The Business Basics grant program provides support to businesses to increase core skills and adopt best practice. This round of Business Basics (Round 6) is focused on business enhancement. The program is administered by the Department of Employment, Small Business and Training (DESBT).

This program is applicable for businesses with less than 5 employees and a turnover of less than $300,000. With increased funding to $7500, start planning your registration of interest in the latest round of small business grants, Business Basics.  Applicants can apply for funding for grant funded activities under the following priorities:

• Professional business advice
• Strategic marketing services
• Website build and upgrades.

Opening Date: Registration of Interest (ROI) opens at 9am, Monday 30 September 2024.

Closing Date: Stage 1: Registration of Interest (ROI) closes at 5pm, Friday 11 October 2024

Access to supporting documentation and eligibility criteria is available on the Queensland Government Business website.

Please reach out to the team at MGI, if you need support in preparing your application.

For small businesses to enhance their efficiency and productivity.

This support includes funded activities in 3 project areas:

• Future planning
• Specialised and automated software
• Planning and systems for staff management and development.

Available Funding:

• $10,000 – $20,000 excluding GST
• Applicants to contribute an equal amount to the funding requested

Stage 1 is open (registration of interest)

Closes on Friday 5^th of July at 5.00pm

More information on eligibility and the application process can be found here.

Don’t hesitate to reach out to MGI if you have any questions or need assistance to complete the application.

 

At the recent 2024 Australian Accounting Awards, MGI Australasia was awarded the Network of the Year Award for our outstanding commitment to supporting our clients in achieving ‘Success Your Way’.

As a proud member of the MGI Australasia network, spanning across Australia and New Zealand, MGI South Queensland’s involvement in this network makes us a stronger firm, allowing us to work with fellow member firms to ensure we are at the forefront of our knowledge and understanding of the latest changes to our industry. This allows us to continue to provide accurate and expert advice to our clients. Our involvement in this network also allows us to provide training and development to our team, so we can continue the incredible work of MGI South Queensland for years to come.

Some other benefits within the MGI Australasia network include; The Graduate Academy, MGI Australasia Future Leaders Conference, MGI Australasia Leaders Conference, MGI Australasia Tax Seminar, MGI Australasia Annual Conference, plus our sub-committees and our connection to the MGI Worldwide International Network.

The value of membership with MGI Australasia extends to the entire teams of all the member firms, allowing them to feel connected to other like-minded professionals across Australia and New Zealand as well as around the world.

We would like to thank all of our clients and staff for your support. We are incredibly proud of what we have achieved as a network and we look forward to continuing to build on our offering and continuing to support you in achieving your success. Also, thank you to Accountants Daily, the judging panel for this prestigious award.

Not for profit entities that aren’t registered charities are now required to complete an annual Not For Profit Self Review return.

The not-for-profit (NFP) self-review reporting is arguably the largest change in this sector since the establishment of the Australian Charities and Not-for-Profit Commission (ACNC) in late 2012.

What has changed for not for profit organisations? 

It is important to note that no changes have been made to the legislation allowing entities to self-assess their income tax exempt status. Every organisation that has been appropriately self-assessing its status the Income Tax Assessment Act 1997 will remain eligible to self-assess for the income tax exemption from 1 July 2024.

The new requirement asks these organisations to formally report the specific basis of their assessment, by reference to the category of organisation and the specific eligibility criteria that apply to that category.

It has always been a requirement that these organisations review their eligibility to self-assess for the income tax exemption on an ongoing basis and now it will be a requirement that this assessment is lodged with the Australian Taxation Office (ATO).

We note that there is no requirement to provide detailed financial information outside of disclosing a revenue band into which the organisation falls, which allows the population to be dissected on the basis of size in the future.

Who will need to lodge? 

Various categories of NFPs will not be included in the new return and will not have a lodgement obligation.

However, if your NFP falls into the below category it will need to self-assess and lodge a return with the ATO:

• Community service organisations
• Cultural organisations
• Educational organisations
• Health organisations
• Employment organisations
• Resource development organisations
• Scientific organisations
• Sporting organisations

Any NFP’s who do not meet the above categories but are either one of the following are considered exempt from lodging the return:

• Government entities
• Taxable not-for-profits
• NFPs with only charitable purposes
• Non-profit sub-entities for GST purposes

How will an organisation know if they need to lodge? 

For those organisations already identified by the ATO, the return will be automatically generated. It will show on the entity’s ‘For action’ page in Online services for business (OSB), which may help identify the requirement for some organisations that lodge periodic activity statements via this method. Tax or BAS agents who assist with meeting GST obligations may be well-placed to identify.

Call to Action

As this is the first year of the new Not For Profit self review return reporting regime, we would suggest the following actions:

1. Contact the NFP accounting specialists in our Business Services Team to discuss the matter.
2. Allow us to review your reporting obligations and notify you whether you meet the requirements of having to lodge a return and if there is the potential of the organisation meeting a taxable outcome.
3. If you are considered a reporting entity, we would highly suggest that you allow our office to prepare and finalise this return.

Should you have any questions or wish to discuss this matter further, please do not hesitate to contact our office.

As the 2024 end of tax year approaches, the Australian Tax Office (ATO) is sharpening its focus on several key areas to ensure compliance and integrity within the tax system. This year, the ATO is particularly vigilant about claims for rental property deductions, work-related expenses, and undeclared income from the sharing economy. If you’re preparing for tax time, understanding and ensuring you’re fully compliant in these areas can help ensure you get your lodgment right the first time. Let’s take a look at the ATO focus areas for 2024 in a bit more detail.

ATO Crackdown: 3 Key Areas To Get Right For Tax Time 2024

1. Rental Property Deductions

Investment properties were a firm focus at tax time in 2023 and the ATO continues to scrutinise rental property deductions closely, ensuring that claims are legitimate and accurately reflect expenses incurred. Recent audits from the tax office indicate that 90% of rental property owners are getting their tax returns wrong.

According to ATO Assistant Commissioner, Robert Thomson: “People aren’t apportioning correctly between interest relating to private use and the interest that relates to the income they’re generating from their investment property.”

Common areas where taxpayers might encounter issues include:

• Repairs vs. Improvements: It is crucial to differentiate between repairs and improvements. Repairs, which restore an item to its original condition, are immediately deductible. In contrast, improvements, which enhance the property’s value, must be depreciated over time.
• Interest Deductions: Only the interest on loans used to purchase or renovate a rental property is deductible. Loans used for personal expenses or to purchase a property that is not rented out cannot be claimed.
• Private Use: Expenses related to periods when the property is used for private purposes are not deductible. It is essential to apportion expenses accurately if the property is only rented out part of the year or used by the owner at any time.

The ATO employs sophisticated data-matching techniques and collaborations with financial institutions to identify discrepancies and ensure compliance. Rental property owners should maintain detailed records and seek professional advice to ensure their claims are accurate and justifiable.

2. Work-Related Expenses

Work-related expenses are another area under the ATO’s microscope. This was another key focus from last year that remains a priority for the ATO. Changes were made last year to the fixed rate method of calculating a working from home deduction and taxpayers were required to keep more detailed documentation. However, this is the first full year of these changes being in effect so the expectation is that you must have comprehensive records to substantiate your claims.

“Copying and pasting your working from home claim from last year may be tempting, but this will likely mean we will be contacting you for a ‘please explain’. Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.” Mr Thomson said.

To avoid issues, taxpayers should adhere to the following guidelines:

• Substantiation: Ensure all claims are supported by receipts and detailed records. Estimates or round figures can raise red flags.
• Direct Connection: There must be a direct connection between the expense and earning income. Personal or unrelated expenses are not deductible.
• Occupation Costs: Deductions for costs like rent, rates or mortgage interest are not allowable unless you’re running a business from home.

Accurate record-keeping and adherence to ATO guidelines are essential to ensure compliance and avoid audits or penalties.

3. Undeclared Income from the Sharing Economy

The rise of the sharing economy has introduced new challenges for tax compliance. Platforms like Airbnb, Uber, and various freelancing sites have made it easier for individuals to earn income that may go undeclared.

The ATO is particularly focused on:

• Rental Income: Income earned from short-term rental platforms must be declared. This includes not only the rent received but also any related fees and charges.
• Ride-Sharing and Delivery Services: Income earned from ride-sharing, food delivery, or other gig economy jobs must be reported. This includes tips and bonuses in addition to standard earnings.
• Online Freelancing: Earnings from online freelancing platforms must be declared. This includes income from both domestic and international clients.

The ATO collaborates with sharing economy platforms to access data and identify undeclared income. These sophisticated data matching systems mean that if you decide to not report your income from these platforms then you are much more likely to trigger a review by the ATO. Participants in the sharing economy should maintain comprehensive records of their earnings and report them accurately to avoid penalties.

The advice is also to not rush to submit your tax return, particularly if you received income from multiple sources. “By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.”

As the ATO intensifies its focus on rental property deductions, work-related expenses, and undeclared income from the sharing economy, it is more important than ever for taxpayers to be diligent and compliant. By understanding these key areas and maintaining accurate records, taxpayers can navigate their obligations confidently and avoid the risk of audits and penalties. If in doubt, seeking professional advice from the tax experts at MGI can provide the necessary guidance to ensure compliance and peace of mind in the 2024 tax year.

Check out our recent blog on Personal Services Income (PSI) to ensure that you are categorising your business and services correctly.

For more information or personalised advice on your tax obligations, feel free to reach out to the experts at MGI South Qld. We’re here to help you navigate the complexities of the Australian tax system with ease and confidence.

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.