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As the world continues to prioritise reducing carbon emissions, the demand for electric cars is on the rise. In Australia, the government has been encouraging the purchase of electric vehicles (EVs) by providing tax incentives to both individuals and businesses. The key example here is that from July 1 2022, employers don’t pay Fringe Benefits Tax (FBT) on eligible electric cars and associated expenses!
Here we’ll break down the incentive a little more, discuss eligibility and look at why you should seriously consider an EV for your business vehicle needs …
The FBT is a tax that employers pay on certain benefits they provide to their employees in addition to their salary or wages. These benefits are referred to as fringe benefits and can include things like company cars, health insurance, and expense accounts. However, electric cars and associated expenses are exempt from FBT under certain conditions and that’s why we’re here…
Eligibility:
To be eligible for the FBT exemption, the electric car must be classified as a “low emissions vehicle” and meet specific criteria set by the Australian Taxation Office (ATO). The car must have zero or very low carbon dioxide emissions and must be capable of being driven solely by an electric motor. Additionally, the electric car must not be designed for off-road use and must not have a carrying capacity of more than one tonne (which may rule your business out).
In addition to the FBT exemption on eligible electric cars, employers can also claim deductions for associated expenses such as electricity used to recharge the car, repairs and maintenance, and even car parking costs.These deductions can be substantial and can help offset the initial cost of purchasing an electric car.
Despite the potential cost savings, to date, many employers are not taking advantage of these exemptions and deductions. According to a recent survey by the Electric Vehicle Council, surprisingly, only 12% ofAustralian businesses currently offer electric cars as part of their company fleet. This is despite the fact that electric cars can be cheaper to run and maintain than traditional petrol or diesel cars.
Well, it would have to first fit your business needs, then fit into the eligibility criteria to make it completely worthwhile, but one of the main reasons for the low uptake of electric cars by businesses so far is the perception that they are too expensive. And, while electric cars can have a higher upfront cost than petrol or diesel cars, the FBT exemption and associated expense deductions can significantly reduce the overall cost of ownership. Additionally, electric cars can generally have lower fuel and maintenance costs, which can further reduce costs over time.
Another reason why employers may not be taking advantage of the FBT exemption is a lack of understanding of the eligibility criteria and the claiming process. We can help here, so if you’re considering a new vehicle for your business, speak with the Attune team so we can show you the options that fit your situation best (including incentives available).
By not taking advantage of the FBT exemption on eligible electric cars and associated expenses, employers may be missing out on significant cost savings. Additionally, encouraging the use of electric cars can help businesses reduce their carbon footprint and contribute to the fight against climate change. That sounds like a couple of big wins to us!
The FBT exemption on eligible electric cars and associated expenses is a valuable tax incentive that employers should take advantage of. So if you’re in the market and would like to discuss how an EV might work for your business (from a taxation perspective), call the Attune team on 1300 866 113 or send us an email to start the conversation.
Treasurer Jim Chalmers recently announced plans to double the tax rate on superannuation balances over $3m from 15 to 30 per cent, but the plans are under fire for just how much they’ll affect those who’ve worked hard for it. As it turns out that could be around 500,000 Australians who’ll be paying tax on their super at 30% when the legislation kicks in during 2025.
According to Prime Minister Anthony Albanese this change will impact approximately 80,000 people. However, the Financial ServicesCouncil (FSC) has found that six times as many Australians could be affected, estimating that about 500,000 people could be impacted in the long-term when younger generations retire. The FSC stated that the $3 million cap is not indexed to inflation, which means that a 30-year-old will have a real cap of around $1 million in today's dollars, raising questions about intergenerational fairness.
As it stands today, the superannuation tax concessions cost the government around $50 billion per year, and Albanese claims that this reform will make the country's $3.3 trillion super system more sustainable.However, Shadow Treasurer Angus Taylor argued that superannuation isAustralians' money and should be left alone, especially as many Australians are struggling to make ends meet with rising interest rates.
It’s bitter-sweet that the change will not be retrospective, rather, it will apply to future earnings and come into effect after the next election.
In 2023, the average superannuation balance is approximately$150,000, and the number of Australians with over $3 million in their super, all the way up to $400 million, is minimal, according to Treasurer Jim Chalmers but again, this is arguable…
Overall, the change to superannuation tax concessions will affect a relatively small number of Australians in the short term, but it could have broader implications in the long term, especially as younger generations retire. Regardless, the government has argued that it is necessary to make the super system more sustainable, given the significant cost of superannuation tax concessions.
If you’d like to discuss your superannuation in it’s current state and how you might be looking as this change comes into affect, reach out to the Attune team for strategic, tailored advice to help you set your retirement up the way you want it. Call the team on 1300 866 113 or send us an email to start the conversation – don’t wait until it’s time to put the tools down.
For a business paying your tax on time is, well, fundamental to running it, but what do you know about the ATOs general interest charge (GIC) rate and shortfall interest charge (SIC)? They’re both worth being aware of, especially now as rates for each has recently increased so we thought we’d give you an overview of both while detailing why paying tax on time and in full is pretty much a no-brainer…
The Australian Tax Office (ATO) has two types of interest charges that taxpayers may incur: the general interest charge (GIC) and the shortfall interest charge (SIC). These charges are designed to encourage taxpayers to pay their tax debts on time and in full, as well as to compensate the government for the time in which debts are outstanding. Recently, the ATO has announced an increase in the rates of both the GIC and SIC, which will certainly impact taxpayers who have outstanding tax debts.
A GIC applies to any unpaid tax debts that are not paid by their due date. The rate of GIC is calculated on a daily compounding basis and is based on the Reserve Bank of Australia's cash rate plus a margin. InDecember 2022, the ATO announced an increase in the GIC rate from 7.08% to 7.40%per annum. This increase is significant – especially for those with larger debts – and will impact taxpayers who have outstanding tax debts.
The SIC, is a charge that applies to any tax shortfall, which is the difference between the amount of tax that should have been paid and the amount that was actually paid. The SIC is also calculated on a daily compounding basis and in December 2022, the ATO also announced an increase in the SIC rate from 4.08% to 4.40% per annum.
The ATO has stated that these rate increases are necessary to ensure that taxpayers who have outstanding tax debts are paying their fair share of the tax burden.
The ATO has a number of options available to it to collect unpaid tax debts, including issuing garnishee notices, initiating legal action, and seizing assets. However, the ATO prefers to work with taxpayers to come up with payment arrangements that are manageable and reasonable.
If you have outstanding tax debts you should immediately discuss them with your Attune team contact so we can reach out to the ATO immediately to discuss payment arrangements. The ATO may be willing to enter into a payment plan or offer a hardship variation if you are experiencing financial difficulties.
It is important for all of us to be proactive in addressing tax debts and not to ignore them, as this can lead to further interest charges and even potential legal action if left long enough.
Keep in mind, it’s incredibly important to understand you tax obligations so it’s always worth seeking clarity from the Attune team on your situation if you are in any way unsure of your situation.
Overall, the recent rate increases of both the GIC and SIC serve as a reminder to all taxpayers to pay their tax debts on time and in full.
Once again, reach out to the Attune team if you’re looking for some tailored advice to help you navigate your business or personal tax obligations. Call us on 1300 866 113 or send us an email to start the conversation.
We’re fast approaching the end of yet another financial quarter so we thought we’d put together a timeline of upcoming tax deadlines for both personal and business entities that are worth adding to your calendar.
Many of you are likely across some of the first few of these and you may have already spoken with the Attune team about your March or April deadlines, but let’s take a look and have your calendar ready so you can keep them in your diary …
Lodge tax return for all entities with a lodgement due date of 15 May 2023 if the tax return is not required earlier and both of the following criteria are met:
If you’d like clarity on any of these deadlines or would like tailored advice on meeting your obligations, reach out the Attune team today on 1300 866 113 or send us an email to start the conversation.
