A Grade Tax News Personal Newsletter
If you run your own business and have bought or are thinking about buying or leasing a company car, make sure you consider your fringe benefits tax (FBT) obligations.
Recent checks of luxury cars by the Tax Office found that many company owned or leased cars used by employees didn't account for FBT - resulting in some hefty tax bills for employers.
In a recent case involving an employee and an employer, an employer failed to lodge an FBT return for a number of years and when followed up by the Tax Office received a default FBT assessment of over $100,000 (including penalties).
The employer argued in the Administrative Appeals Tribunal that the assessment was excessive and that the car was only used for business purposes. However, because there were insufficient records to support this claim the AAT upheld the Tax Office assessment.
To avoid getting stung remember these key points:
- Cars garaged near an employee's home are considered available for the employee's private use.
If a car is garaged at or near an employee's home, the FBT law deems it as available for the employee's private use, regardless of whether the employee has permission to use the car privately. As a general rule, travel to and from work is private use of a vehicle.
- Keep accurate and up-to-date log books.
You need to be able to prove to the Tax Office that the car was used for business purposes so it's important to keep these records up to date and accurate.
The Tax Office is not just checking on the private use of luxury cars. Last April the Tax Office announced a motor vehicle data match on vehicles with a value of $10,000 or greater sold or transferred between 1 July 2007 and 30 June 2008.
The Pension Bonus Scheme (PBS) will be closed to new entrants from 20 September 2009.
To register for the PBS you must first qualify for the Age Pension before 20 September 2009. Therefore, only men over the age of 65 and women over 63.5 years are eligible to register.
Note that you do not need to be eligible for the Age Pension at the time of registration. The pension bonus is calculated based on your Age Pension entitlement when you apply to receive the Age Pension for the first time.
What is the Pension Bonus Scheme
The Pension Bonus is a lump-sum, non taxable payment.
When you come in to see us at A Grade Tax, please bring the following items to assist us in completing your tax return:
Which individuals can claim the Education Tax Offset ?
To be eligible to claim the Education Tax Offset an individual must meet the following 3 conditions:
- The claimant has received or is entitled to receive Family Tax Benefit Part A in respect of a child. Thus the rebate must be claimed by the parent registered for Family Tax Benefits. If for example the parent that is registered for FTB does not need to lodge a tax return then they must complete a stand alone Education Tax Offset claim form – it cannot be transferred to the other parent to claim on their tax return.
- The child is enrolled in a primary or secondary school course.
- Eligible education expenses are incurred in respect of the child.
Eligible claimants will be able to claim the following tax offset amount for 2009:
- A 50% tax offset for up to $750 of eligible education expenses incurred for each child attending primary school ( i.e., a refund of up to 50% x $750 = $375 per primary school child )
- A 50% tax offset for up to $1500 of eligible education expenses incurred for each child attending secondary school ( i.e., a refund of up to 50% x $1500 = $750 per secondary school child )
Only the following prescribed education expenses can qualify for the tax offset:
As announced in the May 2008 Federal Budget, from 1st July 2009 income tests used to determine eligibility for a range of government financial benefits will change. From this date, salary sacrified contributions to superannuation will be counted as income for the following:
- Family assistance
- Child support
- Eligibility for the superannuation co-contribution
- Various tax offsets: and
- Medicare levy surcharge
Therefore, if you are in a salary sacrifice arrangement beware that these payments, whilst not counted towards the above thresholds for this current financial year, will be counted from 1st July 2009 onwards. Accordingly, if you were motivated to enter into a salary sacrifice arrangement in order to qualify (or in the case of Medicare levy surcharge, avoid) one of the earlier payments, you may wish to review with your advisor the benefits of continuing such an arrangement post 1st July, 2009.
For more information ring (02) 4731-1405 A Grade Tax Accountants Penrith for tax advice, planning and all your accounting and taxation needs.
The Education Tax Refund (ETR) is a new government initiative to help with the cost of educating primary and secondary school children. It means eligible parents, carers, legal guardians and independent students could get 50% back on some education expenses. This includes items like computers, educational software, textbooks and stationery.
Most people are eligible for the ETR because they receive Family Tax Benefit (FTB) Part A. However, there are some payments that prevent you from receiving FTB Part A, but which still entitle you to receive the refund. You can also claim the refund if you are an independent student. For more information, see http://ato.gov.au/individuals/content.asp?doc=/content/00174278.htm&page=1&H1
You can claim the ETR each financial year for children in primary and/or secondary school, or if you are an independent student. You will be able to claim the refund from 1 July 2009 for the 2008/09 financial year. This means you can claim for items purchased from 1 July 2008. Remember to keep your receipts as they will help you calculate your entitlement and you may be required to produce them as proof of purchase.
You can claim the ETR even if you are not required to lodge a tax return.
Tax bonus payment
Below is a brief guideline regarding the Government’s tax bonus payments:
- If your 2007-08 taxable income was up to and including $80,000 the bonus is $900
- If your income exceeded $80,000 but did not exceed $90,000 the bonus is $600
- If your income exceeded $90,000 but did not exceed $100,000 the bonus is $250.
To receive the payment your 2007-08 income tax return must be lodged by 30 June 2009 and you must have paid tax. If you were refunded 100% of your income tax paid when lodging your 2007-08 income tax return you will be ineligible for the Tax Bonus Payment. The first round of payments will commence from April 2009. Those who have already had their returns assessed will be the first to receive their payments.
For all your accounting and taxation services please contact A Grade Tax Accountants Penrith on (02) 4731-1405 or visit our website www.agradetax.com.au
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