Posted on July 2, 2019 by Chris Grieve
Much has been written of late on the impact of Artificial Intelligence (AI) on all facets of our lives. Our industry is not immune to this and in our view has and will continue to benefit greatly from further technological progress.
At GeersSullivan we have always embraced change as we look for new ways to provide a better customer experience and break the mould of the traditional accountant looking in the rear-view mirror at historical data.
Two years ago, we implemented a paperless document management system and changed our internal software in both our compliance and superannuation areas of our business. Not only have we reduced our environmental impact as we reduce the amount of printed paper, but it has allowed us to lease less space as the old compactus filing cabinet room was no longer required. As we look to the future, we will be working with our clients who also wish to have their final reports provided in a paperless format.
The introduction of more reliable AI accounting software encouraged us to rethink what an accountant is to our existing and prospective clients and how our tech savvy team could use the benefits of the various software packages to take on the role of internal bookkeeper and external CFO to assist our clients to:
- Extract meaning from their accounting numbers
- Set goals
- Establish strategies to achieve these goals; and
- Measure the progress toward these goals
The above is in addition to our traditional services of attending to the various compliance activities required by the Australian Taxation Office, ASIC and the Office of State Revenue (to name a few).
We at GeersSullivan have developed our End to End service which has been extremely well received by many of our existing clients already. This service includes:
- Bookkeeping services – data entry, accounts payable, accounts receivable, managing payroll via the new Single Touch Payroll system, paying superannuation obligations.
- Periodic reporting on the Key Performance indicators of your business – this involves developing a report tailored to your businesses specific KPI’s and reporting on these in an understandable and timely basis.
- Periodic business meeting – this meeting is with one of our senior staff who acts as an external Chief Financial Officer and mentor to discuss the performance of the business and hold you, the owner accountable for implementing the previously agreed strategies.
- Tax planning – estimating the year end results and final tax position of the group and recommending actions to minimise tax.
- Attending to all the ongoing compliance needs – including preparation of year end financial statements and tax returns, lodging BAS’ and IAS’, preparing Fringe Benefits Tax Returns and payroll tax returns.
The above further develops our strengths and experience in compliance and advisory services and packages it in an affordable monthly fee. To be this involved requires a suitable accounting software package and as a Xero Gold partner we recommend this product however we also are experienced in many other major software providers such as MYOB, Reckon/Quickbooks, Exonet, Sage and Netsuite.
We understand that some clients may wish to take advantage of all or some of the above and as such we are flexible in building a package that suits your business needs.
Call us today to discuss how we can help reduce the time you spend on bookkeeping and focussing your attention on achieving your goals.
Posted on by Tashia Jayasekera
Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits they provide to their employees or their employees associates. It is calculated based on the taxable value these benefits. For FBT purposes, an employee includes a current, future or past employee, a director of a company or beneficiary of a trust who works in the business. Note that FBT is a separate tax to income tax and is payable by the employer (not the employee). FBT paid is also an allowable income tax deduction.
When calculating your FBT liability, the taxable value of the benefits provided must be grossed up. There are two gross-up rates. The type 1 rate is used where the employer is entitled to a GST credit for GST paid on benefits provided to an employee. The type 2 rate is used where there is no entitlement to a GST credit. Currently the type 1 gross up rate is 2.0802 and the type 2 rate is 1.8868. Grossing up the taxable value of benefits reflects the gross salary an employee would have to earn at the highest marginal tax rate to buy the benefits after tax.
The tax payable is then the grossed up taxable amount multiplied by the FBT rate. Currently this rate is at 47%.
Common examples of fringe benefits include vehicles that are available for employee’s private use, providing entertainment by way of free tickets or paying for an employee’s membership fees.
Some types of benefits are exempt from fringe benefits tax and others receive concessional treatment. Below are some of the most common FBT exemptions and concessions.
Work-related items exemption
This exemption is limited to items that are primarily for use in the employee’s employment. Examples include:
- Portable electronic devices (phones, laptops, tablets etc)
- Computer software
- Protective clothing
- Tools of trade
Minor benefits exemption
This exemption is applicable where the benefit provided is less than $300 in notional taxable value and unreasonable to be treated as fringe benefit. The notional taxable value of the benefit is its value if it was taxable. When looking at whether a benefit is unreasonable to be treated as fringe benefit, there are 5 main criteria to be looked at:
- The frequency and regularity of the benefit – the more frequent and regular a benefit, the less likely it will be an exempt benefit
- The total of the notional taxable values of minor benefits – the higher the total, the less likely they will be exempt benefits
- The likely total of the notional taxable values of benefits provided in association with the minor benefit – the greater the total value of associated benefits, the less likely it will be an exempt benefit. For example, a meal in isolation might be a minor benefit. If that meal is connected with a hotel stay and tax travel, it might not be considered minor anymore.
- The difficulty in determining the notional taxable value
- The circumstances under which the minor benefit and any associated benefits were provided – was it the result of an unexpected event or is considered principally as remuneration?
Small business car parking exemptions
Employers who meet the criteria for a small business entity are generally exempt from FBT for car parking benefits. For the exemption to apply, all of the following criteria must be met:
- Parking provided is not in a commercial car park
- The employer is not a government body, listed public company or subsidiary of a listed public company
- The employer qualifies as a small business
Taxi travel expenses exemption
For taxi travel that is a single trip which begins or ends at an employee’s place of work, the benefit arising from the taxi travel is considered an exempt fringe benefit. This travel includes travel that is part of sickness or injury to an employee or travel to an employee’s place of residence.
Living away from home allowance fringe benefits
Employers can choose to pay employee’s an allowance to cover any additional expenses or disadvantages suffered as a result of them being required to temporarily live away from their normal residence in the course of performing their employment duties. This is called a living-away-from-home-allowance (LAFHA).
The taxable value of LAFHA fringe benefits can be reduced by amounts relating to food, drink and accommodation expenses where the following applies:
- The employee maintains a home in Australia at which they usually reside;
- The employee provides a declaration about living away from home; and
- The fringe benefits relate to the first 12-month period at a work location
If the above conditions are not met, the taxable value of the fringe benefit will equal the amount of the allowance paid.
Should you have any queries regarding the above information, please do not hesitate to contact us on (08) 9316 7000.