Yesterday, Tuesday 21st of July, the Prime Minister Scott Morrison and Treasurer, Josh Frydenberg have released details for the much touted Jobkeeper extension program.

 

Jigsaw Tax will await the formal legislative governance set to be provided by Treasury in the Economic Release due on Thursday, 23rd of July 2020 before advising on the implications of the Jobkeeper 2.0 program for our clients. As in the first program, we anticipate there will be a substantial volume of information and legislation to digest before being able to advise on the matter. Please bear with our team while we work through this.

 

We wish to assure clients that the Federal Government has advised that the current Jobkeeper program will continue unchanged to its legislated conclusion of 27th of September, 2020.

 

We look forward to working with you on your regular compliance work in the meantime and thank you for your continued support during what has been proved to be a difficult year for business owners.

 

For up to date information, please ensure you tune into Jigsaw Tax’s Facebook feed where we regularly provided links to webinars, discussion forums, and podcasts on the rapidly changing Australian business landscape.

 

We thank you for your patience as we all navigate our way through this changing climate and we look forward to helping you with all your requirements.

 

The Jigsaw Team.

Love them or hate them, Tradies almost certain started their career as an Apprentice.  It may be challenging to employ a young person and teach them your trade, but there are some advantages to hiring apprentices in your workforce.

In March 2019 there was 276,250 workers in training making up 2.2% of the workforce.  In the 12 months prior to 31 March 2019, 73,650 trade apprentices commenced their apprenticeship.  While the figures may be a little different this year, there is no doubt that the government want you to employ apprentices and they are key to keeping youth unemployment manageable.

The COVID-19 recovery is going to be led from the construction industry.  Construction was one of the few industries that could continue to work during the COVID-19 lockdowns but this doesn’t mean the industry has not been impacted.  We know that many projects were cancelled or delayed, and a large number of construction businesses are receiving support for employees through Jobkeeper.  However, one proven way to stimulate an economy is to create large infrastructure projects, and clearly that is part of the plan of our federal and state governments.  These projects last for years, providing many jobs. This in turn allows those employed on the projects to spend in other sectors of the economy, helping with the recovery.

However, in order to execute these projects our country needs a skilled workforce.  The way to skill up the workforce is to encourage apprenticeships.  The stimulus packages announced in March contain incentives to retain apprentices and this incentive has just been extended.

In the first round of stimulus measures there were incentives for small businesses to retain their apprentices by providing a 50% subsidy on the wages of qualifying apprentices of up to $7,000 per quarter.  To qualify the business needed to employ fewer than 20 people and the apprentice needed to be signed up by 1 March 2020.  The original measure was to run until 30 September 2020, providing a maximum of $21,000 per employee.

Recently the government announced that this was to be extended to 31 March 2021.  It is also available to medium employers with 199 or fewer staff.  To qualify the apprentice needed to be signed up prior to 1 July 2020.  This will be a great benefit for those who are getting Jobkeeper for their apprentices.  There will be something to encourage you to retain them when the Jobkeeper measures come off at the end of September.  You have until 1 October to lodge your claim, so while you can’t get both Jobkeeper and the subsidy at the same time, you can be prepared for October.

If you don’t have an apprentice already, the good news is that you can hire an apprentice who had qualified with the 1 July 2020 sign up date but had been let go.  If you hire one of these apprentices you can continue to get the subsidy regardless of the size of your business.

Note, these measures extend to employees obtained through Group Training Organisations, which may make it easier to find a qualifying apprentice.

There are other incentives available based on the industry you are in and the apprentice you take on.  If you are interested, I suggest you find out more information from the Australian Apprenticeship website.

https://www.australianapprenticeships.gov.au/aus-employer-incentives

Remember that rebates are applied for apprentices for both workers compensation and payroll tax making them a cost effective form of labour.

Still not sure?  Why not speak to a Group Training Organisation.  They employ the apprentices and hire them out, taking on the management and risk of the apprentice.  If you are not sure if you need an apprentice for the entire term of their apprenticeship, or not feeling confident with the recruitment process, this could be the perfect option for you.

Times are tough and everyone is struggling right now but finding a good quality apprentice may be the key to getting through this difficult time.  Give someone a chance to learn your trade. Our country is counting on it.

We’ve put together a few quick and easy to follow video guides on how to correctly record your stimulus payments in QBO

How to record JobKeeper payments
Step 1 – Create a new account for JobKeeper income
https://www.loom.com/share/d094d5d180a8409eb847a1f2f5a18091

Step 2 – Reconcile payment from ATO to the JobKeeper income account
https://www.loom.com/share/70049d1690e44d4f93f1ccb2e64016ec 

How to record Cash Boost
Step 1 – Create a new account for Cash Boost income
https://www.loom.com/share/b728e96b85c54f059ad984460309169e

Step 2a – Reconcile net payment from ATO to ATO income account (Jigsaw will reconcile at EOFY)
https://www.loom.com/share/20a9f62ddff14a08aeaf0eb208452e7f

Step 2b – Reconcile gross payment cash boost to ATO liability account (balance sheet) and ATO income account (P&L)
https://www.loom.com/share/cf74c481c5e34c23ac9afdd4e0f85c69

How to record NSW/VIC Grants
Step 1 – Create a new account for NSW/VIC Grant income
https://www.loom.com/share/2d241721725a4c878c5e66a8afaa5073

Step 2 – Reconcile payment from ATO to the Grant income account
https://www.loom.com/share/9766e45c70d144f0856994282fa49aad

Don’t worry too much – as we’ll be correctly reconciling these when we complete your next BAS / EOFY. If you have any concerns about your JobKeeper, Cash Boost or grants don’t hesitate to contact the team for more information.

FAQs 
JobKeeper:

  • JobKeeper is paid monthly, as a reimbursement for the last 2 fortnights (September payment will include 3 fortnights in August)
  • Every JobKeeper participant is required to lodge a monthly declaration, which will trigger the ATO to release the reimbursement (approx. 14 days from lodgement)
  • The forward month projection is your best guess at your future income. It will NOT be held against you if you are incorrect
  • Once you reach the required reduction in turnover in a month, you can continue claiming JobKeeper for the entirety of the scheme – even if your sales increase
  • Jigsaw Tax does not get notified whether your JobKeeper has been paid. Please let us know if it hasn’t been paid

Cash Boost:

  • Every business that is eligible and reports wages at W1/W2 will have the calculated boost applied automatically
  • The boost will be initially applied to ATO Integrated Client Account debt. Only excess will be refunded
  • The bank details provided for JobKeeper are not applied to Cash Boost refunds. We may have to confirm these again from you

NSW/VIC grants:

  • All grant income must be expended on business expenses (non-JobKeeper staff / top-ups, operating expenses such as rent, maintenance etc.)
  • Do not claim the grant unless you will be able to show expenditure on operating expenses
  • For NSW, we will provide a letter of support and you will be required to lodge documentation with the state Government
  • NSW has advised that compliance and verification action will occur after COVID

This evening, enjoying a glass of red wine from my favourite winery, something came across my screen that would sour my evening. It wasn’t Josh Frydenberg’s face… no no. It was what was written below. This is a bit different to my normal articles – but tries to express the frustrations of the industry.

In my previous article, I mentioned an example of a small business who had lost 60% of their income but facing a wage bill 3x higher than normal due to being required to front the first 2 jobkeeper payments. There are countless similar stories in the media

The Government, unable to implement such a large scheme quickly, offloaded its funding and processing responsibilities to the mums and dads of Australia – requiring each one of them to become experts in the tax and GST Acts, Fairwork and HR laws, banking and finance – all within a fortnight.

I’ve been fairly understanding of the ‘policy on the fly’ we’re seeing – but tonight I’ve decided to share what accountants are feeling.

As we complete many JobKeeper applications today, and our staff return over the weekend to keep processing – one thing has become clear: no 2 situations are the same, and each require careful analysis of the myriad of complex rules, guides, instruments released from the PM, the Treasurer, the Treasury, the ATO etc.

Over the last 48 hours, we thought we had finally locked the rules down and the JobKeeper workflow freight train started to pick up speed. It started of slow, as we made sure we had everything covered, but by this evening it was starting to hum along.

As we broke for dinner, we were confident we’ll get the best result for our clients. This meant we’d had identified eligible businesses, identified eligible employees and advised our clients to make the necessary catchup payments. Many small businesses by this afternoon had started making catch up payments, so they could be reported by next Wednesday/JK-Day (30 April) in STP.

But Josh had other ideas – he issued his latest JobKeeper media release this evening. There were some sensible amendments, like expanded rules for service entities, flexibility for NFPs (charities, religious practitioners, Foreign NGOs) that the industry was asking for, and a few small other changes – these will now keep all those accountants hoping for a break busy over the weekend.

But  this one paragraph is the cause of my latest grievance. Please read and let it sink in – remember all the small businesses that have had to fund junior casuals, from their home loans or personal credit cards

Full time students aged 16 and 17 years old:  As noted in the explanatory statement to the existing rules, the benefit of the JobKeeper payment to workers over the age of 16 is justified for those who are financially independent and who require the security provided by participation in the JobKeeper scheme and the maintenance of the working relationship that it affords.  The rules will provide that full time students who are 17 years old and younger, and who are not financially independent, are not eligible for the JobKeeper Payment.  This clarification will apply prospectively, which would mean an eligible employer that has already met the wage condition of paying such an employee $1,500 for a fortnight could be entitled to a JobKeeper Payment in arrears for that fortnight.

On the whole, it seems a reasonable adjustment and a fair result. But literally 6 days before JK-Day… or 2/3 business days now? And worse – a Friday night, after I’d opened my favourite bottle of wine.

This should have been picked up in the first draft that was scribbled down on a napkin at the Parliament House bar. Everyone could see that this was neither equitable nor attainable. A mortgage holder with 2 kids getting paid the same amount as a school student; a small business needing to fund 10’s of casuals who, due to a Fairwork Act technicality, needed to receive a JobKeeper; legitimate employees connected with an employer excluded due to being a casual rather than a part-timer (a casual had to be hired before 1 March 2019; a part-timer could be hired on 29 February 2020).

While a reasonable adjustment – the devil is always in the detail when we’ve got policy on the fly:
– how do I, as an accountant helping my client determine eligibility, determine if you’re in school full time or part-time
– what about if you’re 18 and at school
– what if you’re at school and 17 years old now, but you will be 18 years old in the next 6 months (i.e. you received April JobKeeper because it was already paid, nothing in May/June, but turned 18 in July… do I need to pay under one in / all in?
– what if you drop out of school, but you weren’t originally eligible. Are you now eligible?
– what if you only paid them some of the $3000, but not all of it – do you still need to top up
– what if you’ve made the payments, but haven’t enrolled in the ATO system?

The modelling for one client tonight, shows their payroll for April (inc. JKP) would have dropped from $42,000 to $22,000.

I’m not one to look a gift horse in the mouth, but hopefully the horse stays still enough for me to have a glance.

There is NO excuse for a policy pivot of this size, and a mere 6 days away from JK-Day, to be released on Friday night at 8pm. And make no mistake – this is a complete 180 degree reversal on what we’ve heard for over a month: initially, the PM proudly stood in front of the press gallery, announcing the JobKeeper scheme as the panacea for the economy – it will keep everyone employed at a minimum of $750 and be the fuel of the economy. The Treasurer, the Treasury and the ATO all repeated the same “one in / all in” principle in every release. The media, the professional bodies, unions and small businesses asked similar questions about the young casuals – but it was clear that there was to be NO flexibility, even for a casual who would work only 3 hours a fortnight. They, with the other employees, MUST BE PAID $3000 for April, or no one gets JobKeeper. No back payments allowed. The PM said “go to your bank” – yet the banks hadn’t gotten that memo until the 11th hour / 6 days out (sneaky NAB had purchased 1800 JOBKEEPER for their 24 hour hotline).

After attending webinars, tele-conferences, speaking with colleagues, it is apparent that Treasury is a closed shop. Experts in the field were jumping up and down, private practitioners could see the issues in the first releases, the media asked good, tough questions – but Treasury would not listen.

Insofar my criticism has been focussed on Treasury, but the ATO is not without criticism. It has at last released its alternative tests – in the evening on Thursday the 23rd of April. When over 1,000 Tax Institute members, like our senior team, attended a webinar on Friday morning – the slides on the presentation hadn’t been updated for the tests. How can such an important test be issued less than 7 days before JK-Day, without a heads up to the professional bodies? Small releases to assist accountants to spread the workload of interpreting, reviewing, and applying the tests would have been preferable than all the tests being issued at once. Clients who did not pass JobKeeper earlier this week, now pass – so the merry-go-round starts again. With these changes, our working papers, templates and workflow all change.

Finally I’ll also mention changes to the Business Boost – we were told businesses weren’t eligible for the Business Boost due to PAYG/W registrations or extension dates, but now the ATO says they are under a discretion; but no information is provided how to apply for said discretion. The banks were to provide low interest, unsecured, $250k loans. Not only have they not been released to the market, but they are neither low interest, unsecured or a guarantee you’ll get $250k.

While the Government response to COVID19 should be commended in many aspects – just look at how Australia and New Zealand are placed – the policy intent and technical implementation of hundreds of billions of stimulus dollars has been flawed since the first day. With a little leeway (e.g. back payments, reporting and enrolling requirements etc.), input from professionals on the ground on how to implement, and Treasury putting aside its tin ear, I truly believe the JobKeeper Scheme could have been initially drafted as a great scheme.

Today was the first day for eligible employers to begin enrolling into the Jobkeeper Scheme. To do so, an employer has already had to:

  • Determine that they are eligible under the GST Turnover reduction test. Interpret various pieces of legislation and guides to ensure correct calculation or forecasting
  • Identified, contacted, and obtained copies of the Jobkeeper Nomination forms for all eligible employees (regardless of whether they are or are not participating)
  • Have paid, or will pay in the next 10 days, a minimum of $3000 per eligible employee

But have employers participating in the scheme considered the true cost of enrolling in the Jobkeeper Scheme. Here are some examples of hidden costs:

  • Administration costs. While many businesses are self managing, most are leaving it to the professionals or their payroll departments. There are costs associated with preparing the required (and often onerous) documentation for supporting eligibility and enrolment. On going reporting and reviewing ongoing eligibility for each employee will be required for each Jobkeeper payment.
  • Interest costs. Many small business owners are drawing down on mortgages, borrowing from family members, or even withdrawing from super due to the Government requiring small businesses to ‘bank roll’ the Government for $3000 per eligible employee. Under the one-in/all-in rule, if you can’t make a payment for all your employees, then none are eligible.
  • Payroll processing costs. Changes to payroll categories, and training payroll processors in applying the various STP reporting categories is a cost each business will need to consider.
  • Leave entitlements and service periods. The complex interaction between leave provisions and Jobkeeper is hard enough to follow, but certain arrangements will lead annual and sick leave accruals. Even for employees who had been stood down but receiving Jobkeeper, the next 6 months will count as employment service, with the potential that redundancies may become more expensive 6 months later.
  • Workers Compensation. NSW iCare has advised that Jobkeeper payments will be included as assessable wages for workers compensation, even those that have been stood down but still receiving Jobkeeper. A café with a policy percentage of 1.7% will now incur an additional $334 per stood down employee – strange considering workers compensation doesn’t cover personal injuries while stood down.
  • Record keeping. Employers will need to keep very detailed records of historical data and minutes of decisions/discussions for a minimum 5 years. We are focusing our client’s attention in making sure documentation is prepared now, and not scrambling during a review/audit.

The question is – would it not have been easier to simply pay all these $750/w payments via Centrelink (for both Jobkeeper and Jobseeker) and employers simply top up payments as required if the staff member works? Surely there are easier ways to support the economy, than forcing small business owners to jump through hoops, beg banks to take on even more debt, and becoming tax, HR, and finance law experts overnight.

Working with small business owners, and being a small business owner myself, there is a common theme that we tend to sweep under the carpet – but it is something that we should all talk about.  We should be talking about it with each other a lot, because we may be able to help each other.  Yet we hide what is going on, sometimes until it is too late.

Until I became a business owner I had no idea of the stress and anxiety involved in running a small business.  The roller coaster ride of emotions mean that one minute you are thinking everything is going great only to have is snapped away instantly when another “challenge” raises its ugly head.  This may happen once a month, once a week or a number of times a day.   Any wonder small business owners are becoming a focus for mental health awareness programs.  According to a recent Everymind study 57.6% of business owners reported stress levels outside of the normal range.

Whether we like it or not there is still a stigma attached to asking for help when you are just not coping.  Many business owners wear a mask most of the time to hide what they really feel.  I know I do.  Sometimes that mask cracks (usually in the privacy of our homes, to the detriment of those we love) but most of the time the mask is firmly in place so we can demonstrate to the world how successful and in control we are.   We don’t always have someone to talk to and share what we are feeling.

The anxiety and stress is often linked to the bank balance for small business.  There are some that are lucky enough to have great cashflow, but most small business owners are struggling.  How do you feel when you see your Business Activity Statement?  How do you feel when you call the ATO to make a payment arrangement and are spoken to with no respect or empathy by the public servant on the end of the line who has no understanding of the challenges you are facing?  How do you feel when the bank manager says “no” to you and asks why you have not managed to save money as your results look good, even though you have a stack of money tied up in Trade Debtors, or you have reinvested everything into your business?  These people have no idea what you are going through and what that means for your confidence and health.

 

Not only do I see it from my clients – I feel it too.  So here are a few things that may help you feel not so alone on your business journey.

·       Just because you are in business does not mean you are rich.

There is a perception that a business owner has heaps of money and can afford anything.  I know my family expect me to pay for everything because I am the business owner so I must have the money.  While my family are out enjoying themselves I am at home, usually working so that we can earn enough money to cover our costs.  Some weeks I cannot afford to pay myself because people have not paid my business.  Some nights I do not sleep trying to do the numbers in my head to work out how we will get through – particularly at Christmas time which is meant to be a time of joy and celebration, but not for the small business owner.  We do not have the certainty of a weekly pay cheque like others and we are at the whim of our customers.  If this sounds familiar to you, you are in the majority of small businesses.  Cashflow is the biggest factor to cause small business to fail and without doubt the biggest stress factor.

·       You are not the only one who has a payment arrangement with the ATO.

I probably don’t really need to elaborate on that but I assure you that many businesses have ATO debts and payment arrangements.

·       You do work harder than everyone else.

As business owners we are always worried about our staff and their wellbeing.  We make sure they take regular breaks and take days off when they are not feeling well.  We make sure they schedule regular holidays and leave work on time.  But what about you?  I bet you are the first to start work, the last to leave, work even if you are sick, and don’t take as many holidays as you should.  Will you be working over Easter this year?  Did you work over the Christmas break last year?  Did you continue to work while you were on holidays?  Do you check your emails and catch up on work over the weekend?  Do you even get a weekend?  Do you work late at night or early in the morning?

·       You give away your time or skills for free because that is what people expect.

How often do friends or family ask you to pop over for a beer so that you can fix their leaking tap, broken power point or whatever it is that you are skilled in.  Although beer is nice, it does not pay the bills.  We all do it, we all take advantage of other people to a certain extent, and we don’t mind a bit of it, but I am sure deep down it frustrates you.  Your time is precious and you devoted a lot of time to master your skills.  It is OK to be a little frustrated when people take advantage of you.

 

What I really want you to know is that you are not alone.  There are many people out there feeling exactly the same way you do.  Everyone copes differently.  Some throw themselves even deeper into work, others drink too much to take away the pain.    You are likely to snap when your work mask comes off and this can affect your family relationships.

I am not a counselor and I certainly don’t have the answers.  All I can do is let you know that I understand how it feels.  I rarely talk about my own struggles as I really don’t think anyone cares to listen.  If I do try to speak about how I am feeling with my family they try to tell me how to solve my problems, but that is not what I am after.  Sometimes I just want someone to listen and care.  Sometimes I just need to have a cry and get some reassurance that everything will be ok, that every problem can be solved.   Right now I am feeling pretty good about things, but that may all change by the end of the week.  My emotions are intrinsically linked to my business and I can’t tell you what will trigger the next down slide as small business is full of surprises.

If you are a business owner and feel this way please talk to someone.  If someone is talking to you, please listen and offer your support.   If you think you need professional help, don’t be afraid to ask for it.  You are taking a brave step in the right direction and that will help everyone in the long run.

When my son Joel recommended a movie called the Laundromat over the holidays, I didn’t immediately find it on Netflix and watch it.  I couldn’t quite see why a movie about a Laundry would be of interest to me.   I do not profess to being a keen housewife, and I certainly don’t iron undies!  When he followed up to see how I liked the movie and told me it was about the Panama Papers, he caught my attention.  Like the true nerd I am I had to watch this movie.

Now this movie is not for everyone. I know you may be thinking, what the hell are the Panama Papers, but for tax nerds like me, this is our type of story about scandal & corruption.  The Panama Papers were documents leaked to the press and releases to the world in April 2016.  Effectively someone at the law firm Mossack Fonseca in Panama leaked 11.5 million documents containing all the juicy details of its client’s offshore dealings to hide money and avoid taxes.  The fact that many of the names leaked were recognisable, including criminals and politicians such as Putin, added extra substance to the story that followed.

Watching this movie made me think about tax avoidance and tax evasion.  I had just been listening to a podcast on a similar subject and the same quote came up in both.  It was that of the former UK Chancellor of the Exchequer (such a fancy title) Denis Healey.  “The difference between tax avoidance and tax evasion is the thickness of a prison wall”.  Tax evasion is a crime were as tax avoidance involves using legal means to avoid paying taxes.

Although the definitions about tax avoidance talk about tax shelters and multinational companies, I believe tax avoidance is what many Australians do, avoid paying taxes?  Much of my job is around finding the legal means for my clients to pay the least tax possible.  Anyone who is negative gearing a rental property is avoiding pay tax.  Few Australians who grapple with the morality of this type of tax avoidance.

Avoiding tax has been around as long as tax has existed.  It is in our human nature to find a way to minimise the amount of tax we need to pay.  In 1696 a tax on windows was introduced in England and Wales because the bigger the house you had, the wealthier you must be.  A count of the windows was a simple solution to measure the occupant’s wealth.  Tax avoidance saw property owners blocking up windows or having one window that spanned two rooms to reduce the tax payable.  Interestingly enough, this is where the term “daylight robbery” originated.  Tax avoidance is not new, it has just become more complicated.

I am guessing you don’t have a copy of the Australian Tax Act in your bookshelf, but it is a massive piece of legislation.  In fact, there are a number of pieces of legislation that make up our tax laws, including two parts to the main legislation enacted in 1936 and 1997.  The tax legislation is an evolving beast with much of the legislation devoted to closing up the loopholes clever accountants and lawyers find to help avoid paying taxes.

So if tax avoidance is not illegal, why doesn’t everyone take advantage of tax shelters, and what is a tax shelter anyway?

Keeping it simple, to create a tax shelter a company sets up its business in a country that has a better tax rate than its own.  Australia’s company tax rate ranges between 27.5-30%.  The company tax rate in the US was 35% until Trump cut it back to 21% in 2017.  Ireland has a company tax rate of 12.5% but extra advantages reducing the rate to 6.25% for revenue tied to patents or intellectual property.  You can see why tech companies like Apple have strong interests in Ireland.  The subsidiary in the tax shelter country charges higher prices to the company operating in the home country, moving the profits to that lower tax country.  In Australia we have rules about “transfer pricing” (that is what it is called), to ensure that profits made in Australia are taxed in Australia, but it is a challenge for our authorities to monitor.  Although it seems contradictory, charging a lower company tax rate can be very good for a country as it encourages businesses to move to that country to operate.  The tax is picked up by providing jobs to people in that country who pay tax.  Apple do have employees in Ireland but without doubt it was a strategic decision to operate out of Ireland to save tax, not just because they love the rolling green hills and the Irish pubs.

Not everyone has the ability to just set up an operation in a tax haven.  Instead, they set up a shelf company in a tax haven and channel their investments through this.  A country like Panama offers no taxes for foreign companies, and it has privacy agreements that prevent it from sharing information with other tax jurisdictions.  It is the perfect place for money to be hidden from the tax authorities.  It is also the perfect place for criminals to hide their money.  The lines between tax avoidance and tax evasion start to blur.

The reason we don’t all set up tax shelters is that it is extremely expensive and few of us make enough money to see any benefit.  We have other ways of avoiding tax (legally) in Australia such as negative gearing.  Also, for many of us we feel we have certain moral obligations to contribute taxes to our country.  Without taxes, the country would not operate.  Although we hear stories of our taxes being wasted on things we feel are not useful, the vast majority of our taxes are critical to maintaining infrastructure such as schools, hospitals, roads and defence.

Next time you are coming up with a scheme to reduce the amount of tax you pay, think about it and work out whether it is tax avoidance of tax evasion.  Just a little hint, taking cash money and not declaring it is tax evasion.  It is illegal, and the days of hiding that money from the authorities are drawing to a close.  There are many examples of small scale tax evasion that we see every day, much of it that would not be detected by the authorities.  Technology and tax legislation will continue to evolve to stamp out both avoidance and evasion, putting all tax payers on a level playing field eventually.

If you are interested in the Panama Papers or tax in general, I suggest you nerd out for a few hours and watch The Laundromat simply to understand what it is all about.  Another similar recommendation is The Big Short which is about the US loan market practices that lead to the Global Financial Crisis.  Both movies take something really complex and break it down to something a little easier to understand.  I know it is not everyone cup of tea so I am not recommending it to those who would prefer to watch Married at First Sight or the Real Housewives.  Although secretly, I enjoy watching those too.

Fringe benefits are an important part of business and can be a useful way of attracting quality staff. However, if you’re going to provide fringe benefits to your staff, you need to be aware of your taxation obligations.
Fringe Benefits Tax (FBT) can be difficult to understand, particularly when the government constantly makes changes to legislation. The experienced staff at Jigsaw Tax and Advisory can assist with all your FBT needs.
Here are five key changes to FBT which will take effect from 2018 year onwards:

Increased tax rates – The FBT rate rose from 47 to 49 per cent in the FBT years ending in 2016 and 2017. The rate will nowdrop back to 47 per cent in the 2018 year.

Not-for-profit changes – There is now a $5,000 cap on top of the existing exemption caps for salary-packaged meal entertainment and entertainment facility leasing expenses for certain employees. These new caps require expenses to be reported in the FBT for this year.

New standards (entertainment) – Employers are now required to use a specific reporting method when submitting tax returns. The ‘concessional valuation rules ’ have been changed. For the current FBT year, employers can’t use the 50-50 split method or the 12-week register methods for valuing salary-packaged entertainment.

No tax for devices – Small businesses can now avoid incurring a FBT liability if they provide employees with multiple portable electronic devices that have substantially similar functions. This is particularly relevant for businesses that may need to provide employees with devices such as laptops, tablets, mobile phones and GPS’s.  Previously, small business employers were subject to FBT if they provided two devices that had significantly identical function, e.g. smartphones can perform similar or identical functions to laptops and tablets. As long as the multiple devices are primarily used for work, businesses will not have to claim them on FBT for the first time this year.

Three-year reporting requirements – The amendment period for a FBT return is three years, however, the ATO can extend that period if it deems it necessary, particularly if it believes an entity is involved in fraud or tax evasion. From this year onwards, employers who receive employee contributions that offset FBT must be registered and begin lodging FBT returns showing the contributions made by the employees. This means businesses need to ensure records are kept for an appropriate amount of time.