2023 FBT instructions
On 6 March 2023, the ATO published instructions for completing the 2023 Fringe benefits tax (FBT) return, including examples.
The instructions include:
- What’s new in FBT
- FBT rates and thresholds
- Completing your 2023 FBT return – all employers
- 2023 FBT return calculation details – taxable employers
- Not-for-profit employers – completing your 2023 FBT return
- Item 23 Fringe benefit categories
- Keeping records for FBT
- Calculation rates
- Worked examples – not-for-profit employers – completing your FBT return.
The due dates for lodgment and payment of 2023 FBT are:
• 22 May, if the return is lodged via paper — as the statutory due date of 21 May falls on a weekend this year. This due date also applies to your clients who self-prepare
• 26 June, if the return is lodged via the Practitioner Lodgment Service (PLS) — as the lodgment program due date of 25 June falls on a weekend this year.
FBT electric vehicles
The ATO has released a fact sheet on fringe benefit tax (FBT) obligations where an employee is provided with an electric vehicle and associated items for their private use.
From 1 April 2025, private use of a plug-in hybrid electric vehicle is no longer eligible for the exemption, unless both of the following apply:
- use of the plug-in hybrid electric vehicle was exempt before 1 April 2025; and
- a financially-binding commitment exists to continue providing private use of that vehicle on or after 1 April 2025.
Five requirements must be met for the exemption to apply:
• the benefit is a car benefit;
the vehicle must be a car, which is a zero or low emissions vehicle (vehicle requirements);
the car was first held and used on or after 1 July 2022 (held and used date requirements);
• The car is used or available for private use by a current employee or their associate (including family members) (recipient requirements); and no amount of luxury car tax (LCT) has become payable on the supply or importation of the car (LCT requirements).
If the combined taxable value of certain benefits and fringe benefits provided to an employee exceeds $2,000 in an FBT year, the grossed-up value of those benefits must be reported on the employee’s payment summary or through Single Touch Payroll for the corresponding income year. This includes the value of car benefits arising from the private use of electric vehicles.
Carbon credit units
On 6 March 2023, Treasury released exposure draft legislation and explanatory material on tax changes to provide concessional tax treatment to certain primary producers that generate revenue from the sale of Australian Carbon Credit Units (ACCUs). This proposed measure was announced by the former government on 29 March 2022 as part of the Federal Budget 2022–23.
The exposure draft legislation proposes to enable eligible primary producers to treat the net proceeds from the sale of ACCUs they first held on or after 1 July 2022 as primary production income for the purposes of the Farm Management Deposit scheme and accessing income tax advice expert Sydney averaging.
The taxing point for ACCUs held by eligible primary producers will also be set to the point of sale, instead of being taxed based on changes in the value of their ACCUs each income year.
Failure to keep records
On 13 March 2023, the ATO updated PS LA 2005/2 Penalty for failure to keep or retain records (Practice Statement) to allow the Commissioner to issue a tax records education direction (direction to educate) to a business instead of imposing a penalty.
The purpose of the direction is to help educate businesses about their tax-related record-keeping obligations.
An entity that is given a direction must complete an ATO-approved online record-keeping course. Successful completion of the course by the due date means the entity is no longer liable for the penalty.
The Practice Statement has been updated as a result of the Treasury Laws Amendment (2022 Measures No. 2) Act 2022, which received Royal Assent on 12 December 2022.
Digital games tax offset
On 7 March 2023, the ATO released information on the Digital Games Tax Offset (DGTO). The measure is contained in Schedule 1 to the Treasury Laws Amendment (2022 Measures No. 4) Bill 2022 which is currently before the Senate.
The DGTO will provide eligible game developers with a 30% refundable tax offset for qualifying Australian development expenditure from 1 July 2022.
It will be available for completion, ongoing development or porting of digital games, subject to:
- eligibility criteria set out in Division 378 of the Income Tax Assessment Act 1997, including certification by the Arts Minister; and
- at least $500,000 of qualifying expenditure.
The offset is capped at $20 million per company (or group of companies where each other company
It is connected with or is an affiliate of the company) per income year. Reaching this cap would require approximately $66.7 million in eligible expenditure.
Applicants must be companies that are:
• Australian tax residents; or
• foreign tax residents with a permanent establishment in Australia.
The cents per work hour have increased from 52 cents to 67 cents and it covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables.
Expenses that can be claimed separately:
• Decline in value of assets and equipment used while WFH.
• The repairs and maintenance of these assets.
• The costs associated with cleaning a dedicated home office.
Taxpayers are not required to have a dedicated home office to claim WFH expenses under this method.
Taxpayers need to keep a record of all the hours worked from home for the entire income year. The ATO will not accept estimates, or a 4-week representative diary or similar document, under this method from 1 March 2023.
Records of hours worked from home can be in any form provided they are kept as they occur, for example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.
Records must be kept for each expense that taxpayers have incurred which is covered by the fixed rate per hour.
Actual cost method
The actual cost method hasn’t changed. Taxpayers can claim the actual work-related portion of all running expenses.
INDIVIDUALS AND EMPLOYEE’S TAX WFH deductions
Taxpayers can choose either the ‘actual cost’ or the ‘fixed rate’ method to claim Working From Home-WFH deductions. Only the fixed rate method is changing.
The revised fixed rate method applies from 1 July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.
From 1 July 2022 to 28 February 2023, the ATO will accept a record representing an estimate of the total number of hours worked from home (such as a 4-week diary). From 1 March 2023 onwards, taxpayers must keep records of the total number of hours they actually work from home.
Revised fixed rate method
The changes are:
On 6 March 2023, the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022 (the Bill) was passed by the Senate without amendment and awaits Royal Assent.
The Bill amends the Paid Parental Leave Act 2010 (the PPL Act) to:
• Extend parental leave pay from 18 weeks to 20 weeks from 1 July 2023, with two weeks reserved on a ‘use it or lose it’ basis for each claimant. Dad and partner pay will be abolished.
• Remove the notion of ‘primary’, ‘secondary’ and ‘tertiary’ claimants and the requirement that the primary claimants of parental leave pay must be the birth parent, allowing families to decide who will claim first and how they will share the entitlement. The permission requirements for parents other than a birth parent will also be revised.
• Make paid parental leave consist of only flexible paid parental leave days, allowing claimants to take the payment in multiple blocks, as small as one day at a time, within two years of the birth or adoption, and remove the requirement to not return to work in order to be eligible.
• Introduce a $350,000 family income limit, under which families can be assessed if they do not meet the individual income test.
• Expand eligibility to allow an eligible father or partner to receive parental leave pay regardless of whether the birth parent meets the income test, residency requirements or is serving a newly arrived resident’s waiting period.
Client-agent linking
The ATO has updated the rollout schedule of the client to-agent linking process in online services to include government entities, effective from 24 February 2023.
The client-to-agent linking process strengthens the security of the ATO’s online services to help protect agents and their clients against fraud and identity theft.
If agents are unsure if their clients are required to complete an agent nomination, agents can check by trying to add their clients in their online services. Agents will receive an error message if their clients must complete a nomination.
Interest on early payments
The ATO has advised that taxpayers are entitled to interest on early payments (IEP) when they pay certain tax liabilities more than 14 days before the due date. IEP is paid directly to a taxpayer’s nominated bank account, so they need to make sure their financial institution account details are up to date.
If the taxpayer’s bank account details aren’t up to date, they will only receive a cheque for IEP if the amount is over $9.99.
Lesser amounts will remain on a taxpayer’s account for a maximum of 12 months provided the amount has not been offset against an existing tax debt or paid with another credit.
If the taxpayer’s bank account details are still not up to date after 12 months, then the IEP credit will be issued by cheque.
If practitioners or taxpayers update the taxpayer’s bank account details within those 12 months, the IEP credit will remain on their account and be paid to the bank or trust account after the 12 months has passed.
Payment of an IEP credit retained on an account can be requested:
• through practice mail in Online Services for Agents
• through secure mail in Online services for business
• in writing.
PAYG tax installments
PAYG instalments allow taxpayers to make regular prepayments towards the tax on their business and investment income.
Taxpayers will be automatically entered into PAYG instalments if they earnt over the entry threshold in business and investment income in their latest lodged tax return.
If taxpayers are starting PAYG instalments, they can start making payments once they receive a BAS or instalment notice from the ATO.
Taxpayers can vary PAYG instalments if their current PAYG instalments could result in them paying too little or too much tax for the year. Practitioners can vary taxpayers’ PAYG instalments through their next activity statement when it is available in the practitioner lodgment service practice software, or in Online Services for Agents.
Variations must be made on or before the payment due date. The varied amount will apply for all the remaining instalments unless another variation is made before the end of the income year.
GOODS AND SERVICES TAX GST assurance
The ATO has announced that as part of the expansion of the Top 1,000 assurance program to include assurance for GST, the ATO has introduced a compulsory element to assure that the right amount of GST has been paid. This is known as the GST analytical tool (GAT).
The ATO uses the GAT to analyze variances between the business activity statement outcomes and the audited financial statement accounting outcomes.
Since the change, the ATO has found that taxpayers are able to substantially complete the revenue side of the GAT with little assistance from the ATO.
GST fraud
On 17 February 2023, the ATO issued a media release announcing a significant milestone in its crackdown on the biggest GST fraud in Australia’s history, Operation Protego.
The scheme in concern involves offenders inventing fake businesses and Australian business number (ABN) applications, then submitting fictitious Business Activity Statements (BASs) in an attempt to gain a false GST refund.
A raft of enforcement activity has been undertaken across the country by the ATO-led Serious Financial Crime Taskforce. On 31 December 2022, the ATO has taken compliance action on more than 53,000 clients and stopped approximately $2.5 billion in fraudulent GST refunds from being paid to individuals seeking to defraud the system. Two individuals have been sentenced to jail time for their crimes so far, and this follows 87 earlier arrests across the country, with many more to come.
SUPERANNUATION Increased super tax on large balances
The Federal Government has announced a plan to increase the rate of taxation on future earnings of superannuation funds to 30%, instead of the current rate of 15%, for superannuation member balances above $3 million.
The key points of the measure are as follows:
• Individuals with total superannuation balances (TSBs) over the $3 million threshold at the end of a financial year would be subject to an additional tax of 15% (additional tax) on the proportion of earnings for that year corresponding to balances above the threshold.
• Earnings on superannuation member balances below $3 million will continue to be taxed at the current rate of 15%.
• No limit will be imposed on the size of account balances in the accumulation phase’
• Earnings would be calculated with reference to the difference in the TSB at the start and end of the financial year, adjusted for withdrawals and contributions.
• Negative earnings would be carried forward and offset against the additional tax in future years’ tax liabilities.
• Individuals will have the choice of either paying the additional tax out-of-pocket or from their superannuation funds. Individuals who hold multiple superannuation funds can elect the fund from which the additional tax is paid. The additional tax will be separate from an individual’s personal income tax, similar to the existing Division 293 tax.
• Treasury will consult further on the appropriate treatment for defined benefit interests to ensure that it is broadly commensurate with the treatment for interests in accumulation funds.
The changes are proposed to apply prospectively from 1 July 2025 and are expected to impact less than 80,000 superannuants. The Government currently projects that the proposed changes will raise $3.2 billion over five years.
Super clearing house:-
On 8 March 2023, the ATO advised that practitioners and taxpayers can manage requests to amend incorrect period dates entered in Small Business Super Clearing House (SBSCH) payment instructions without needing to call the ATO.
If taxpayers can view the payment instructions under the ‘Current’ tab in the clearing house, it means the payment hasn’t been processed. To correct these instructions:
• the payment instruction will need to be deleted; and
• once deleted, a new payment instruction will need to be lodged with the correct period dates.
If viewing payment instructions via the ‘historical’ tab in the clearing house, the period dates can’t be amended as the payment has been processed. Taxpayers will need to keep records that reflect the correct period date that was meant to be entered on the payment instruction.
Taxpayers should also ensure that their employees are made aware of the incorrect period dates associated with their payment.
since last financial year and the ATO is urging Australians to check their myGov account to see if some of the money is theirs.
Superannuation becomes ‘lost super’ when it is still held by the fund but the member is uncontactable or the account is inactive. Superannuation funds currently hold $10.4 billion in lost superannuation.
Superannuation providers are required to report and pay superannuation to the ATO once it reaches
certain unclaimed superannuation money category requirements. The ATO currently holds $5.6 billion in superannuation, an increase of $1.6 billion (40%) since 2019.
Lost super
The ATO has advised that new data reveals that there is $16 billion in lost and unclaimed superannuation across Australia. This is an increase of $2.1 billion determined that the NSW surcharge provisions for purchaser duty and land tax are inconsistent with international tax treaties entered into by the Federal Government with New Zealand, Finland, Germany and South Africa.
Effective immediately, individuals who are citizens of the nations concerned purchasing residential-related property or land in their own capacity will no longer be required to pay surcharge purchaser duty or surcharge land tax.
OTHER
NSW Surcharge:-
On 21 February 2023, the NSW Government Surcharge purchaser duty or surcharge land tax liability for non-individuals, such as corporations, trusts or partnerships that arises because of an entity’s affiliation with these nations, may also be affected by the international tax treaties.
Refunds may be available for purchasers/transferees, and landowners, from the nations concerned who paid surcharge purchaser duty or surcharge land tax on or after 1 July 2021.
DGR revocations :-
On 8 March 2023, the ATO advised that most non government deductible gift recipients (DGRs) needed to be a registered charity by 14 December 2022 to remain eligible for DGR endorsement.
An eligible DGR must:
• be operated by a registered charity or an Australian government agency; or
• be an ancillary fund or a DGR that is listed by name in tax legislation.
The ATO have recently reviewed non-government DGRs against the requirements to be a registered charity or operated by one, and are now beginning to revoke the DGR endorsement of those that are no longer entitled.
DGRs that don’t meet the eligibility requirements Business Tax Compliance Guidance Sydney and haven’t been approved by the ATO for a 3-year extension will have their DGR status revoked. DGRswill receive a notice with the date, reason for revocation and their right to review the decision.
If a DGR’s status is revoked, the DGR can re-apply for endorsement once it satisfies the eligibility requirements. To register as a charity, visit the Australian Charities and Not-for-Profits Commission’s (ACNC) website to check the charity registration eligibility requirements.
NSW payroll tax case :-
On 14 March 2023, the New South Wales (NSW) Supreme Court of Appeal (the Court) handed down its decision
in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40. The case concerned an appeal from the Appeal Panel of the NSW Civil and Appeal Tribunal (NCAT) regarding the imposition of payroll tax on certain arrangements between medical practices and medical practitioners.
The taxpayers operated a number of medical practices that employed nurses and administrative staff. The medical practices also engaged the services of medical practitioners in accordance with a written agreement, supplemented with informal arrangements. The case operated under the presumption that the written agreements were representative of the actual arrangement.
A key feature of the written agreement was that the medical practice would collect bulk billing proceeds from clients and pay 70% to the medical practitioners. The medical practice kept the remaining 30% to represent the fees for the services provided (such as the nurses and administrative support).
At first instance, the NCAT relied on the decision of Commissioner of State Revenue v The Optical Superstore Pty Ltd [2019] VSCA 197 (OSS case) and held that the arrangement was a relevant contract as, although the medical practitioners were providing services to individuals, they were also providing services to the medical practices. As a result, the taxpayer was an employer of the medical practitioners for the purposes of the Act. The Appeal Panel of the NCAT did not overturn the finding of fact, noting that the outcome was open for the member to make.
For similar reasons, the Court did not overturn the decision of the NCAT, holding that there was no question of law for the Court to address. The Court was of the view that the finding by the NCAT was open for the Senior Member to make following the precedent set in the OSS Case.
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