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Newsletter March 2007

Fringe benefits tax (FBT) is a tax paid on certain non cash benefits employers provide to their employees or their employees’ associates. The FBT year runs from 1 April to 31 March. Entities that are required to lodge an FBT return should do so by late April or May (depending on their 2006 liability).

Fringe benefit is a benefit provided to an employee (or their associate) in respect to their employment. Some of the common benefits that are exempt from FBT such as work-related items and minor benefits are:

• most minor benefits valued at less than $100 where it would be unreasonable to treat the benefit as a fringe benefit;
• a notebook, a laptop computer or similar portable computer (one per employee per FBT year);
• a mobile phone or a car phone if the phone is primarily used in employment;
• an item of protective clothing;
• a calculator or tools of trade.

Fuel tax credits commenced on 1 July 2006 as part of the Government’s major programme of reform to modernise and simplify the fuel taxation system. Under these reforms, the previous system of fuel grants, rebates and remissions (including the energy grants credits scheme) has been substantially replaced with a single fuel tax credit.

Fuel tax credits help to cut fuel costs by providing a credit for the fuel tax (excise duty) included in the price of fuel, when used for specified activities. This will lower compliance costs, reduce tax on business and remove the burden of fuel tax from thousands of individual businesses and households.

The fastest way to check your eligibility is to visit the Tax Office website www.ato.gov.au/fuelschemes or phone the Tax Office on 13 28 66.

Personal Contributions

Personal superannuation contributions apply where an individual does not receive superannuation support from an employer or where their assessable income from employment income plus fringe benefits tax is less than 10% or the total assessable income plus fringe benefits.

Up to 30^th June 2007 the deductible superannuation contribution is limited to $5,000 plus 75% of the excess above $5,000 limited to the age base limits.

The age base limits are; 

Under 35         $15,260
35-49               $42,385
50 % over        $105,113

There are however work based restrictions if the individual is over 65 years of age, eg the individual must work at least 40 hours over a consecutive 30 day period.

From 1^st July 2007 the superannuation contribution is limited to $50,000 per person per annum. There are transitional limits of $100,000 per person where the individual is aged 50 years or over in the financial year. The transitional limit ceases on the 30^th June 2012.

Once the individual reaches the age of 75 no further superannuation contributions can be made.

Excess contributions made to a superannuation fund will be taxed at 46.5% in the superannuation funds tax return.

Undeducted Contributions

Up to 30^th June 2007 individuals can make an undeducted contribution up to $1 million per person. The period for the $1 million is taken as the 10^th May 2006 to 30^th June 2007.

From the 1^st July 2007 the maximum undeducted contribution is $150,000 per person per annum. When no further undeducted contributions are made for the following 2 years the individual can put in up to $450,000 per person.

Where the individual makes an undeducted contribution they do not get a tax deduction for the undeducted contribution in their personal tax return. Nor is the undeducted contribution regarded as income in the superannuation fund.

Again, the work base tests apply from the age of 65- 74. There can be no further undeducted contributions from the age of 75.

Excess undeducted contributions above the cap are taxed in the superannuation fund at 46.5%.

Employer Contributions

Up to 30^th June 2007 employer contributions are limited to the age base limit.

Under 35        $15,260
35-49              $42,385
50 & over        $105,113

From 1^st July 2007 the maximum contributions will be $50,000 per person unless the employee is aged 50 years or over during the financial year. This transitional limit ends on the 30^th June 2012.

Excess contributions will be taxed at 31.5% plus the 15% contributions tax taking the tax rate 46.5%.

Deductible Contributions can only be made from employees up to the age of 74.