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Newsletter February 2005

The ATO advise that employers will no longer have to provide employees with quarterly superannuation statements.  The requirement for employers to report payments under the Superannuation Guarantee (Administration) Act 1992 has been removed for all employers.

The following expenses are tax deductible and exempt from fringe benefits tax:

• A mobile phone or car phone that is primarily for use in the employees employment;
• Protective clothing required for the employees employment;
• A brief case, a calculator, a tool of trade, computer software used in the employees employment;
• An electronic diary, a notebook computer or a similar portable computer;
• Compassionate travel;
• Benefits with a value less than $100.00 which are provided infrequently eg. Christmas gifts, news papers provided to employees for business purposes;
• Occupation health & counselling, work related medical tests, preventive health care, optical aids for screen based equipment, but not massages;
• Taxi travel provided by employers to employees for travel beginning and ending at the employees place of work;
• Certain in house benefits up to $500.

Non payment of 9% superannuation entitlements will result in employers being liable for superannuation guarantee charge (SGC).  Often employers try to do the right thing by paying late super contributions after the due date for the previous period.

However, the AAT has recently affirmed that the late superannuation payments do not count for SGC purposes.  Accordingly, employers can end up paying super contributions for eligible employees twice.

The Government has advised that it will backdate the introduction of a new 30% Child Care Rebate for approved care to 1 July 2004.

As a consequence, parents should keep all receipts for childcare paid in the current year.  Alternatively an annual statement may be provided by child care providers.

The rebate will be claimed in the succeeding year's tax return.  This means that the 2004/05 rebate will be claimed in the return for the year ended 30 June 2006, with a maximum rebate of $4,000 per child.

Where a company receives a franked dividend, its assessable income is grossed-up by tax paid on the relevant profits and a corresponding tax credit is allowed.

Where the company is unable to use the credits because its tax payable is insufficient, the excess credits are converted to an additional tax loss, which can be carried forward with other losses.

The following rule changes apply from 1 July 2004:

• The work test for individuals aged less than 65 has been removed.  Previously an individual under 65 years of age and contributing to superannuation was required to have worked at least 10 hours in a week in a two year period.
• The work test for contributions and payments for individuals aged 65 to 74 has been simplified.  The new rules are that the individuals will be treated as gainfully employed on a part time basis, where they work at least 40 hours in a continuous 30 day period in that same financial year.
• Compulsory cashing of benefits at age 75.

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