IN THIS ISSUE
- New small business rollover relief
- Reviewing taxable payments annual reports
- Your Superannuation
- FBT 2016: The top 4 things every business needs to know
New small business rollover relief
The bill was introduced to Parliament on 4 February and passed the Senate on 29 February 2016. It contains the new rollover rules that will be available when small businesses undertake a restructure from 1 July 2016.
A number of fundamental changes have been made to the new rules since the draft legislation was released late in 2015 including;
- There is no longer a $6m net asset value test that needs to be passed. The parties involved in the transaction will need to pass a small business entity test based on having aggregated annual turnover of less than $2m.
- The entity acquiring the assets will be able to provide consideration, but there is no requirement to provide consideration.
- The assets being transferred need to pass an active asset (i.e., they need to be used in a business of the entity disposing of the asset or a connected entity or affiliate).
- Applying the rollover will not reset the ownership period of the asset under the small business 15 year exemption.
- Applying the rollover will reset the ownership period under the CGT discount.
- If all the conditions for applying the rollover are satisfied then Division 7A will not apply, even if assets are transferred from companies for less than market value consideration.
The rules retain the use of the family trust election system for facilitating transfers from or to a discretionary trust.
The rules apply tax relief not only to CGT assets but also to trading stock, depreciating assets and other assets held on revenue account of the basic conditions are met.
Reviewing taxable payments annual reports
The ATO is contacting businesses in the building and construction industry about information that businesses have provided on their Taxable Payments Annual Report. The ATO will be contacting businesses who have:
- Provided a report with missing or invalid ABNs;
- included amounts paid for GST when the contractor isn’t registered for GST;
- not lodged a report, when ATO records indicate they should;
- advised the ATO they are not required to report, but the ATO’s records indicate the business should have reported.
The ATO will advise businesses, that are reviewed, what the review has found and will suggest ways to make it easier for the business to complete their reports more accurately in the future, such as using the ABN Lookup tool or ATO app to check a contractor’s ABN or if they are registered for GST.
There is almost no doubt that the current raft of concessions available to superannuation will change. To lock in your access to the current concessions, you should focus on maximising the tax-free component of your superannuation. If you haven’t already, come and see us to have a chat as there are different strategies that can be utilised depending on your situation.
Super and Social Security
The social security income test tightened on 1 January 2016 for superannuants. If you receive defined benefit income from your superannuation, a larger portion of this income will now be taken into account when applying the relevant social security income tests – capping the proportion of income that can be excluded at 10%. This affects aged care fees, income support payments, the Low Income Health Care Card, etc.
FBT 2016: The top 4 things every business needs to know
If your business is in the hospital/non-profit sector and uses salary packaging for team members, you’re a small business and there are a few things you need to know beyond the basic FBT changes when the new FBT year starts on 1 April 2016.
1.You will pay more FBT
The Fringe Benefits Tax (FBT) rate is currently 49%. The rate increased from 47% on 1 April 2015 in conjunction with the introduction of the 2% debt tax on high-income earners (Temporary Budget Repair Levy). The FBT year that is just ending is the first year at the higher rate – which means if you have an FBT liability, you will pay more tax. The FBT rate will stay at 40% until 31 March 2017 when the impact of the debt tax is scheduled to be removed.
2. Meal entertainment crackdown – medical professionals beware
If your business is an FBT exempt entity (public and not-for-profit hospitals, public benevolent institutions, health promotion charities, public ambulance service) or qualifies for the FBT rebate, then there are significant changes that come into play on 1 April you need to be across.
In the past, employees of FBT exempt and rebatable entities have been able to salary sacrifice an unlimited amount of meal entertainment expenses (e.g., restaurant meals) with no impact on their existing annual caps. But, this will all change on 1 April 2016. From this date, a separate single grossed-up cap on $5,000 for salary sacrificed meal entertainment benefits for employees of exempt and rebatable employers will apply.
As an employer, it will be essential to review the existing salary packages of team members affected by the changes as someone will be paying the extra FBT that arises as a result of the new cap being introduced.
3. Salary sacrificing may not be worth it
By now you should have reviewed any salary sacrifice agreements to ensure that they are still viable at the higher 49% FBT rate. In some cases, salary sacrifice agreements may no longer achieve the intended goals and simply create an administrative burden for little to no benefit.
For high income earners (above $180k) however, the difference in timing between the FBT year and the income year means that there will be a planning opportunity between 1 April 2017 when the FBT rate reduces back to 47% and 30 June 2017 when the 2% debt tax is removed.
4. Two laptops are better than one for small business
If your business is a small business (turnover under $2m). From 1 April 2016 the FBT exemption on portable electronic devices will be extended. From this date, you can offer employees more than one work-related portable electronic device, such as a mobile phone, laptop and tablet and not have to pay FBT on it even if the device is the same or similar to other devices already provided in that same FBT year. All other businesses are limited to one device that is identical or similar to another.
Burns Sieber are the experts in providing business advisory and taxation. If you have any colleagues requiring business advice, Burns Sieber are able to assist. Please contact our office and visit our website for more information and testimonials from our valued clients.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
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