Talking Concepts

March 2023

INTEREST RATES ​

Interest Rates that start from…

5.06% p/a Fixed Rate
5.12% p/a Comparison Rate

Based on our lender panel, BetterChoice’s Variable Rate, provides the most competitive Interest Rate. Interest rates are correct as at 31/03/2023 and subject to change at anytime. The comparison rate is based on a loan amount of $250,000, over a 30 year term. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different comparison rate. Terms, conditions, fees and charges apply and your full financial situation would need to be reviewed prior to acceptance of any offer or product.

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Dates to Remember

31 March 2023 – Fringe Benefit Tax end of year. Remember to take your odometer reading.

25 April 2023 – Anzac Day

28 April 2023 – Superannuation Guarantee contributions for March quarter due

21 May 2023 – FBT returns due

26 May 2023 – March 2023 BAS due if ELS lodged with C&R

30 June 2023 – End of Financial year

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OUR PLAN TO HELP YOU​

We strongly recommend that together we undertake a fast and simple three step process to implement your EPOA and Will.

Call our office on 9569 5676 and ask to speak to Bethany to get started.

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A story as old as time

As a business idea conceived by its founders over a game of poker, Silicon Valley Bank (SVB) was a gamble that rode the tech-wave of the 21st century. Playing a high-stakes game, SVB rose to become the 16th largest bank in the USA. Now as just another example of a failed former business, the SVB story is not the harbinger of a new GFC, nor is it a story of a banking sector in crisis. What it is, is a story of a manager that chose growth over fundamentals. And that’s a story as old as time.

Workplace relations changes are here. How do they affect you?

The Federal Government introduced its Fair Work Amendment (Secure Jobs, Better Pay) Act 2022 to Parliament. It has received Royal Assent and is now law.

IMPORTANT: BUILD A LINE OF EPOAS AND EXECUTORS

Abbott & Mourly Lawyers advise that you should provide a successor EPOA and Executor in case, when the time comes, the person or persons you appointed cannot or might not want to take up the role you have endowed upon them. It does not hurt to have a second successor EPOA and Executor. Safety, certainty, and security are paramount. If something happens, we want to make sure your family are looked after quickly.

Its FBT Time!

Why should you lodge an FBT Return?

Even though Fringe Benefits Tax (FBT) is designed to capture benefits enjoyed by an employee, it is levied on the employer. Unless your employment agreement allows for any FBT that becomes payable to be recouped from the employee, the employer will have no recourse for reimbursement.

So, why should an employer lodge an FBT return where no FBT is payable? Well, for the simple reason that it turns on a three-year deadline for the ATO to commence audit activities.

Without an FBT return being lodged, the ATO has the discretion to launch an audit into activities as far back as a business has had employees. Without the evidence (e.g. signed declarations, logbooks, meal entertainment records, etc.) that FBT was NOT payable in each year the ATO is likely to raise FBT liabilities, even where the employee who enjoyed the benefit may no longer work for the business. This makes it impossible for the business to recoup anything from the past employee.

Deep Dive: The FBT spectrum for electric car benefits

On 12 December 2022, the Treasury Laws Amendment (Electric Car Discount) Act 2022 (the Act) received Royal Assent. The Act provides the legislative framework supporting the Government’s pre-election policy announcement to provide a Fringe Benefits Tax (FBT) exemption for certain electric cars (see What’s emerging? Electric Car FBT exemption awaiting Royal Assent). 

It is important to note that the Australian Taxation Office (ATO) had indicated that it will release further guidance in relation to the FBT and broader taxation implications of Electric Vehicles once enactment of the Bill had occurred. Limited updated guidance was provided on the ATO’s website the same day the Act received Royal Assent.

In this Deep Dive article, we step through some key FBT considerations for employers (and employees) now that the measure is law.

How the ATO identifies potential FBT Audits

The table enclosed outlines the key tax return labels that can alert the ATO that an employer may have some FBT exposure:

2023 WORKING FROM HOME TAX DEDUCTIONS

Action Required – Changed Record Keeping Requirements to Claim Tax Deductions for Working from Home

The ATO has recently released a draft tax guidance (PCG 2022/D4) for claiming tax deductions for working from home. You need to be aware of these changes so that you can keep the appropriate records to maximum your tax claims in your 2023 Tax Return.

WHAT ARE THE KEY CHANGES?

From 1 July 2022, the ATO has explained that taxpayers who are working from home can claim deductions based on their actual expenses, or they can potentially adopt a revised fixed rate method which uses a rate of 67 cents per hour.

To use the revised fixed rate method, you must meet the following basic conditions:

  • You must be working from home while carrying out your employment duties or carrying on your business on or after 1 July 2022;
  • You must be incurring specific additional running expenses which are deductible under section 8-1 as a result of working from home; and
  • You must keep and retain relevant records in respect of the time you spend working from home and for the additional running expenses you are incurring.

The running expenses covered by this method are:

  • Energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home;
  • Internet expenses;
  • Mobile and/or home telephone expenses; and
  • Stationery and computer consumables.

While no separate deduction can be claimed for the expenses listed above if using the revised fixed rate method, you can potentially still claim depreciation deductions for assets used while working from home (e.g. computer, desk, chair, etc) along with any other running expenses not listed above, provided the normal tax deductibility requirements are satisfied.

A key change is that you do not need to have a separate home office or dedicated work area set aside in your home in order to rely on the fixed rate method.

Also, if more than one individual is working from home at the same time, each individual will be able to apply the fixed rate method if they each meet the requirements listed above.

This new practical compliance guideline from the ATO has been issued in DRAFT form and the final guidance may change. We will keep you informed of any changes, but we strongly recommend you start to keep the records the ATO has listed in their guideline.

VERY IMPORTANT: THE RECORDS YOU NEED TO KEEP

You need to keep the following records to prove your working from home tax deductions for the 2023 financial year:

  • A record which is representative of the total number of hours you worked from home during the period from 1 July 2022 to 31 December 2022; and
  • A record of the total number of actual hours you worked from home for the period 1 January 2023 to 30 June 2023.

For the 2024 and later financial years, the ATO expects you to keep a record for the entire income year of the number of hours they worked from home during that income year. An estimate for the entire income year or an estimate based on the number of hours worked from home during a particular period will not be accepted.

NEXT STEPS

To use the revised fixed rate method and claim 67 cents per hour for working from home expenses in your upcoming 2023 Tax Return, you will need to IMMEDIATELY start to keep a record of your actual hours working from home.

A record of your hours for the income year can be in the form of:

  • timesheets
  • rosters
  • a diary or similar document kept contemporaneously.

You must also keep evidence for each of the additional running expenses that you incurred. The documents you need to keep in order to demonstrate that you have incurred additional running expenses must show what the expense is and that you incurred the expense.

For energy, mobile and/or home telephone and internet expenses, you must keep one monthly or quarterly bill. If the bill is not in your name, you will also have to keep additional evidence showing you incurred the expenses; for example, a joint credit card statement showing payment or a lease agreement showing you share the property, and therefore the expenses, with others.

For stationery and computer consumables, which are occasional expenses, you must keep one receipt for each item purchased.

Please contact our office and speak with one of our expert accountants if you need any assistance with this so we can help you to maximise your tax deductions in your 2023 and future year Tax Returns.

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How to Pay your land tax assessment notice

Please note that the State Revenue Office are phasing out payment of land tax by cheque.

You can pay a land tax assessment notice by credit card, BPAY or via AutoPay Instalments. If the options of paying at a Westpac branch or in person at Australia Post outlets are listed on your assessment you can also pay by those methods.

AutoPay is probably the best option. With AutoPay, you can pay land tax in instalments, which can be spread over 38 weeks with payments scheduled:

  • fortnightly
  • monthly, or
  • in four equal instalments.

This service is available daily between 2am and 10pm Australian Eastern Standard Time.

As your tax liability can change each year, you must log into AutoPay each year to create a new payment schedule. 

Not paying super on time?

Harsh penalties can be imposed on employers by the Tax office for not meeting their quarterly superannuation guarantee (SG) obligations on time.

You can only claim a tax deduction for super guarantee payments you make for employees in the financial year if it’s paid on time, i.e. within 28 days after the quarter, regardless of whether your accounts are reported on a cash or an accrual basis.  Contributions are considered paid when the super fund receives them.

The ATO and superannuation funds have improved their detection of late super guaranteed payments as a result of the Single Touch Payroll (STP) reporting services which became mandatory for most employers from 1 July 2021.

Employers who have missed their employees’ super payments are required to pay a Superannuation Guarantee Charge (SGC), which is then not tax-deductible.  The SGC is calculated as the sum of:

  • The shortfall amount – which is calculated on employees’ salary and wages, rather than their ordinary time earnings (OTE)
  • A nominal interest component (currently 10% per annum) of the shortfall amount from the beginning of the quarter in which the contribution was required to be made until the lodgement of an SGC statement; and
  • A $20 administration fee per employee, per quarter.

Please be advised the due date for payment of the Super Guarantee Charge and lodging the statement is one calendar month after the super guarantee due date. This is shown in the table below.

Quarter

Period

Super guarantee due date

SGC & statement due date

1

1 Jul – 30 Sep

28 Oct

28 Nov

2

1 Oct – 31 Dec

28 Jan

28 Feb

3

1 Jan – 31 Mar

28 April

28 May

4

1 Apr – 30 Jun

28 Jul

28 Aug

 

Other penalties

In addition to having to pay the SGC, employers should be aware of the other potential additional penalties and consequences of not meeting their super obligations:

  • The entire SGC amount (that is the shortfall, the nominal interest, and the administration charge) is not tax deductible.
  • The ATO can impose other penalties. For example, the maximum penalty for failing to provide an SGC statement when required is 200 percent of the SGC payable.
  • Directors of a company that fails to meet an SGC liability in full by the due date can become personally liable for a penalty equal to the unpaid amount.
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THE PROCESS IS SIMPLE AND QUICK IF YOU GET YOUR EPOA AND EXECUTORS RIGHT

The person who you nominate as your EPOA can also be the Executor of your Will to ensure safety, certainty, security, and continuity. It may be more than one – known as joint EPOAs and Executors.

The person or persons you choose will look after your financial, health and super affairs in the event of an illness or incapacitation.  In addition, they will be tasked as Executor with looking after your estate upon your death, managing any of your specific gifts such as property going to one or more family members, jewellery to grandchildren and well anything you desire. They can also limit any disposition of your estate to your lineage – which is your direct descendants or to bloodline only which may include brothers and sisters if a main or specific beneficiary is not alive.

Protect Your Family Wealth with up to date Wills and EPOA's

Planning for your family’s future after you’re gone is an important task. It is vital to ensure, while fit, competent and able that you safeguard your financial affairs by giving a spouse, relative or close associate your enduring power of attorney (EPOA). This enables your EPOA to act on your behalf if you become sick, are quarantined for a long time, or become incapable of managing your financial or health affairs. Each State has its own EPOA legal requirements.

Apart from an EPOA, it is also important to put in place a Will or revisit your Will if it has not been updated in the last two years. Coronavirus showed us that change can happen quickly, and we must prepare for change. A great safeguard right now is to put in place an Enduring Power of Attorney and create/update your Will and that of your closest loved ones. Many families have neither document, relying on the Courts to solve these issues, yet the Courts may be quarantined still or may be backlogged with cases. 

Concepts & Results Group in partnership with Lawyers and specialist estate planning advisers, Abbott & Mourly can provide you and your family with these important solutions in these challenging times. Importantly, the Wills that we build for you have the unique option of limiting any distribution to your bloodline only This helps protect your hard-earned family wealth stays in the family.

In terms of completing estate planning documents for our clients, we have been suggesting it for clients when we do annual reviews, but the feedback we are getting from clients is that it is important to do right now.

Average loan life now around 3 years: Sherlok

- The Adviser

The average length of a loan is now 37 months, according to refinance fintech Sherlok, as more brokers and borrowers work to take advantage of competition in market.

Data insights from mortgage refinancing and repricing platform Sherlok has found that the average lifespan of a mortgage in Australia has dropped markedly in the last few years.

Ahead of the release of its Third-Party Home Loan Insights report, the founder of the fintech, Adam Grocke, revealed that the median ‘survival time’ of a home loan has dropped to 37 months. 

This is down from 43 months prior to the pandemic (2019) and a drop of 13 months (or just over a year) in a decade.

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Speaking to The Adviser about the drop in the average length of a home loan, Mr Grocke said sharp refinancing rates and cashback offers had contributed to the falling lifespan of a loan.

“There’s no doubt that the refi cashback incentive is sparking people to move, to switch lenders. So that’s a significant event that hasn’t been around forever. It’s quite noticeable in the data that there’s an uplift in refinance activity and people switching as a result of that,” he said.

“Moreover, for such a long period of time, rates were reducing … For 10 years when rates were going down, people didn’t really need to do that much. So what we’re seeing in the most recent data is that the life of a loan is getting much shorter now because people are actually doing something about it to save money.”

 

Have you considered life/trauma cover as an insurance should there be an unexpected event in your or a loved ones life?

There are several options available to you to source such insurance. Through our financial planning department we can research the market and provide you a recommendation , or via our loans department we can utilise the services of associated companies such as ALI. See video below prepared by ALI which helps explain what life/trauma insurance is and how it works. 

Here's some information about ALI:

Having adequate insurance cover is an important consideration we take very seriously as we want to ensure you are protected against those unforeseen events life sometimes throws at us.
For a small monthly premium (that could be offset by ALI’s extra benefit savings as detailed below), this insurance provides you with a unique living benefits cover which provides a pay-out should you suffer from a serious medical condition that is not terminal (such as cancer or a stroke).
My Protection Plan policyholders also automatically get exclusive access to ALI’s everyday savings program, Extra Benefits. It provides a discount of 7.5%* for Coles and Woolworths, which on a $1,000 monthly grocery spend means a saving of $75 each month.
With close to 100 retailers, including fuel, electronics, fashion and homewares stores, the savings can really add up. You can use ALI’s handy calculator here to work out how much you could save which will help offset your premium should you wish to take out a My Protection Plan.

If you would like to find out more, please watch this video about ALI’s My Protection Plan:

Please note that this is general advice only and it not tailored to your individual circumstances and needs.
If you would like to obtain a quote for ALI’s My Protection Plan, please contact us and we will send you further details to review and consider.

Why use a Bucket Company?

A “bucket company” allows you to “cap” the tax on profits distributed by a trust to 30% or 27.5%. This is much less than the individual top marginal rate of 47%!

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Want to discuss the above face to face? Come visit our specialised team members to find out more.

612 Warrigal Road, East Malvern PO Box 61, Holmesglen, Vic 3148

Call us

Have any questions? Further discussions on the above can be may be held over a telephone appointment.

(03) 9569 5676

Contact us

For any and all queries regarding the above, you may contact Concepts & Reuslts by emailing us

concepts@cr.com.au