CONNECT MARCH 2014 ISSUE
Tax updates leading into the end of financial year Business owners take note; the coming months will see a number of tax and superannuation changes come into effect for Australian businesses. The changes relate to the launch of the National Disability Insurance Scheme, Fringe Benefits Tax (FBT) rates and the Superannuation Guarantee rate.
before incurring any FBT are as follows: $17,000 gross-up
$30,000 gross-up
New FBT rates – 1 April 2014
Type 1 (GST-inclusive)*
$8,172
$14,421
While the increase in marginal tax rates will take effect from 1 July 2014, the corresponding increase in the FBT rate to 47% will commence on 1 April 2014.
Type 2 $9,009 (GST-exclusive)*
$15,899
This change will affect the ‘Gross-up rates’ in the calculation of FBT, which will affect salary packaging arrangements. The following gross-up rates will apply from 1 April 2014, ie they will start to apply for the FBT year ending 31 March 2015 Gross-up rates Type 1 (GST-inclusive)
2.0802
Type 2 (GST-exclusive)
1.8868
The change in the gross-up rates will also affect the annual FBT exemption capping threshold applicable to employees of public benevolent institutions, public hospitals and rebatable employers. The maximum cash values of fringe benefits that can be provided to employees
INSIDE THIS ISSUE
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*If both Type 1 and Type 2 fringe benefits are provided to an employee, the total gross-up value of the benefits must not exceed $17,000 or $30,000, depending on the employer’s FBT status, to avoid incurring any FBT liability. Accordingly, salary packaging arrangements may need to be reviewed and updated to reflect the reduction in the extent of FBT exemption that is available to the affected employees. As an indicative, the reductions are estimated to range from approximately $3.00 to $7.00 per fortnight. Other changes to keep in mind •B enchmark interest rate for the FBT year ending 31 March 2015 is 6.45% •C ar parking threshold for the FBT year ending 31 March 2015 is $8.03. National Disability Insurance Scheme & New income tax rates – 1 July 2014
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The launch of the National Disability Insurance Scheme (NDIS) will see the Medicare levy increase from 1.5% to 2.0% effective from 1 July 2014. As a result, all marginal tax rates will also increase by 0.5% from this date as follows: Income
2013-14 2014-15
$0 - $18,200
Nil
Nil
$18,201 - $37,000
20.5%
21.0%
$37,001 - $80,000
34.0%
34.5%
$80,001 - $180,000
38.5%
39.0%
$180,001 +
46.5%
47.0%
New Superannuation Guarantee rate As a reminder, since 1 July 2013, the Superannuation Guarantee rate is now 9.25% of ordinary time earnings. This rate will increase to 9.5% from 1 July 2014, subject to draft legislation introduced by the Government, which may delay the increase to 9.5% for 2 years to 1 July 2016. Remember to speak to your Powers Accountant about tax planning to avoid any last minute issues that could arise. Call us in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
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