Following on from our post a couple of months ago about tax and superannuation deadlines the following are the upcoming contribution cap and superannuation changes.

1. Contributions – cap increase

From 1 July 2024 a number of rates and thresholds will increase, including the contribution caps. There has been no further indexing of the transfer balance cap so there will be changes to the eligibility to use the 3 year bring forward non-concessional contributions (see table below).

A reminder to review any salary sacrifice agreements to avoid excess concessional contributions with the increase in super guarantee to 11.5% from 1 July 2024.

2. Defined benefit interest (CSS/PSS) calculation for Division 296 – in relation to superannuation balances above $3million

From 1 July 2025 tax concessions will be reduced for certain earnings for superannuation balances above $3 million. On 28 February 2023, the Australian Government announced from 1 July 2025 a 30% concessional tax rate will be applied to future earnings for superannuation balances above $3 million, known as Division 296.

If you are wondering how the balance of your CSS or PSS pension will be calculated for the purposes of the proposed Division 296 tax you will need to wait a little longer.

While draft legislation has been released, the calculations for determining the balance of defined pensions will be contained in the regulations which no one has seen (or possible written).

3. Reminder about the changes in Small Business Super Clearing House

From 15 March 2024, the ATO will introduce SMSF bank account validation in the Small Business Superannuation Clearing House (SBSCH). This will require any small employer using the SBSCH to ensure that their employees’ SMSF bank accounts match the bank account details registered with the ATO for contributions.

If you are receiving contributions via SBSCH or using the SBSCH to pay employer contributions, it is important to contact employees to confirm that the SMSF bank account that superannuation contributions are paid to, is the same as the SMSF bank account registered against the superannuation role, with the ATO. A mismatch will mean that their superannuation contributions can’t be processed through the SBSCH.

This also applies for any member roll-in and roll-out requests.

Please contact us if you need to check the details of the bank account registered with the ATO for your SMSF.

Proactive steps are essential to ensure any SG obligations for the March 2024 quarter can be met by 28 April 2024.

4. Non-Arm’s Length Income/Expense (NALI/NALE) Bill Passed Through Parliament

An important reminder to the trustees and the members of the fund, that NALI/NALE bill has now passed through both houses of Parliament and it is essential to review all general expenses incurred/not-incurred within the fund.

It is crucial to understand and review transactions within the superfund that there is no expenditure at non-arm’s length that will trigger the rules concerning non-arm’s length income.

This rule specifically dives into general expenses such as discounted accounting or adviser fees, legal fees or any other general expenses which are non-arm’s length.

If you have any queries or concerns or need further advice and support about superannuation changes please don’t hesitate to reach out to the team at MGI.

Storm-ravaged tourism businesses on the Gold Coast will receive a further $2.5 million in support funding from the Queensland government. 50,000 vouchers, each worth $50 will be available for use at Gold Coast tourism businesses.

Some tourism businesses are still closed due to damage caused during the deadly Christmas and Boxing Day storms. Deadly storms battered south-east Queensland on Christmas Day and Boxing Day, claiming seven lives and leaving tens of thousands of homes and businesses without power. Tourism attractions across the region were heavily impacted, with some still closed due to the storm damage.

Premier Steven Miles has announced that 50,000 vouchers, each worth $50, would go on offer to stimulate the Gold Coast’s tourism economy.

How do the vouchers work?

If you spend $50 on a day tour or attraction taking part in the scheme you will receive an extra $50 credit. It means a $100 experience will put you out of pocket by $50.

Tourism and Events Queensland chief executive Patricia O’Callaghan said vouchers had been proven as a way of helping tourism businesses across the state during the COVID pandemic. She said they had proven benefits in the short- and long-term.

How do I get a tourism voucher?

Premier Steven Miles said south-east Queenslanders could access one of the 50,000 vouchers through the GC Summer FUNds website but it is yet to go live.
The vouchers, when you can sign up, will be available for use until the end of March.

For more information about the stimulus, visit the Queensland Government website.

If you have any questions or need assistance with your application, please contact the team at MGI South Qld.

Are you having a staff Christmas Party? With the festive season just around the corner, the ATO has reminded employers to consider the fringe benefits tax (FBT) implications of the party or other event. So what are the FBT implications of the office Christmas party?

This will depend on a number of factors:

• The amount you spend on each employee
• When and where the event is held
• The value and type of gifts you provide; and
• Who attends – is it just employees, or are partners, clients or suppliers also invited?

It is important to keep all records relating to the entertainment-related fringe benefits you provide, including how you worked out the taxable value of benefits.

You need to be sure you really understand how FBT works, otherwise you could end up with a heft FBT liability.

Christmas parties constitute “entertainment benefits” and to the extent that the expenditure relates to employees or their associates attending the function, the expenses may be subject to fringe benefits tax (FBT) unless an exemption (eg, the “minor benefits” exemption) applies.

A minor benefit is one that is provided to an employee or their associate (eg, spouse) on an “infrequent” basis, which is not a reward for services, and at a cost less than $300 (inclusive of GST) “per benefit”.

Entertainment expenses are not tax-deductible unless they are subject to FBT. This means that expenses incurred in providing a Christmas party are not generally deductible where the minor benefit FBT exemption applies.

Non-entertainment benefits provided to employees at the Christmas party, such as a hamper, are considered separately when applying for the $300 minor benefits exemption. Although the total cost per person is more than $300, each benefit should be considered separately under the minor benefits exemption.

Tax Implications of Employee Gifts

If the business gives employees non-entertainment type gifts that cost less than $300 (inclusive of GST) per employee, then the cost is fully tax-deductible, with no FBT payable and GST credits can be claimed. The gifts at Christmas parties are usually exempt from FBT because they are not provided on a regular basis, and the gift is not provided to the employees wholly or principally as a reward for their services rendered.

Unlike non-entertainment gifts, gifts classified as entertainment, including recreation, are non-deductible and GST credits cannot be claimed. A tax deduction and GST credits can only be claimed on entertainment or recreation gifts where Fringe Benefit Tax applies. This means that while the minor and infrequent exemption could still apply for entertainment and recreation gifts costing less than $300 (GST inclusive), tax deductions and GST credits can only be claimed where FBT applies to entertainment and recreation gifts.

The costs (such as food and drink) of a Christmas party are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. If spouses or other guests of employees are entitled to attend, there could be an FBT liability unless the cost is covered by the minor benefits exemption.

This is general information above, but for specific FBT implications and tax advice, please talk to the team at MGI.

Australian Government Grant Opportunity G06557 – Aged Care Registered Nurses’ Payment to reward clinical skills and leadership – Round 2

In Round 2, payments up to $6,000 (GST not applicable) will be available per eligible Registered Nurse working in aged care.  This round will accept applications for Registered Nurses who were employed by the same eligible employer during the entire eligibility period of 1 November 2022 to 31 October 2023. Applications for this grant opportunity must be submitted by the employer. Employers should discuss this grant opportunity with their employees prior to the submission of the application.

To be eligible to receive a payment under this grant opportunity, Registered Nurses must hold general registration with the Nursing and Midwifery Board of Australia (Nursing and Midwifery Board of Australia – Nursing (www.nursingmidwiferyboard.gov.au)) as a Registered Nurse (Division 1).

Registered Nurses must have been employed by the same eligible employer for the full period of 1 November 2022 to 31 October 2023 to receive the 12-month payment or have been employed by the same eligible employer for the full eligibility period of 1 May 2023 to 31 October 2023 to receive a 6-month payment.

Applications for Registered Nurses eligible for either 12-month or 6-month periods can be lodged at the same time.

Successful applicants must make full payment of grant funds to eligible Registered Nurses within 8 weeks after receiving the grant funds.

Aged Care Registered Nurses – Round 2 Eligibility and Submission Instructions

Close Date: 20th of December, 2.00pm ACT time.

If you have any questions or need assistance with your application, please contact the team at MGI.

The Government has released draft superannuation legislation for the proposed new tax on members with more than $3m in super – known as “Division 296 tax”.

The Federal Government hasn’t moved from its original direction and so the unpopular elements remain:

• The mechanism for calculating the “earnings” that will be taxed is based on movement in a member’s total superannuation balance. By default, that will include unrealised capital gains.
• No refunds in years when earnings are negative.
• No indexation of the $3m threshold

With regard to earnings

Earnings is essentially movement in a member’s total superannuation balance adjusted for net contributions and withdrawals.

Earnings will be specifically adjusted to reflect the fact that increases in a member’s balance arising from inheriting super pensions, receiving transfers from a partner or ex partner’s superannuation (under a contribution split or family law split) and insurance payouts are not earnings and shouldn’t be subject to the tax. Interestingly, even some amounts allocated from reserves will be excluded from earnings.

The Government will not chase deceased members for Division 296 taxes that would otherwise be incurred in the year of death. A member who dies before the end of the year will be deemed to have a $nil tax regardless of what’s happened to their super during the year. If their balance has been left in super but transferred to a spouse (for example, a reversionary pension or a death benefit pension) it will be counted in the inheriting spouse’s $3m. So, this is only relevant for people whose super is still waiting to be dealt with at the end of the year.

How much of the earnings will be taxed?

The Bill reduces the tax concessions for individuals with a total superannuation balance (TSB) above $3 million by imposing an additional 15 per cent tax on certain earnings under Division 296 of the Income Tax Assessment Act 1997.”

When and how it’s paid

The tax will be levied on individuals but can be paid from a super fund using the usual release authority mechanism.

What can we expect next?

Treasury has invited responses to the draft legislation, but there’s a very short turnaround required (18 October 2023), suggesting major changes are not expected.

MGI SQ will provide further updates in due course on the legislation. In the meantime if you have any queries please don’t hesitate to contact us.

What is the Small Business Technology Investment Boost?

The Small Business Technology Investment Boost by the ATO, is a tax incentive program designed to provide financial support to small businesses seeking to invest in technology to improve their operations and productivity. The scheme allows eligible businesses to claim an additional 20% tax deduction for technology-based expenses up to a threshold.

Eligibility For The Technology Investment Boost

For an entity to be eligible for the boost it must be “carrying on a business” with an aggregated annual turnover of less than $50 million. The boost can apply to sole traders, partnerships, companies, and trusts.

Business expenses that have a close connection with the entity’s digital operations or digitising its operations are eligible for the bonus deduction. As the legislation is very broad in its definition a large variety of expenses may be eligible.

Eligible Period

• Eligible Expenditure must be incurred between 7:30pm AEDT 29 March 2022 and 30 June 2023.
• If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use for taxable purpose by 30 June 2023.

Eligible Expenditure

• Digital Enabling Items – computer and telecommunications hardware and equipment, software (such as Xero or MYOB subscriptions), internet costs, systems and services that form and facilitate the use of computer networks.
• Digital Media & Marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design.
• E-Commerce – goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth.
• Cyber Security – cyber security systems, backup management and monitoring services.

Depreciating Assets

• Expenses eligible for the boost can also apply to depreciation on assets that relate to digital operations, such as computer equipment.
• Many small businesses have been utilising Temporary Full Expensing depreciation rules over the last few years, allowing them to immediately claim full depreciation on assets. As such, many of the assets purchased before the boost started (29 March 2022) will not be eligible for the bonus deduction as they have already been fully depreciated. However, Temporary Full Expensing will also allow for eligible new assets purchased and “ready for use” during the boost’s eligible period to be immediately depreciated and the bonus boost deduction to be calculated on the full depreciable value.

What You Can’t Claim As Part of the Technology Investment Boost

• Salary & Wages
• Phone Expenses
• Capital Works Costs
• Financing Costs
• Training or Education Costs (they may be eligible for the Small Business Skills and Training Boost)
• Expenses that form part of your trading stock costs

How to Claim The Tax Deduction

The bonus deduction for the boost will be taken up by us as a tax adjustment when we prepare the 2023 Income Tax Returns. The 2023 Income Tax Returns will include the tax adjustment for eligible expenses incurred during the 2023 financial year, as well as eligible expenses incurred during the eligible period within the 2022 financial year (29 March 2022 to 30 June 2022).

The boost is capped at $100,000 of expenditure per income year, resulting in a bonus deduction of $20,000. Therefore, since the eligible period covers one full financial year (2023) and part of another financial year (2022), the total bonus deduction claimable is $40,000.

What You Need to Do

• If we have already prepared your 2023 Tax Return, we have already included the boost in your returns if you are eligible.
• Ensure expense information provided to us has sufficient details so we can identify what they relate to. Where possible also attach tax invoices in your bookkeeping software.
• Ensure single payments for multiple goods and services that include eligible and non-eligible expenses are recorded as separate amounts.
• Separate out internet costs from phone costs so the internet can be included in the boost.
• Separate out any private portion of expenditure, in particular technology expenses.
• Email or call your MGI contact if you have any questions.

FAQ’s about the Small Business Technology Investment Boost

• Does the boost only apply to new technologies, or also existing technologies?
  Although the scheme is focused on incentivising businesses to adopt new technologies, the legislation does not exclude existing technologies.
• Are social media advertising expenses eligible?
  While ATO guidance isn’t particularly clear on this area, we believe this expenditure falls under the grouping of Digital Media & Marketing and would be eligible for the boost assuming the advertising has a direct link to the business’ digital operations.
• What if I started digitalising my business before the boosts eligible period?
  The boost exclusively looks at the date the expenditure has been incurred. Therefore, on-going monthly digital expenses paid during the eligible period would qualify, but any prior expenditure would not. However, if the prior expenditure related to depreciable assets the expenditure may still be eligible depending on the depreciation method.

For further details on the Small Business Technology Investment Boost please click on this Australian Tax Office link.

Please contact the team at MGI if you have any questions or require further information.

With it being tax time, be wary of fraudsters

The Australian Taxation Office (ATO) has estimated more than $800 million of fraudulent refund claims have been made, with fraudsters relying on the self-assessment process in the BAS lodgement system to claim and be paid for false GST refunds, all before the fraudulent return is picked up by the ATO.

The attempted fraud involves an individual, often with stolen ID:

• inventing a fake business
• lodging a fraudulent Australian business number (ABN) application, and
• submitting fictitious business activity statements (BAS) to attempt to gain a false GST refund

As part of this increased scrutiny and investigation, the ATO has introduced protocols to closely review all GST refund claims, both legitimate and false, and are putting extra controls in place, such as reviewing bank accounts and requesting further information on specific BAS statement items, to ensure the legitimacy of the claims being made.

For businesses that may rely on the GST refund claim coming in to purchase goods, pay other bills or otherwise be reliant on the cash flow for business purposes, this fraud activity is understandably causing some concern.

If you are concerned about a potential impact on your cashflow or see anything suspicious that may indicate GST refund fraud, please reach out to the MGI team.

Recently, The Fair Work Commission (FWC) announced the decision to increase the minimum wage and Modern Award pay rates by 5.75% as a result of the Annual Wage Review 2022-23.

The new Modern Award pay rates are to be paid from the first full pay period on or after 1 July 2023.

There is no obligation to increase the salaries of employees who are already paid more than the new Modern Award. However, no employee covered by a Modern Award should be paid less than the new Modern Award minimum rates.

Enterprise Agreements – Employee

Employers have an obligation to employees to ensure that those covered under an Enterprise Bargaining Agreement are not paid under the base rate of the Modern Award. As a result, some employers may need to increase their base rate to employees to match the base rate in the relevant award. Employers need to ensure they review their EBA’s against the Modern Award Rates to ensure legal requirements are met.

Superannuation Guarantee Charge (SGC) – Employer

From 1 July 2023, employers must increase the minimum employer superannuation contribution for their employees from 10.5% to 11%.

This increase applies to any salary or wages payment made on or after 1 July, including where the salary or wages payment covers the period of work undertaken before 1 July 2023.

Further Information on the Annual Wage Review 2022-23

Visit the website to find out more about the FWC determinations for the Annual Wage Review 2022-23 including updated wages tables for the modern awards.

If employers are unsure about the modern award changes and how to apply them, please contact the team at MGI for assistance.