And the most unsettling thing for SMEs is uncertainty. Good times or bad times SMEs are often better positioned to adapt quickly to change providing they know what to expect.
So what predictions can we make with a reasonable degree of certainty?
Tax effective gift giving might not be at the top of everyone’s mind but hey, we’re accountants and we can’t help it. So, for all those non-accountants, here are our top tips for giving to those you intend (and not the tax office):
Giving to your team
Christmas celebrations at your work on a working day are likely to be exempt from FBT.
Keep the cost of your celebrations per person below $300 to make sure the event is a minor benefit for FBT purposes and exempt from FBT (including meals, beverages, entertainment, etc.,).
Keep any Christmas presents below $300 per person and ensure they are ‘one-off’ gifts. They need to be ad hoc to be exempt from FBT.
You can’t deduct the cost of your Christmas celebrations for team members unless FBT applies.
The Christmas season affects different businesses in different ways and can have a significant impact on you.
For some, it is boom times but for others, a period of significant dislocation. Because of these differences, there is not a one size fits all answer to the best way to prepare and manage the season. You need to look at your business model and how the season affects your customers and suppliers. Armed with this information, what you need to be doing should be reasonably predictable.
Any period where operating conditions change means that there can be an impact on your profitability and cash flow. You need to look at both of these areas.
Dear Santa,
Thank you for the opportunity to provide advice on your Australian tax position. We are concerned by a number of areas of your operation that will no doubt come under scrutiny by the ATO. We note these below:
Most goods imported into Australia with a value above $1,000 are subject to GST. With approximately 4,329,000 children in Australia on your list, averaging $40 per gift (depending on whether they have been naughty or nice), we estimate that you will be liable for GST in excess of $17,317,192. We need to discuss tax structuring urgently.
We are also concerned that you also may face other commercial issues from Australian retailers who will perceive your ‘gift’ giving as a hostile attempt to gain market share (please google recent comments by Gerry Harvey and GST).
If this is you it might be an idea to have another think about it because the beneficial ownership of the company and the business rests with the shareholders. That’s OK while the status quo remains but the moment there is any change in the business the issue of who holds the shares becomes important.
Hayes Knight is the brand name of the Hayes Knight group, a network of independent firms across Australia and New Zealand. Each firm within the Hayes Knight group is, and acts as, a separate legal entity. Liability for each Australian entity is limited by a scheme approved under the Professional Standards Legislation.
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