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As the end of financial year gets closer, some investors are thinking about the most effective ways to boost their super balance, particularly with an increase in the caps on contributions from 1 July.

We all know how hard it is to find good employees and also how important it is to hold onto our good team members. While some workforces shrink it can often be our good people that get loaded up in the workplace. Not kept in check this can leave to employees burring out. Burnout can be described as a severe state of physical and emotional exhaustion, and in the workplace, it can arise from prolonged job stress and inadequate support. It progresses through stages: exhaustion, cynicism, and reduced accomplishment. Ignoring burnout can lead to employees having decreased productivity, increased absenteeism, turnover, and mental health issues. Where we have good relationships with our team, we can begin to see the early signs before it becomes a problem. However, it can also present in different ways including absenteeism, performance, behaviour. The good news is that it can be prevented. Firstly, through good open communication and that includes listening. Secondly, we need to set our team members realistic goals and provide adequate resources and training. As managers you need to be role models of good behaviour and promote a fair but achievable work life balance. No one needs an employee that is not functioning at their best, treat and manage team members well and your business will only prosper from it.

Businesses looking to attract and retain staff often provide employee benefits, on top of salary, as a way to sweeten the deal. Many of these benefits (but not all) can have potential tax consequences – known as fringe benefits tax (FBT) - so it is important to weigh up the effect on your business. FBT is separate to income tax and is calculated on the value of the benefit provided to the employee. Employers must work out the amount of FBT they owe each year and lodge a return. It is worth noting that the FBT year is not the same as the financial year. It runs from 1 April to 31 March. What to report Most fringe benefits must be reported to the ATO. Some examples of benefits include: the use of a company car outside of work; free parking; gym membership; payment of school fees; tickets or vouchers for concerts, meals or movies; and living accommodation. Some benefits do not need to be reported and do not incur FBT.i These include a number of benefits provided to employees working in remote areas, such as living assistance. Other fringe benefits that are exempt from tax include work-related items such as portable electronic devices, computer software, protective clothing and tools of trade. If the taxable value of an employee’s fringe benefits for the FBT year (1 April to 31 March) is less than $2,000, no reporting is required. In adding up the fringe benefits, the ATO says you will need to make sure you include the employee’s part of any benefits they share with other employees as well as the value of any benefits provided to the employee’s associates, such as their partner. Doing the numbers For each employee, you’ll need to calculate their ‘reportable fringe benefits amount’ (RFBA) by multiplying the total taxable value of the benefits provided by an ATO ‘gross-up rate’. The Type 1 gross-up rate is used where a GST credit entitlement is applicable to the benefit. The Type 2 gross-up rate is used where there is no GST credit entitlement applicable to the benefit. (For the FBT year ending 31 March 2023, the Type 1 rate is 2.0802 and the Type 2 rate is 1.8868.) This calculation grosses up the pre-tax income the employee would have had to earn to buy the benefits themselves. FBT and salary sacrifice Benefits provided to employees through salary sacrificing may also attract FBT. Under a salary sacrificing arrangement, an employee agrees to forgo part of their salary in return for benefits of a similar value, such as more super or a car. As a result, the employee pays less income tax and the employer pays FBT on the benefits provided. Extra super contributions made under a salary sacrificing arrangement are not subject to FBT and are treated differently. They are considered employer contributions and are taxed in the super fund. Claiming deductions Employers can claim income tax deductions for the FBT they are required to pay. You can also claim an income tax deduction and GST credits for the cost of providing the fringe benefits. The ATO provides some suggestions for reducing FBT liability. For example, employers do not incur an FBT liability if you give an employee a benefit they would have been able to claim as an income tax deduction if they had paid for it. Your FBT liability can also be reduced if the employee contributes towards the cost. Fringe benefits can be a valuable and strategic tool in your recruitment and retention toolbox. We can help you understand and comply with the reporting requirements and be clear about the impact of FBT on your business.  i Fringe benefits tax - a guide for employers | Legal database (ato.gov.au)

Understanding the New $3m Super Tax The much-debated tax on superannuation balances over $3 million is inching closer and those who may be affected should ensure they have considered the implications. Although it is not yet law, the Division 296 tax should be taken into account when it comes to investment strategy and planning, particularly in relation to any end-of-financial-year contributions into super. Tax for higher account balances The new tax follows a Federal Government announcement it intended to reduce the tax concessions provided to super fund members with account balances exceeding $3 million. Once the legislation passes through Parliament and receives Royal Asset, Division 296 will take effect from 1 July 2025. Division 296 legislation imposes an additional 15 per cent tax (on top of the existing 15 per cent) on investment earnings of a super account where your total super balance exceeds $3 million at the end of the financial year.(i) The extra 15 per cent is only applied to the amount that exceeds $3 million. Given the complexity of the new rules, it is important to seek professional advice so you can make informed decisions. How the new rules work A crucial part of the new legislation is the Adjusted Total Super Balance (ATSB) , which determines whether you sit above or below the $3 million threshold. When assessing your ATSB, the ATO will consider the market value of assets regardless of whether or not this value has been realised, creating a significant impact if your super fund holds property or speculative assets. The legislation also introduces a new formula for calculating your ATSB for Division 296 purposes. The legislation outlines how deemed earnings will be apportioned and taxed, based on the amount of your account balance over the $3 million threshold. Negative earnings in a year where your balance is greater than $3 million may be carried forward to a future financial year to reduce Division 296 liabilities. If you are liable for Division 296 tax, you can choose to pay the liability personally or request payment from your super fund. Strategic rethink may be needed For many fund members, superannuation remains an attractive investment strategy due to its favourable tax treatment.(ii) But those with higher account balances need to understand the potential effect of the Division 296 tax. For example, given the new rules, you may need to consider whether high-growth assets should automatically be held inside super. Holding long-term investments that may be more difficult to liquidate, such as property, within super may be less attractive in some cases, because the new rules create the potential to be taxed on a gain that is never realised. This could occur where the value of an asset increases during a financial year but drops in value by the time it is actually sold. For some, holding commercial property assets (such as your business premises) within your SMSF may be less attractive. It will also be important to balance asset protection against tax effectiveness. For some people, the asset protection provided by the super system may outweigh the tax benefits of other investment vehicles, such as a family trust. Division 296 will require more frequent and detailed asset valuations, so you will need to balance this administrative burden with the tax benefits of super. Estate planning im plications Your estate planning will also need to be revisited once Division 296 is law.The tax rules for super death benefits are complex and should be carefully reviewed to ensure you don’t leave an unnecessary tax bill for your beneficiaries. If you still have many years to go before retirement and hold high-growth assets in your fund, you will need to closely monitor your super balance. If you want to learn more about how Division 296 tax could affect your super savings, contact our office today. i https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf ii https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/understanding-concessional-and-non-concessional-contributions

Getting paid on time is essential for managing cash flow and establishing a profitable business. And while staying on top of unpaid invoices helps, there may be times when a customer can’t or won’t pay. Here’s how to handle it.

Understanding financial health. Financial health is an important part of our lives. When we take care of our financial health we can better manage financial stress and achieve our financial goals.

If you’ve ever been thrown in the deep end to help organise an event, whether it be the school cake stall, your sister’s wedding or a workplace training day, you’ll know that putting on an event can be a a huge ask! Getting it right can bring great results – like raising lots of money […] The post How to create a memorable event appeared first on BMO Accountants.

Investing successfully and improving your investment portfolio can be as much about minimising mistakes as trying to pick the ‘next big thing’. It’s all about taking a calm and considered approach and not blindly following trends or hot tips. Let’s delve into some of the most prevalent investment mistakes and look at the principles that […] The post Investing mistakes to avoid appeared first on BMO Accountants.

Prime Minister Anthony Albanese has announced proposed changes to address ongoing cost of living pressures with all 13.6 million Australian taxpayers receiving a tax cut from 1 July 2024, compared to the tax they paid in 2023-24.i Now is the time to assess what it means to your hip pocket and what implications it may […] The post Tax changes – what it will mean to me appeared first on BMO Accountants.

The rules around making some types of super contributions have been relaxed in recent years, so it’s worth exploring the different opportunities available to you before making a large contribution.i What are contribution caps? Given the tax-effective environment of Australia’s super system, there are annual limits on how much you can contribute each financial year. […] The post SMSFs: What happens if you exceed your super caps appeared first on BMO Accountants.

“If you can measure it, you can manage it.” – Robert Kaplan Running a healthy small business is no mean feat, and business owners have certainly had some challenges thrown at them over the past few years. However, small businesses are renown for being agile, resilient, and proactive. If you are working hard to achieve the […] The post Measure it, manage it – business milestones to success appeared first on BMO Accountants.