Newsletter March 2011
Print NewsletterIn this issue we look at:
Fringe Benefits Tax
Fringe benefits tax is a tax paid on certain benefits you provide to your employees or your employees’ associates. FBT is separate from income tax and is based on the taxable value of the various fringe benefits you provide. The FBT year runs from 1 April to 31 March.
A fringe benefit is a benefit provided in respect of employment. However, the following are not fringe benefits:
- payments of salary or wages,
- shares purchased under approved employee share acquisition schemes,
- your employer contributions to complying super funds,
- employment termination payments (for example, a company car given or sold to your employee on termination),
Some of the common benefits that are exempt from FBT are:
- most minor benefits valued at less than $300 where it would be unreasonable to treat the benefit as a fringe benefit,
- certain work-related items such as:
- a portable electronic device
- an item of computer software
- an item of protective clothing
- a briefcase
- a tool of trade.
As an employer, you have to pay FBT, even if the benefit is provided by an associate or by a third party under an arrangement with you. For example, you may deal with a supplier who, in turn, provides free goods to your employees.
Some employers providing fringe benefits may be eligible to receive concessional FBT treatment. These include:
- public benevolent institutions
- public and non-profit hospitals and public ambulance services
- religious institutions
The FBT rate of 46.5% is applied to the grossed up value of benefits to determine the total FBT due.
An FBT return covering the FBT year that begins on 1 April and ends on 31 March, should be lodged by 21 May each year
Proposed Standard $500 Deduction
Further to the 2010/11 Budget announcement, the government has again raised the proposal that individual taxpayers will receive the option to claim a standard $500 deduction for work-related expenses and the cost of managing tax affairs. Under the proposal, taxpayers will be able to claim a standard income tax deduction without receipts.
The standard deduction will be $500 for 2012/2013, rising to $1,000 for 2013/2014 and subsequent years. Taxpayers whose claims for these expenses exceed the standard deduction will still be able to claim those deductions.
Superannuation – Proposed Concessional Contributions Cap for those Aged 50 and Over
The Assistant Treasurer has proposed that from 1 July 2012, individuals aged 50 and over with total superannuation balances below $500,000 will be allowed to make up to $50,000 per year in concessional contributions. This doubles the cap of $25,000 that is scheduled to apply from 1 July 2012.
Superannuation Rates and Thresholds for 2011/2012
The Tax Office has released key superannuation rates and thresholds for the 2011/2012 financial year.
Concessional Contributions Cap – the concessional contributions cap for 2011/2012 is $25,000. Concessional contributions include employer contributions and personal contributions claimed as a tax deduction by a self-employed person.
A transitional concessional contribution cap applies until 30 June 2012 for people aged 50 years or over. If you are 50 years old or over, the annual cap for the 2011/2012 financial year is $50,000.
Non-concessional Contributions Cap – the non-concessional contributions cap for 2011/2012 is $150,000. Non-concessional contributions include personal contributions for which you do not claim an income tax deduction. People under 65 years old may be able to make non-concessional contributions of up to three times their non-concessional contributions cap over a three-year period. This is known as the ‘bring-forward’ option.
Minimum Pension Payments – once you start a pension, a minimum amount is required to be paid each year. There is no maximum amount other than the balance of your superannuation account. The minimum payment amounts have been halved for certain pensions for the 2008/09 and 2009/10 years.
Age | Minimum % withdrawal for the 2008/09 and 2009/10 years | Minimum % withdrawal (in all other years) |
Under 65 | 2% | 4% |
65 - 74 | 2.5% | 5% |
75 - 79 | 3% | 6% |
80 – 84 | 3.5% | 7% |
85 – 89 | 4.5% | 9% |
90 – 94 | 5.5% | 11% |
95 or more | 7% | 14% |
Preservation Age – the following table provides the preservation age which generally must be reached to access superannuation.
Date of Birth | Preservation Age |
Before 1 July 1960 | 55 |
1 July 1960 – 30 June 1961 | 56 |
1 July 1961 – 30 June 1962 | 57 |
1 July 1962 – 30 June 1963 | 58 |
1 July 1963 – 30 June 1964 | 59 |
From 1 July 1964 | 60 |
Tax-Free Part of Genuine Redundancy Payments – for genuine redundancy and early scheme payments for 2010/2011, the base limit is $8,126 and, for each complete year of service, $4,064.
Superannuation Guarantee – the superannuation guarantee requires an employer to contribute a minimum of 9% of an eligible employee’s earnings. The contributions need to be made at least every quarter.
The maximum super contribution base is used to determine the maximum limit on any individual employee’s earning base for each quarter of any financial year. An employer does not need to provide the minimum support for part of earnings above the limit. The base for 2010/2011 is $42,220 per quarter.
Superannuation Co-contribution – The super co-contribution is a helping hand from the government to assist eligible individuals to save for their retirement. If you are eligible and make personal superannuation contributions, the government will match the contribution with a super co-contribution up to certain limits. For 2010/2011 the maximum entitlement is $1,000, with the lower income threshold at $31,920 and the higher income threshold at $61,920.
If you require details about any of the items in this newsletter or would like more information, please contact us. Items in this Bulletin are general comments only. They do not constitute advice and should not be used as a substitute for business planning, financial or taxation advice.
