certain social security payments. Who the FBT exemption does not apply to By its nature, the FBT exemption only applies where an employer provides a car to an employee. Partners of a partnership and sole traders are not employees and cannot access the exemption personally. If you are a beneficiary of a trust or shareholder of a company, the exemption can only apply if the benefit is provided in your capacity as an employee or as a director of the entity (you need to be able to show you have an active role in the running of the entity). How do the tax rules apply to home charging units? The ATO has confirmed that charging stations don’t fall within the scope of the FBT exemption for electric cars. This means that FBT could be triggered if an employer provides a charging unit to an employee. If an employee purchases a home charging unit then it might be possible to claim depreciation deductions for the cost of the unit over a number of income years if the unit is used to charge a vehicle that is used for income-producing purposes. However, if an employee is only using the vehicle for private purposes then the cost of the charging unit is a private expense and not deductible. What about the cost of electricity? A friend of mine travels a lot for work and used to rack up large travel expenses… right up until he switched to an electric vehicle. Now it costs him 3 cents per km in electricity. Because it is often difficult to distinguish home electricity usage, the ATO has set down a rate of 4.20 cents per km for running costs for EVs provided to an employee (from 1 April 2022 for FBT and 1 July 2022 for income tax). If you use this rate, you cannot also claim any of the costs associated with costs incurred at commercial charging stations. It is one or the other, not both. You also have the option of using actual electricity costs if you can calculate them accurately. Our purpose is to inspire business owners to achieve success in powerful and meaningful ways. Let us know if any topics covered here are of particular interest to you. Call our team in Ballina or Byron Bay on 02 6686 3000.

1 July 2023 Super Balance Increase but no Change for Contributions The general transfer balance cap (TBC) – the amount of money you can potentially hold in a tax-free retirement account, will increase by $200,000 on 1 July 2023 to $1.9 million. The TBC is indexed to the consumer price index each December and applies individually. If your transfer balance account reached $1.7m or more at any point before 1 July 2023, your TBC after 1 July 2023 will remain at $1.7m. If the highest amount in your account was between $1 and $1.7m, then your cap is proportionally indexed based on the highest ever balance your transfer balance account reached. That is, the ATO will look at the highest amount your transfer balance account has ever been, then apply indexation to the unused cap amount. For example, if you started a retirement income stream valued at $1,275,000 on 1 October 2022 and this was the highest point your account reached before 1 July 2023, then your unused cap is $425,000 ($1.7m-$1.275m). This unused cap amount is used to work out your unused cap percentage ($425k/$1.7m=25%). The unused cap percentage is then applied to the indexation increase ($200k*25%=$50k) to create your new TBC of $1,750,000. But don’t worry, you don’t have to calculate this yourself, you can see your personal transfer balance cap, available cap space, and transfer balance account transactions online through the ATO link in myGov. The caps on the contributions you can make into super however, will remain the same. That is, $27,500 for concessional contributions and $110,00 for non-concessional contributions. The contribution caps are linked to December’s average weekly ordinary time earnings (AWOTE) figures. Let's Talk That’s all we focus on: You, your family, your wealth, your business and the legacy you (and we) leave. That’s it. Join Collins Hume on this amazing journey.