Tax efficient gift giving
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.
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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:
GST
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).
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NSW only – Payroll tax rebate for creating new jobs
Did you know you can get a payroll tax rebate for employing more staff? A new scheme by the NSW Government gives employers a payroll tax rebate of up to $4,000 per employee (equivalent to the annual payroll tax bill for one employee on an average wage).
So, if you added five new team members in new jobs that could be $20,000 less to pay in payroll tax over the next two years. The rebate is paid on the first and second anniversary of the team member’s employment. But, as always, there are a few provisos:
Don’t pay more tax than you need to
If you are finalising your end of financial year accounts and calculating your tax position, keep in mind that there are still options available to save you tax.
One of these options impacts on the valuation of your trading stock and if stock is a material asset in your business, you should most certainly consider it. This option provides you with different valuation methods that can be applied to your trading stock.
The majority of businesses value their trading stock at cost and in many cases this is the right valuation approach. However the Tax Act gives you the choice of valuing your stock at the lower of cost, market, or replacement value.
Predictions and realities for the new financial year – What you need to know in 2011/2012
It’s a new financial year and with it comes a series of changes and challenges. The central message for the new financial year is ‘cash is king’ and will remain so for some time to come.
While the economy is performing well, consumers are wary about parting with their cash. Part of the problem is that around 50% of Australia’s growth is coming from 10% of the economy. For the rest of the economy, petrol prices are high, interest rates are likely to rise, and the rate of debt default is at record highs.
Consumer sentiment shows that no one really feels as secure as the headline economic data indicates so discounting and long decision making processes are likely to continue.
For business, take the ‘cash is king’ message to heart. Some very high profile and established businesses have dissolved recently so stick to your trading terms and watch your debtors or you may be caught out by someone else’s problem.
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