Small business changes announced in the 2015-16 budget are now law. The following changes apply from 1 July 2016:
If You’re Angry About Taxes, Here’s Who to Blame –
It’s coming up to tax season again, which has a lot of us wondering: Who came up with this crap? The oldest records of taxes go back to 6000 B.C. in what is now Iraq. The ancient Greeks, Egyptians, and Chinese all had their own versions of taxes, too. Abraham Lincoln, instituted federal income taxes to help pay for the Civil War. The English used rules established by Roman emperor Caesar Augustus for personal and inheritance taxes. So when you’re sending payment to the ATO this year, you can choose who you want to blame: Greeks, Egyptians, Iraqis, the Chinese, Romans or the English.
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:
SMSFs can be set up with balances of as little as $200,000, but these smaller funds are often insufficiently diversified which drives down returns. They become more viable if the trustee chooses to take on some of the administration themselves, however in many cases this is best left to professionals.
That being said, an SMSF can have up to four members, so funds may be pooled with spouses and/or family members in order to maximise the starting balance and subsequent contributions.
Establishing an SMSF can be a fruitful exercise for high-net-worth investors due to the increased flexibility and control it offers. However, with these benefits come increased responsibility. Investors must be aware of the regulatory requirements and associated costs which are unique to the SMSF sector.
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.