What is a fringe benefit?
A fringe benefit is a 'payment' to an employee, but in a different form to salary or wages.
According to the fringe benefits tax (FBT) legislation, a fringe benefit is a benefit provided in respect of employment. This effectively means a benefit is provided to somebody because they are an employee. The 'employee' may even be a former or future employee.
An employee is a person who is entitled, or has been entitled, to receive salary or wages. Benefits provided in respect of someone who has died are not fringe benefits as a deceased person does not meet the definition of 'employee' in the FBT legislation.
The terms benefit and fringe benefit have broad meanings for FBT purposes. Benefits include rights, privileges or services. For example, a fringe benefit may be provided when an employer:
Changes to car allowances mean if you are paying your employees a car allowance in excess of 66c per kilometre, you need to withhold tax on the amount you pay over 66c.
If you haven’t been doing this since July 2015, you should begin to withhold tax on the amount you pay over 66c and advise your employees.
What if your employees think that not withholding until now might result in them getting a tax bill?
Depending on the amount you’ve paid them, this shouldn’t have a significant impact on their tax for the year. But you can agree to increase the amount you withhold for the remainder of the financial year to cover the shortfall.
Remember, registered tax agents and BAS agents can help you with tax and super advice.
Companies with a turnover of up to $50 million a year will receive a tax cut, applicable to this financial year, taking the rate down from 30% to 27.5%. Small business gets a step-up
The tax cut will be staggered, with an immediate cut in 2016-17 for companies with an annual turnover up to $10 million, followed by a cut for companies turning over up to $25 million in 2017-18, and up to $50 million in 2018-19.
Australia’s financial health appears at risk, with the majority of Aussies believing they won’t have enough to sustain their retirement, according to a new study.
The study conducted by NAB-owned wealth manager MLC Wealth showed just 6 per cent of Australians would classify themselves as wealthy.
The survey found that Australians are largely dissatisfied with their net wealth, rating theirs 4.1 out of ten on average.
With Australians expecting to require $873,000 in assets, including homes, on average to retire, the need for greater planning is urgent, according to MLB.
A lack of advice and a good financial plan could be contributing to growing financial anxiety, evidenced by the fact that 70 per cent of Australians have not received financial advice in the last two years.
If you are considering using your superannuation to establish your own self-managed superannuation fund to purchase a residential investment property, here are a few broad guidelines I use when considering if such a strategy is appropriate for my clients: 1) Minimum super balance: ASIC advises that a minimum of $200,000 is required to establish an SMSF. 2) At least 10 years of working life left: This is not an ideal strategy for people who have less than ten years to work. 3) Protect your cash flow: What happens of one of the members loses their job? Or if you lose a tenant? I always recommend that an SMSF hold a cash buffer that amounts to six months of all property expenses that includes loan repayments and rental costs such as landlord insurance, strata fees and council rates 4) What is your plan to pay off the loan?: Whenever you take on a loan, you need a plan to pay down this loan.