News & Insights

This edition features pieces on:

• Personal Deductible Superannuation Contributions: 
  Overview: This article delves into the complexities surrounding the age-based rules and the work test for making deductible contributions to your superannuation fund. 
  Key Points: It covers the age brackets that are eligible for making contributions, the "work test" that individuals aged 67 to 74 must pass, and the annual caps on contributions. 
  Relevance: Understanding these rules is crucial for maximising your retirement savings while also taking advantage of tax benefits. 

• Capital Gains Tax (CGT) Roll-over Concessions:
  Overview: This piece provides an in-depth look at CGT roll-over concessions, which allow the deferral of capital gains tax. 
  Key Points: It explains the types of assets that qualify, the conditions under which the concessions can be applied, and the documentation required. 
  Relevance: Small business owners will find this particularly beneficial for tax planning and asset management.

• Small Business Skills and Training Boost: 
  Overview: This article focuses on the government's skills and training boost aimed at small businesses. 
  Key Points: It outlines the eligibility criteria, the types of training that qualify, and how businesses can claim tax deductions on these expenses. 
  Relevance: Investing in employee training not only enhances skills but also offers financial incentives through tax deductions. 

• Retirement Concession and Capital Gains:
  Overview: This section offers insights into capital gains concessions available to those aged 55 or over. 
  Key Points: It discusses how a capital gain of up to $500,000 can be taken tax-free or channelled into a super fund, along with the conditions that must be met. 
  Relevance: For those nearing retirement or considering asset liquidation, this information is invaluable for financial planning. 

1. Property Development and Taxation: 
   Overview: This article explores a Federal Court decision that has implications for property developers. 
   Key Points: It examines how the original purchase price of land can influence the costs that can be claimed as a tax deduction. 
   Relevance: Property developers and investors will find this information crucial for understanding the tax implications of their projects.

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This edition features pieces on:

• Registering a trademark for your business: A trademark legally protects your brand and helps customers distinguish your products or services in the market from others. Trademarks can be used to protect a logo, phrase, word, letter, colour, sound, smell, picture, movement, aspect of packaging or any combination of these. Have you considered registering one? Do you know how?

• Appointing an SMSF auditor: Early last month, the ATO issued a reminder around auditors.  If you have an SMSF, You need to appoint an approved SMSF auditor for each income year, no later than 45 days before you need to lodge your SMSF annual return (SAR). Your auditor will perform a financial and compliance audit of your SMSF’s operations before lodging. Approved auditors must be registered with ASIC.

• Purchasing and maintaining a caravan/motor home for work-related travel: In these challenging and changing times, many have jumped on the modern version of the proverbial band wagon and purchased a caravan or motor home to use for work or business-related travel. We explore the tax treatment of this scenario including where you have a business logo on the side on your van or motor home.

• Self-education: It’s not uncommon for individuals to change careers, seek a promotion, top-up their current skills or knowledge etc. In doing so, they may incur significant self-ed expenses. However, there are certain criteria which must be met before these expenses become deductible.

• 50% CGT discount: This can effectively halve any capital gain that you make when you sell a CGT asset including land, rental properties, shares etc. However, the asset must be held for 12 months or more. Most entities are eligible with the main exclusions being companies and trusts.

• Beware of SMSF scheme promoters: Don't be tempted by 'too good to be true' SMSF schemes promoted by an advisor you don’t trust and who isn’t on the ASIC Financial Register. You may risk losing some or all of your retirement savings and receive significant penalties if you enter into one of these schemes.

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This edition features pieces on:

• FBT and employee gifts:  Some employers, especially at Christmas time or for birthdays, give small gifts to their employees or employee associates (such as their spouses). How FBT, GST and income tax applies to such gifts depends on a range of factors including the value of the gift, the type of gift, and the recipient. 

• Research and development: A recent court case around R&D is a timely reminder of the eligibility rules around this tax incentive. By way of background, the research and development tax incentive (R&DTI) helps companies innovate and grow by offsetting some of the costs of eligible R&D. If your company is conducting certain R&D activities, it may be eligible for this incentive. 

• Super withdrawal options: For individuals who have retired and met a condition of release, or who have turned 65 and are still working, you can receive your superannuation as an super income stream, as a lump sum, or a combination of both. There are advantages of each withdrawal option.

• SMSFs and higher interest rates: While higher interest rates (10 increases since May 2022) have provided SMSFs with a viable and very safe investment opportunity, there are certain downsides, especially for those funds with a limited recourse borrowing arrangement (LRBA).

• Trusts – are they still worth it?: Despite the ATO’s recent crackdown on what were long-regarded as legitimate trust distribution strategies, they remain very much a viable business structure for a range of reasons including legitimate tax minimisation, asset protection, and more!

• Unexpected, first-time, tax debts: For a range of reasons, some taxpayers (particular younger folk) are receiving tax bills for the first time. We tackle some of the likely reasons and myths in this area.

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This edition features pieces on:

• Employee contractor case law: Another key Federal Court case handed down in June may have a bearing on whether you owe certain workers you engage superannuation guarantee or not. A key factor is whether the worker has the ability to delegate or subcontract the work.

• Working out your car expense deductions: With the cents per kilometer rated having just increased, we weigh up the pros and cons of the two alternative methods to use when calculating your work-related car expense deductions.

• Lodgment amnesty: Since Budget night, the ATO has released more information around the small business lodgment amnesty which can now be taken advantage of from 1 June 2023. It applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and runs from 1 June 2023 to 31 December 2023.

• Fair Work changes: The national minimum wage has increased from 1 July to $882.80 per week or $23.23 per hour. There have also been changes to the award minimum wage, the paid parental leave scheme, and more!

• Choosing your business structure: There are four main types of structures; each with its pros and cons. The new financial year is an opportune time to review your structure to see if it still meets your and your business’s needs. There are a number of factors to take into account when making this decision.

• Increased superannuation guarantee rate: This came on stream from 1 July meaning that employees and certain contractors will be entitled to 11% superannuation payable on their ordinary time earnings. This rate change can be more complex that one may think!

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This edition features pieces on:

• Maximising cashflow: The predicted slowing of the economy in 2023-24 along with the pay-day super guarantee (SG) proposal are sure to make cashflow more important than ever for business over the coming months and years, noting that it is one of the biggest difficulties faced by business. There are some simple steps you can employ, in consultation with your tax agent to maximise your cashflow moving forward.

• Side-hustles: With the cost of living skyrocketing, have you taken up a side-hustle? With new and emerging ways to make money, the ATO is reminding taxpayers to consider if they are ‘in business’ and to declare to their tax agent if they are engaged in a side-hustle.

• Super pensions and the senior’s health card: Are you a self-funded retiree who does not qualify for the Age Pension? If you’ve answered yes, then help may be available for certain living expenses by way of the Commonwealth Senior’s Health Card. But how does your super pension impact your health card eligibility?

• Tax time focus areas: With the end of the financial year on our doorstep, the ATO has announced that it will focus on the following areas this Tax Time – capital gains, work-related expenses, and rental property deductions. In view of this, what are the record-keeping requirements in these areas?

• What type of super funds can you contribute to?: There are five types of super funds you can contribute to. This article provides a brief summary of those types and highlights the differences between each.

• Final days of generous depreciation: Temporary full expensing (TFE) ceases from 1 July. From that date, less generous depreciation rules will come on stream. What do you need to do to in order to take advantage of the final days of TFE?

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Contents

The federal budget, handed down last night, contained a number of tax, superannuation, and social security/cost of living proposals that may impact your clients including:

• The end of temporary full expensing

• Small business energy initiative

• Crackdown on unpaid tax and superannuation

• No change to stage 3 tax cuts

• Confirmation of an extra 15% tax on super ‘earnings’ for account balances above $3 million

• Pay day superannuation guarantee

• Boost to Centrelink payments

….and more

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This edition features pieces on:

• Upcoming federal budget: It’s now less than a fortnight until the Federal Budget which is to be handed down on 9 May. Some of the things to look out this year potentially include an announcement on the future of temporary full expensing and its possible replacement, the fate of the so-called stage three individual income tax cuts, and much more.

• New reporting requirements for SMSFs: From 1 July 2023, trustees and directors of SMSFs must report certain events that affect their members transfer balance account quarterly. These events must be reported by lodging a ‘transfer balance account report’ (TBAR).

• Financing motor vehicles: One of the most common decisions facing business is how to finance and account for the acquisition of a motor vehicle. There are numerous ways of doing so, including outright purchase, lease, chattel mortgage, and hire purchase…with each resulting in differing accounting, taxation and GST treatment. 

• Temporary full expensing…get in quick: On current legislative settings, the depreciation rules for business are set to change for the worse from 1 July. If you are considering investing in your business, it may be advantageous to get in before this date to take advantage of temporary full expensing. 

• Bringing forward super deductions: Businesses who pay superannuation guarantee contributions to their workers can optimize their 2022/23 tax position by bringing forward these contributions to before 1 July 2023. However, there are a number of important timing issues that must be adhered to.

• Upcoming, year-end trust distributions: In good news for taxpayers who operate their business via trusts, the ATO has softened its position in this area following a recent decision by the Full Federal Court. What does this mean for upcoming trust distributions for 2022/23?

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This edition features pieces on:

• Proposed 15% super tax: Individuals with large superannuation balances may soon be subject to an extra 15% tax on earnings if their balance exceeds $3 million at the end of a financial year. Those affected would continue to pay 15% tax on any earnings below the $3 million threshold but will also pay an extra 15% on earnings for balances over $3 million.

• Reducing the risk of crypto scams: ASIC has released fresh and timely information around cryptocurrency scams. Scammers use cryptocurrencies, like bitcoin or ether, because they are not easily recovered. Crypto can be sent overseas quickly with limited oversight. If you lose your money to a crypto scam, your money is likely gone. What are the red flags to be aware of?

• FBT exemption for electric vehicles: Fringe benefits provided on or after 1 July 2022 for cars that are eligible zero or low emissions vehicles that are first held and used on or after 1 July 2022, may be exempt from FBT. A new ATO factsheet provides more detail on this exemption. 

• Finding your lost super: There is more than $16 billion in lost and unclaimed superannuation across Australia. Does some of this belong to you? Make sure you search for any lost or unclaimed super you may have as bringing it all together may help you save on fees and will also make it easier to manage your retirement savings. The good news is that it is easy to conduct a search.

• Fending off GST audits: The government has welcomed the uncovering and prosecution of ‘the biggest GST fraud in Australia’s history’, stopping approximately $2.5 billion in fraudulent GST refunds from being paid to fraudsters. On a smaller scale, there are lessons to be learned about how you or your business can stave off a GST audit or review if you are subject to ATO scrutiny.

• Trust distribution landscape now more settled: If you carry on your business affairs through a trust structure, there is now slightly more clarity around the law on distributions following a decision of the full Federal Court. With 30 June rushing towards us, family trusts need to be considering their position in relation to upcoming trust resolutions.

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This edition features pieces on:

• Crystalising capital losses: It’s been a tough 12-months for investors. However, a loss on an investment is only realised if you dispose of the asset. If you retain the asset, you may be able to ride things out and hopefully the market bounces back. Even where you do sell and incur a capital loss, there can be a silver lining from a tax perspective.

• PAYG instalment variations: The ATO is encouraging accountants to educate clients around varying PAYG instalments – this can potentially assist cashflow. If you or your business’s financial situation has changed for the worse, varying your PAYG instalments downwards can help with cashflow which can be a significant problem for small business. There are however dangers in varying.

• Legislating the purpose of superannuation: Treasury released a consultation paper on legislating the purpose of superannuation. However, as noted in the paper, the purpose of legislating such an objective is to guide future policy makers rather than lay the groundwork for changes to existing superannuation settings.

• Changes to claiming work-from-home deductions: Are you one of the five million Australians who claim work from home deductions? If so, stricter record-keeping requirements may now apply from 1 March 2023. A new, increased cents per hour rate is also now available. 

• Super teething issues: Last year 9,700 individuals applied for compassionate release of super for dental treatment expenses, and 82% were approved. Out of those approved, 9% were for a dependent child’s dental treatment, which could include braces. What are the rules around making a claim?

• FBT and car logbooks: The majority of employers calculate any car fringe benefits under the logbook method. As we approach the end of the FBT year, logbooks need to be in order, including adequate descriptions of trips, odometer records and more.

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This edition features pieces on:

• Missing the director ID deadline: For those who have missed the deadline to obtain a director ID, you can still apply!  However, an extension of time application form will need to be completed first. Although the deadline may have been missed, the ATO says it will take a reasonable approach with directors who are trying to do the right thing.

• ATO’s new year resolutions: Whether your side-hustle has crossed the line into a business, keeping good business records, and determining whether the personal services income rules apply to you…are just some of the issues that the ATO says will be on its radar as we head into 2023.

• Using your SMSF property upon retirement: Many SMSF trustees wonder if they can live in their SMSF property once they retire. This is a common question particularly as property is such a popular SMSF investment. The answer is that the rules in this area are quite restrictive.

• The importance of cashflow forecasts: Cashflow is one of the leading causes of small business failure. To this end, a Cash Flow Forecast is a crucial cash management tool for operating your business effectively – tracking the sources and amounts of cash coming into and out of your business.

• ATO finalises section 100A guidance for family trusts: For those who operate their affairs through a family trust, the ATO has released its final guidance on how section 100A applies to distributions. In light of this guidance, there are various risk-management options on the table for distributions moving forward. 

·         Reduction in downsizer eligibility age: The eligibility age for downsizer contributions reduced from 1 January 2023. This means if you are age 55 or older, you could invest the proceeds of the sale of your family home to your superannuation outside of your standard contribution caps.

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We are pleased to provide you with your December 2022 Newsletter.

Christmas is traditionally a time of giving, including employers showing gratitude to their workers for a job well done throughout the year, also to customers, contractors, and suppliers. However, depending on the nature and value of the gift, and also who the gift recipient is, such magnanimity can attract unwanted income tax, fringe benefits tax and also GST consequences. So how as an employer do you gift most tax-effectively this festive season? Aside from gifts, cash bonuses and leave bonuses are quite common at this time of year. These too have flow-on impacts for employers and employees alike.

Electric vehicles are set to become more affordable after the government sealed a deal with crossbench Senators. The new law introduces an electric car discount in the form of an FBT exemption. This allows for car fringe benefits comprising the use or availability for use of an eligible car that is a zero or low emissions vehicle to be exempt from FBT where certain conditions are met. Employers are the other big winner from the changes, which will remove the FBT liability on company-owned electric vehicles provided as part of a salary package for personal use by employees.

Meanwhile, in a recent speech, the ATO’s assistant Commissioner outlined the ATO's latest compliance issues it is focusing on for those who operate an SMSF. Identity fraud and investment scams, illegal early release of benefits, non-lodgment of SMSF annual returns, the adequacy and independence of audits, as well as the obtaining of director identification numbers for directors of corporate trustees are just some of the issues on the ATO’s radar.

Contents

This edition features pieces on:

• On-boarding employees for the holiday rush: Hiring additional employees to help with surging end-of-year demand? The New employment form, accessed through ATO online services, will help reduce compliance time for employers.
  

• Single member SMSFs: it is permissible to have single member funds. The main advantage of doing so is that you have total control over your retirement savings, and the investment decisions in respect of those savings. However, there are some issues to be mindful of.
  

• Xmas gifts from employers: Gifts provided by employers to employees, contractors, suppliers and key customers can have very different income tax, GST, and FBT treatment. However, keeping some basic rules in mind can assist employers in gifting tax-effectively.
  

• New work from home deduction rules: New rules have taken effect for calculating an individual’s work from home deductions. In summary, the new method for working out your claim may leave you worse off than the methods it replaced, and also impose a greater compliance burden.
  

• FBT exemption for electric vehicles: Electric vehicles are set to become more affordable for both households and businesses after the government sealed a deal with crossbench Senators on legislation to exempt low and zero emission cars from fringe benefits tax (FBT).
  

• SMSF compliance – what’s on the ATO’s radar?: identification fraud and investment scams, illegal early access to retirement savings, non-lodgment of annual returns, regulatory contraventions, the adequacy and independence of audits are just some of the issues on the ATO’s radar in respect of SMSF compliance.

We are always here to help

· If you have any questions or feedback regarding our Monthly Client Newsletter or if you'd like clarification or further advice on any of the content in this month's edition - don't hesitate to reach to us at admin@shepdud.com.au

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Introduction to this Month’s Edition

Are you across the 25 October federal Budget and how it may impact you, your business and your superannuation affairs? In this special edition, we canvass the important measures contained in the first federal Labor budget in almost a decade. On the taxation front, the adoption of the Stage 3 tax cuts, the scrapping of a tax offset for low and middle-income earners were the big-ticket items. On superannuation, maintaining the current contribution rules, and the ruling out of a three-year audit cycle for SMSFs were both welcome announcements.

With the housing crises in full swing, quite a number of people have welcomed relatives and friends into their homes (and rental properties) until they can find permanent accommodation of their own. A recent Administrative Appeals Tribunal (AAT) case has confirmed that where rent paid in this circumstance is not at commercial levels, this may limit the deductions that the homeowner/landlord can claim. It will though depend on the circumstances at hand.

Meanwhile, choosing the right business structure and knowing what your obligations are can be complex. This is particularly the case around superannuation and whether you are obligated to pay it to yourself as a business owner. This will principally depend on the vehicle through which you operate your business.

Contents
This edition features pieces on:

• Federal budget – business and individual taxation: It was a somewhat quiet budget on the business front, with it being notable for the burning issues that it did not address such as Division 7A reform, the taxation of trusts, the future of the loss carry back rules and current depreciation rules for business (both expiring in 2023). On the individual level though, lucrative future year tax cuts were confirmed.
  

• Federal budget - superannuation: The retention of the existing contribution caps, leaving indexation undisturbed, reducing the downsizer contribution age to 55 (down from 60), and the delay in the SMSF residency rule changes were just some of the announcements on the super front.
  

• Rental deductions curbed: Where you let out your home to family or friends or otherwise on a non-commercial basis, a recent AAT decision reminds us that, in doing so, this may limit your deduction claim to the amount of rent charged.
  

• Director ID’s – new campaign launched: The federal government has launched a last-ditch awareness campaign reminding those who are directors to obtain their ID by the 30 November deadline. How? Who? Why? We answer these questions.
  

• Do I have to pay myself super as a business owner?: The answer depends on a range of factors, principally your trading structure. Different rules apply for sole traders, companies, partnerships and businesses operated through a trust structure.

• Business versus hobby: When do otherwise private activities cross over from a hobby to a business? This matters from a tax perspective particularly around the declaring of payments received, claiming deductions, record-keeping…and more!

We're always here to help

If you would like clarification or further advice on any of the content in this month’s edition, please reach out on admin@shepdud.com.au

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Introduction to this Month’s Edition

Have you applied for your director identification number? Time is running out to meet the 30 November 2022 deadline which applies to most directors. All existing directors of a company, registered Australian body, registered foreign company, or a director of corporate trustees of an SMSF are required to apply for a director ID. A director ID is a unique 15-digit identifier that all directors or people intending to become directors must apply for. It’s free to apply and you only need to apply once. A director must apply for their own director ID personally.

With the economy emerging from its COVID-related downturn, individuals may have made business losses that may be able to be offset against other income such as salary and wages. There are however a number of hurdles to clear. These include the non-commercial loss rules which determine whether the loss, or your share of the loss, is deductible in the current year.

Meanwhile, the latest ATO super statistics confirm that there is a significant superannuation gender gap – with women generally having far less super savings than men. There are a number of strategies that can be employed to close this gap including catch-up contributions, superannuation splitting, and spouse contributions.

We're always here to help

Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter

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Introduction to this Month’s Edition

With interest rates rapidly increasing, homeowners are being encouraged to look around for a better deal on their home loan. ASIC has recently released some tips if you are doing so. These include asking your existing lender for a better deal, negotiating the length of your new loan, factoring in the cost of possible lender mortgage insurance, comparing a range of accompanying fees and charges, and more.

Rental property claims are being heavily scrutinised by the ATO this Tax Time. The ATO is urging rental property owners to ensure they carefully review their records before declaring income or claiming deductions.

Meanwhile, recent data from the government’s MoneySmart website and the Association of Superannuation Funds of Australia helps individuals answer the perennial questions: how much superannuation will you need to retire? And how much are you likely to spend in retirement?

Contents
This jam-packed edition features items on:

• ATO rental property focus – this Tax Time, the ATO is homing in on rental property claims. Declaring all related income, correctly claiming any expenses over the correct period, and retaining appropriate records are all in focus.
  

• COVID-19 relief for SMSF trustees now at an end – the ATO has reminded SMSF trustees that the COVID-19 relief and support offered to SMSFs is now over. This support related to residency, rent relief, loan repayment relief, and in-house assets.
  

• Wash sale arrangements under scrutiny – where you sell and then quickly reacquire shares or cryptocurrency in order to derive a tax benefit, the advantage of doing so may be disallowed by the Taxman. Each arrangement will be judged on its circumstances, however.
  

• GST health check – now that the financial year has come to a close, it’s a good time to check all things GST. Reporting periods, accounting methods, unclaimed GST credits, should all be covered off on.
  

• YourSuper comparison tool – if you have a MySuper fund, the ATO’s YourSuper comparison tool can help you compare different MySuper products and choose a superannuation fund that meets your needs.
  

Switching home loans – with interest rates increasing quite rapidly, homeowners are being encouraged to look around for a better deal on their home loan. ASIC has recently released some tips in this space

We're always here to help

Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter

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Introduction to this Month’s Edition

During COVID-19, the ATO took a softly-softly approach to debt collection, acknowledging the financial impacts of the pandemic. However, with the economy now opening back up, firmer debt collection practices are resuming, including garnishees, recovery of director penalties, disclosure of business tax debts, and legal actions including summons, creditors petition, wind-up and insolvency action. Do you or your business have a tax debt? If so, it’s important to engage with the ATO with our assistance. Their payment plans can be quite flexible.

Employers need to make Single Touch Payroll (STP) finalisation declarations by 14 July each year. As your registered agent, we can assist you in this important, upcoming process. Your employees depend on this process being completed in order to lodge their tax returns.

Meanwhile, the new financial year heralds an increase to the superannuation guarantee (SG) rate for your employees and certain contractors. Low paid workers are now also entitled to SG. This additional employer cost comes with some complexity. We guide you through it.

We are always here to help.

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Critical information

Ø Year end tax planning – both from a tax and superannuation perspective.

Ø An ATO warning on the latest tax scam doing the rounds. The ATO has recently reported an increase in fake websites offering to provide Tax File Numbers and Australian Business Numbers.

Ø What the new government has foreshadowed on the tax and super front. This includes support for significant income tax cuts for individuals, a crackdown on multinational tax avoidance, lowering the age eligibility for the super downsizer scheme and a home buyer subsidy – making it easier to buy your first home.

Ø The four items under the ATO’s microscope as we head into Tax Time 2022.

Ø How downsizer super contributions can help older individuals for their retirement.

We are always here to help.

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Critical information

Ø With the ATO having announced a more hardline approach to discretionary trusts, we detail some good news around the possible retrospectivity of their new approach.

Ø Are you aware of the personal property security register? In your May newsletter, we outline its importance and how it can reduce your risk of property you are thinking of purchasing being repossessed

Ø It’s recommended that employers have in place a human resources (HR) manual. HR manuals document the workplace policies and procedures that will be applied to all employees inside and to a lesser extent outside the workplace.

We're always here to help.

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Critical information

Ø With the FBT year now at an end, we provide a non-exhaustive checklist of some of the main potential fringe benefits employers may have provided their workers throughout the year.

Ø With the ATO flagging a new crackdown on discretionary trust distributions, find out the potential target areas in your April Newsletter.

If you are a ride-sharing driver (such as with Uber) or if you are a rider, there is a raft of tax issues to be aware of from both standpoints. From GST, income tax, deductions, and PAYG withholding…we’ve got it all covered.

We're always here to help.

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Critical information

The 2022 Federal Budget was handed down last night. In this special edition of our Client Newsletter, we have summarised some of the main measures that may impact both your business and individual clients, including:

• 20% additional deduction for skills training and digital adoption
• The extension of various apprentice wages subsidies
• An increased income tax offset of up to $1500 for low and middle income earners
• $250 cost of living payment for various welfare recipients
• Further relief for first home buyers
• 50% reduction in fuel excise.
We're always here to help.

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