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Tax News and Updates December 2022


Claiming losses relating to collapse of FTX crypto exchange


The collapse of the FTX crypto exchange has left around 30,000 Australians on the list of more than 1 million unsecured creditors worldwide.


Taxpayers will seek to claim those losses as early as possible either as a capital loss which can only be offset against capital gains, a revenue loss, or as a business of crypto trading.


The capital loss would not be available until the appointed administrator or liquidator issues the relevant loss declaration statement – this process can take many years so investors won’t be able to immediately offset the losses against capital gains.


Where taxpayers wish to claim the losses against their other income either on revenue account, or as a business of crypto trading, they can expect close scrutiny from the ATO. There would likely be similar issues with respect to the timing of the loss as the crypto accounts are frozen and therefore cannot be accessed.



Proposed additional compliance obligations for ABN holders


Treasury has released for consultation exposure draft legislation and draft explanatory materials to give effect to the announcement in the Federal Budget 2019−20 regarding additional compliance obligations for ABN holders. Broadly, the draft legislation seeks to make ongoing ABN registration contingent on ABN holders meeting 2 additional obligations to:

  • comply with income tax return lodgement requirements; and

  • annually update the accuracy of their details on the Australian Business Register (ABR).

In particular, the exposure draft legislation proposes to amend the A New Tax System (Australian Business Number) Act 1999 by providing that:

  • in addition to the Registrar’s existing cancellation powers, the Registrar may cancel a person’s ABN where that person has two years of outstanding income tax lodgement obligations. The Registrar may also cancel a person’s ABN if that person fails to confirm the accuracy of their details with the Registrar or fails to confirm they still require an ABN.

  • in addition to the Registrar’s existing reinstatement obligations, if a person’s ABN has been cancelled because of a failure to lodge their income tax returns, the Registrar must reinstate that person’s ABN if the Registrar is satisfied the person has made arrangements with the Commissioner to lodge the relevant tax returns. The Registrar must also reinstate the person’s ABN if the person updates their details and confirms they require an ABN with the Registrar.

  • an ABN holder may notify the Registrar in the approved form that they still require an ABN and that all the information they have given to the Registrar remains accurate and complete.


FBT exemption for electric cars bill passes senate


The Treasury Laws Amendment (Electric Car Discount) Bill 2022 was passed by the Senate (with a few amendments) on 25 November 2022.


From 1 July 2022, an FBT exemption will apply for battery, hydrogen fuel cell and plug-in hybrid electric cars that have a first retail price below the luxury car tax threshold for fuel-efficient cars of $84,916 for the 2022-23 year. One of the amendments made is that plug-in hybrid electric cars will only get the benefit of the FBT exemption up to 1 April 2025.


The Labor Government claims an employer offering a $50,000 EV to an employee as a fringe benefit could save up to $9,000 a year.


It also claims that individuals using a salary sacrifice arrangement to pay for the same model could save up to $4,700 a year.


The ATO will also issue guidance on when household charging technology is able to be included within FBT-exempt vehicle packages.


Employers will still need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount.



Taxation issues with office Christmas parties


Hosting an office Christmas party has income tax, GST and fringe benefits tax (FBT) implications which need to be considered as follows:


(i) Christmas party held on the business premises

Holding the Christmas party on a working day on the business premises is usually more tax effective than holding the party off-site. Where a Christmas party is hosted on-site, expenses such as food and drink (including alcohol) for employees are exempt from FBT (with no dollar limit). However, a tax deduction or GST credit cannot be claimed by the business.


Where an employee’s spouse or a family member (i.e. associates) attends the Christmas party and the cost attributable to each associate is $300 or more inclusive of GST, the business will incur FBT on the associate’s portion of the food and drink. A tax deduction or GST credit can also be claimed on that portion. The cost of clients attending the party are not subject to FBT, however no tax deduction or GST credit can be claimed on their portion of the cost.


Where the Christmas party is held on the business premises on a working day, with only employees and clients attending, the entire cost is tax deductible, as long as no alcohol is provided and only finger food or a light meal is given. In this situation, the business will not incur FBT and a GST credit can be claimed on the entire cost.


(ii) Christmas party held off the business premises

Christmas parties held off the business premises are exempt from FBT where the cost for the employee and their associates (e.g. family members) is each less than $300 inclusive of GST. However, no tax deduction or GST credit can be claimed. The cost of clients attending the party is not subject to FBT, and no tax deduction or GST credit can be claimed on their portion of the cost.


Certain benefits provided to employees at the Christmas party are considered separately when applying the $300 minor benefits exemption. For example, a Christmas party is held at a restaurant costing $220 per head. At the Christmas party the employees are provided with a Christmas hamper (considered a ‘non-entertainment gift’), costing $150. Although the total cost per head is more than $300, the provision of both benefits will usually be exempt from FBT with each benefit considered separately under the minor benefits exemption.


In regards to the Christmas party expenses, the business will not be entitled to claim a tax deduction or a GST credit. However, a tax deduction and GST credit can be claimed on the cost of the hamper as this is not considered to be providing ‘entertainment’.


If the cost of hosting a Christmas party is $300.00 or greater per employee/associate, FBT will apply and income tax deduction and GST input tax credits can be claimed.



Requesting stapled superfund details for new employees


The ATO has issued detailed web guidance on how employers can request stapled superannuation fund (SSF) details for new employees who do not nominate a superannuation fund when starting employment.


A stapled superannuation fund is an existing superannuation account linked, or ‘stapled’, to an individual employee so it follows them as they change jobs. Before employers can request SSF details, they must offer the eligible employee a choice of superannuation fund, including a fund they already have.


Employers must request SSF details from the ATO for new employees when:

  • they need to make superannuation guarantee (SG) payments for that employee; and

  • the employee is eligible but does not choose a superannuation fund — this extends to contractors who are paid mainly for their labour and are employees for SG purposes.

Employers may also need to request SSF details for some employees who are not eligible to choose their own superannuation fund. This includes employees who are:

  • temporary residents

  • covered by an enterprise agreement or workplace determination made before 1 January 2021.


Disclaimer

This information is provided solely for general information purposes and is not intended as professional advice. Readers should not act on the information contained therein without proper advice from a suitably qualified professional.


We expressly disclaim all liability for any loss or damage to any person or organisation for the consequences of anything done or omitted to be done by any such person relying on the contents of this information.

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