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Now that the new FBT year is firmly underway, the ATO has released the rates and thresholds for the 2016-17 FBT year.
And remember, we’ve just entered the final year where the FBT rate is 49% (until June 30, 2017) due to the budget repair levy.
This change in FBT rate has meant that some of the factors that we have committed to memory have changed, such as the gross-up factor.
If the employer is entitled to a GST input tax credit the FBT gross-up factor (known as type 1) is now 2.1463. Where the employer is not entitled to a GST credit, the factor (type 2) is 1.9608. (Until April 1, 2015, these used to be 2.0802 and 1.8868 respectively.)
When working out an FBT liability, an employer must gross-up the taxable value of benefits provided to reflect the gross salary employees would have to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax. The tax payable is the fringe benefits taxable amount multiplied by the rate of tax.
Importantly, the FBT rate will revert to 47% at April 1, 2017, even though the budget repair levy stays until June 30, 2017.
The other relevant FBT rates and thresholds are as follows.
|Living away from home allowance: Reasonable food component per week for fringe benefits tax for the 2016-17 FBT year
|One adult and one child
|Two adults and one child
|Two adults and two children
|Two adults and three children
|Three adults and one child
|Three adults and two children
|For larger family groups, add $121 for each additional adult and $61 for each additional child.
|Taxable value of a fringe benefit arising from private use of a motor vehicle other than a car (cents-per kilometre basis) for the 2016-17 FBT year
|0 – 2500cc
|52 cents per km
|63 cents per km
|16 cents per km
|Indexation factors for non-remote housing for the 2016-17 FBT year
|New South Wales
|Australian Capital Territory
|Business record keeping exemption for FBT
|FBT- Benchmark interest rate
|Car parking threshold
|For FBT year ending March 31, 2016
The ATO says that it regularly identifies industries that it has found to be more at risk of dropping the ball on superannuation guarantee (SG) obligations.
This can take the form of not paying the compulsory 9.5% on a regular basis in more serious cases, but also covers other obligations regarding SG, such as offering choice of fund, providing tax file numbers or keeping adequate records.
This year, it says the industries it has identified as being at risk of not meeting SG obligations for eligible employees includes:
– car retailing
– computer system design.
Tax professionals with clients in these industries are to be notified by the ATO of planned audits (and many tax practitioners may have already received notice). Starting in July this year, the ATO says it will be focusing on the meeting of SG obligations, especially from businesses operating in the above industries.
In the meantime, it is advising taxpayers to:
– pay the correct super contributions for their employees and eligible contractors
– comply with SuperStream
– offer employees a choice of super fund
– provide employee TFNs to their super funds within 14 days of receiving a Tax file number declaration form
– meet the quarterly due dates for super payments, and
– keep up-to-date records of all super payments.
The ATO has announced that it will acquire data from businesses that it visits as part of its employer obligations compliance program during the 2016-17, 2017-18 and 2018-19 financial years.
The data it says will be collected includes:
– ABN of the payer business
– ABN of the payee business (or contractor)
– the name, address and contact details of the contractor
– dates of payment to the contractor, and
– amounts paid to the contractors (including details of whether the payment included GST).
These records will be electronically matched with other data holdings to identify con-compliance regarding registration, lodging records, reporting and payment obligations and so on under taxation laws.
The ATO says it is estimated that records for 25,000 entities will be obtained, including the records of 12,500 individuals. It says a document describing the program has been prepared in consultation with the Office of the Australian Information Commissioner, which can be viewed here.
Although the transition to Standard Business Reporting (SBR) might be getting a lot of attention, there are several other strategic digitally-based analytics projects underway at the ATO.
For example, its Smarter Data Program, which the ATO pre-empted through its document Blueprint for Change that was released in 2015. The aim of this program is to leverage the latest digital technology to make the job of anyone dealing with the taxation sector not only faster and more efficient but more thorough.
With so much taxpayer data now existing online, not only is the ATO (or other institutions) able to pre-fill information, it is working steadily towards being able to, for example, identify anomalies in tax returns through data analytics.
This side of the Smarter Data initiative, termed “nearest neighbour”, aims to have the capacity to set parameters for various profiles of individual and business clients. The data from millions of tax returns, activity statements, payroll records and other information from third party sources will be accessed and used.
Similar sorting and matching of data would take up to two weeks under current circumstances, but the “nearest neighbour” analytics has been trialled to run to less than 20 minutes. Ultimately, such comparisons could even run in real time. Such capabilities are already in use overseas, with HM Revenue & Customs (the British tax office) displaying screen pop-ups to accounting program users that show the taxpayer, or their professional adviser, how the tax outcome compares in real time to other similar taxpaying clients.
To properly assess artworks and collectibles owned by taxpayers, the ATO says it is working with insurance companies to identify the owners of these sorts of assets.
The ATO says it has identified instances where “lifestyle assets” are not being properly accounted for. It says taxpayers need to be aware they may be subject to CGT on disposal.
The ATO says it is important that SMSF trustees are aware that:
– items purchased for more than $500 on or after September 20, 1985, are subject to CGT, even if they are kept mainly for the personal use or enjoyment of the client, and
– that special CGT rules apply to items that form part of a deceased estate, then…
…the date of purchase/auction needs to be accounted for, not the settlement date.
This is especially important given the changes looming for the SMSF landscape from July 1. The way in which collectible investment assets are dealt with when held by an SMSF will be required to adhere to a new set of rules.
From July 1, 2016, the rules regarding any collectible/artwork owned by an SMSF include:
– the collectibles are not to be stored at the SMSF trustee’s residence
– an SMSF trustee or a related party is not permitted to lease or use any of the collectibles
– the collectible must be insured by its own separate policy
– the storage decisions by the trustees must be documented and minuted
– if the collectible is to be sold to an SMSF trustee or related party, then a valuation by a qualified independent valuer must be sought to determine the market value.
Given the latest data matching exercise being undertaken by the ATO regarding insurance policies on lifestyle assets, the above point regarding separate insurance policies is especially important. This also ties in with the efforts by the ATO to ensure CGT liabilities are factored into tax outcomes.
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