With the holiday period just around the corner, we’re reminding you how to keep your business premises and client information secure if you’re closing the workplace over the holiday break.

We’ve made a list (and checked it twice) of simple things to protect your business, both on site and online:

• Safely secure all physical files (or dispose of them appropriately). It only takes a few moments for thieves to photograph hard copies of your clients’ files so it’s crucial that all physical information is stored in locked storage units or shredded.
• Log out of all devices.
• Securely store your devices.
• Ensure all devices are using the latest software. Cyber criminals use known weaknesses in systems or apps to hack into devices. Turn on automatic updates to take the guesswork out of updating work devices.

Our list above is not an exhaustive list, and it’s important you take all necessary steps to ensure your information is protected.

The Foreign resident capital gains withholding (FRCGW) rules are changing from 1 January 2025.

Currently, Australian residents selling property must provide a clearance certificate to the purchaser at or before settlement to avoid having 12.5% withheld from a property sale where the value of the property is $750,000 or more.

Under the changes:

• the withholding rate will increase from 12.5% to 15%
• the $750,000 property value threshold will be removed, and the withholding rules will apply to all property sales.

The changes apply to contracts entered into on or after 1 January 2025.

FRCGW is designed to support the collection of tax liabilities owed by non-residents selling Australian property.

All Australian residents selling property will require a clearance certificate from the ATO, or withholding will apply to the transaction. If an Australian resident vendor doesn’t provide a clearance certificate by settlement, 15% of the sale price must be withheld by the purchaser and paid to the ATO.

If an amount is withheld from the sale price, the vendor will only receive any refund due after their next income tax return is processed at tax time.

Most clearance certificates will issue within a few days, but it is important to apply early because some can take up to 28 days to issue. They are valid for 12 months, so the vendor doesn’t need to wait until they have signed a contract.

Foreign resident vendors may be able to apply to vary the withholding rate.

There are very limited circumstances where you can legally access your super early, and the ATO is reminding taxpayers that “paying bills and buying Christmas presents doesn’t make the list.”

Generally, you can only access your super when you:

• reach preservation age and ‘retire’; or
• turn 65 (even if you are still working).

To access your super legally before then, you must satisfy a ‘condition of release’.

SMSF members who illegally access their benefits may be liable for additional income tax and administrative penalties, and they could be disqualified as a trustee.

For taxpayers who have illegally accessed their super, returning it to the fund may be considered a new contribution.  Depending on their contribution caps, this may result in additional tax on excess contributions.

You should beware of people promoting ‘early access schemes’ to withdraw your super early (other than by legal means).

You can protect yourself from promoters of such schemes by:

• stopping any involvement with the scheme, organisation or person who approached you;
• not signing any documents, and not providing any of your personal details such as your tax file number; and
• making a ‘tip-off’ to the ATO online or by phoning the ATO on 13 10 20.

While the ATO knows most small businesses try to report correctly, it understands that mistakes can happen.  The ATO advises taxpayers that it is important to get the following ‘basics’ right:

• using digital tools and business software to help track and streamline processes to increase the efficiency of their business;
• keeping accurate and complete records, which will help taxpayers meet their tax and super obligations and make lodging easier; and
• getting the right advice from trusted resources such as their registered tax professional, which can help taxpayers navigate change and uncertainty at any stage of the business life cycle.

Year-end (and other) staff parties

Editor:  With the well-earned December/January holiday season on the way, many employers will be planning to reward staff with a celebratory party or event.  However, there are important issues to consider, including the possible FBT and income tax implications of providing ‘entertainment’ (including Christmas parties) to staff and clients. 

FBT and ‘entertainment’

Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the ‘actual method’ or the ’50/50 method’, rather than the ’12-week method’.

Using the actual method

Under the actual method, entertainment costs are normally split up between employees (and their family) and non-employees (e.g., clients).

Such expenditure on employees is deductible and liable to FBT.  Expenditure on non-employees is not liable to FBT and not tax deductible.

Using the 50/50 method

Rather than apportioning meal entertainment expenditure on the basis of actual attendance by employees, etc., many employers choose to use the more simple 50/50 method.

Under this method (irrespective of where the party is held or who attends) 50% of the total expenditure is subject to FBT and 50% is tax deductible.

However, the following traps must be considered:

• even if the function is held on the employer’s premises – food and drink provided to employees is not exempt from FBT;
• the minor benefit exemption* cannot apply; and
• the general taxi travel exemption (for travel to or from the employer’s premises) also cannot apply.

(*) Minor benefit exemption

The minor benefit exemption provides an exemption from FBT for most benefits of ‘less than $300’ that are provided to employees and their associates (e.g., family) on an infrequent and irregular basis.

The ATO accepts that different benefits provided at, or about, the same time (such as a Christmas party and a gift) are not added together when applying this $300 threshold.

However, entertainment expenditure that is FBT-exempt is also not deductible.

Editor:  ‘Less than’ $300 means no more than $299.99!  A $300 gift to an employee will be caught for FBT, whereas a $299 gift may be exempt.

Example: Christmas party

An employer holds a Christmas party for its employees and their spouses – 40 attendees in all.

The cost of food and drink per person is $250 and no other benefits are provided.

If the actual method is used: 

• For all 40 employees and their spouses – no FBT is payable (i.e., if the minor benefit exemption is available), however, the party expenditure is not tax deductible.

If the 50/50 method is used:

• The total expenditure is $10,000, so $5,000 (i.e., 50%) is liable to FBT and tax deductible.

Christmas gifts

Editor:  With the holiday season approaching, many employers and businesses want to reward their staff and loyal clients/customers/suppliers.

Again, it is important to understand how gifts to staff and clients, etc., are handled ‘tax-wise’.

Gifts that are not considered to be entertainment

These generally include a Christmas hamper, a bottle of whisky or wine, gift vouchers, a bottle of perfume, flowers or a pen set, etc.

Briefly, the general FBT and income tax consequences for these gifts are as follows:

• gifts to employees and their family members – are liable to FBT (except where the ‘less than $300’ minor benefit exemption applies) and tax deductible; and
• gifts to clients, suppliers, etc. – no FBT, and tax deductible.

Gifts that are considered to be entertainment

These generally include, for example, tickets to attend the theatre, a live play, sporting event, movie, etc, a holiday airline ticket, or an admission ticket to an amusement centre.

Briefly, the general FBT and income tax consequences for these gifts are as follows:

• gifts to employees and their family members – are liable to FBT (except where the ‘less than $300’ minor benefit exemption applies) and tax deductible (unless they are exempt from FBT); and
• gifts to clients, suppliers, etc. – no FBT and not tax deductible.

 Non-entertainment gifts at functions

Editor:  What if a Christmas party is held at a restaurant at a cost of less than $300 for each person attending, and employees are given a gift or a gift voucher (for their spouse) to the value of $150?

Actual method used for meal entertainment

Under the actual method no FBT is payable, because the cost of each separate benefit (being the expenditure on the Christmas party and the gift respectively) is less than $300 (i.e., the benefits are not aggregated).

No deduction is allowed for the food and drink expenditure, but the cost of each gift is tax deductible.

50/50 method used for meal entertainment

Where the 50/50 method is adopted:

• 50% of the total cost of food and drink is liable to FBT and tax deductible; and
• in relation to the gifts:

         –     the total cost of all gifts is not liable to FBT because the individual cost of each gift is less than $300; and

 –      as the gifts are not entertainment, the cost is tax deductible.

Editor:  We understand that this can all be somewhat bewildering, so if you would like a little help, just contact our office.

If you’re registered for GST and you make a business purchase, you may be eligible to claim the GST you paid in the purchase price as a credit.

GST credits offset the GST you need to pay when you lodge your business activity statement (BAS). This will reduce the amount of GST you owe and may result in a refund.

If you’re also eligible for fuel tax credits, you can claim credits for the tax included in the price of fuel you use in your business.

The best way to ensure you don’t miss out on any credits is to lodge your BAS on time.

How long do you have to claim?

You need to claim your GST and fuel tax credits within 4 years of the due date of the earliest BAS in which you could have made your claim for the relevant credit. If you don’t claim the credits within that time, you’ll no longer be eligible to claim them.

The credits must be included in your assessment within the 4-year credit time limit. Lodging an amendment to your original assessment or a private ruling request does not mean you have claimed your GST credits and fuel tax credits.

There are a number of options for claiming a credit other than requesting us to amend your original assessment to include the credits. You can:

• Claim the credits yourself by including them in your next BAS, provided that BAS is lodged within the 4-year credit time limit.
• Lodge a Revised BAS (RBAS) for the original period via Online Services during the 4-year credit time limit (however, this is treated the same as an amendment request and so the credits will not be included in your assessment until the RBAS is processed by us.
• Lodge a valid objection during the 4-year credit time limit to preserve your entitlement to those credits.

We recommend you consider your options early and do not leave your credit claims to the last minute because you risk your credit expiring.

Remember to keep accurate records to support your claims and we are here to help as your trusted registered agent.

To learn more about the 4-year credit time limit, visit Time limit on GST credits.

Fuel tax credit rates changed on 1 July 2024 and 5 August 2024.

Starting 1 January 2025, large Australian businesses and financial institutions will be required to produce annual sustainability reports, including climate-related financial disclosures, under new legislation recently passed by Parliament.

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 received Royal Assent on 17 September 2024, mandating these climate reporting obligations. ASIC Commissioner Kate O’Rourke encourages impacted entities to actively engage with these requirements, emphasising the importance of setting up effective governance and sustainability processes before the new rules take effect.

“This reform has substantial implications for our stakeholders, and ASIC acknowledges the transition period needed for businesses to build their reporting capabilities,” said Commissioner O’Rourke. “Our approach to supervision and enforcement will consider this adjustment phase, ensuring a balanced and practical implementation.”

To aid in this transition, ASIC is maintaining standards for voluntary disclosures and protecting against misleading conduct. Additionally, a dedicated sustainability reporting resource is available on the ASIC website to support reporting entities, with updates and regulatory guidance to be added over time.

ASIC also plans to consult with stakeholders to develop specific guidance on meeting these reporting obligations and how these will align with current legal requirements.

As more stakeholders factor environmental sustainability into financial decision-making, the importance of climate disclosure continues to grow. Enhanced climate reporting will benefit entities, providing them with insights into their climate-related risks and opportunities over varying timeframes.

Phased Reporting Rollout
The new climate reporting will phase in across three groups over the next three years:

• Group 1: Entities with $500 million in revenue, $1 billion in assets, or 500+ employees, starting their reporting from 1 January 2025.
• Group 2: Entities with $200 million in revenue, $500 million in assets, or 250+ employees, beginning from 1 July 2026.
• Group 3: Entities with $50 million in revenue, $25 million in assets, or 100+ employees, commencing from 1 July 2027.

ASIC advises all reporting entities, including those in later groups, to start preparing for these requirements now. Visit ASIC’s sustainability reporting page for more information on the new regime and ongoing guidance.

The ATO has been responsible for the administration of the early release of superannuation on compassionate grounds since 1 July 2018. It will only approve a release of superannuation on compassionate grounds if the applicant meets all the conditions set out in the regulations, including that the applicant has no other means to pay the expenses.

The five main grounds of eligibility are:

• medical treatment or transport (i.e., to treat a life-threatening illness or injury, or alleviate acute or chronic pain or mental illness) for the applicant or their dependant;
• accommodating a disability for the applicant or their dependant;
• palliative care for a terminal illness for the applicant or their dependant;
• funeral expenses for a dependant of the applicant; or
• preventing foreclosure or forced sale of the applicant’s home.

With the holiday season kicking off, you may be planning a celebration with your staff.

Before you hire a restaurant or book an event, make sure you work out if the benefits you provide your employees are considered entertainment related and if they’ll attract fringe benefits tax (FBT).

This will depend on:

• the amount you spend on each employee
• when and where your celebration is held
• who attends – is it just employees? Or are partners, clients and suppliers also invited?
• the value and type of gifts you provide.

If you do provide entertainment-related fringe benefits, keep the right records to support this so you can calculate their taxable value.

It’s important to get on top of how FBT works before you provide perks and extras. Otherwise, you may end up with an unexpected FBT liability.

You can find more fringe benefits tax and entertainment information on the ATO’s website.

From 1 April 2025, a plug-in hybrid electric vehicle (‘PHEV’) will not be considered a zero or low emissions vehicle under fringe benefits tax (‘FBT’) law and will not be eligible for the electric car FBT exemption. However, an employer can continue to apply the electric car exemption if:

• use of the PHEV was exempt from FBT before 1 April 2025; and
• they have a financially binding commitment to continue providing private use of the vehicle to an employee or their associate on and after 1 April 2025 (note that any optional extension of the agreement is not considered binding).

If there is a change to a pre-existing commitment on or after 1 April 2025, the FBT exemption for the PHEV will no longer apply from the date of that new commitment.

An employer is not entitled to an exemption from FBT after 1 April 2025 if there was no binding financial commitment to provide the car to a particular employee in place before then.