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Author: Leanne Roberts

23
Mar 2018

New Rules for Exempt Vehicles

31 March is the last day of the FBT year.

If you claim your vehicle as a business expense then there’s some changes which require you to take action before then.

What’s the big deal?

The ATO are cracking down on exempt car and residual benefits. This catches any ute, dual cab ute or van provided to employees (including business owners) for use in a business.

They have now issued clear rules that taxpayers should follow to ensure they will not be targeted for audit, especially if claiming 100% business use. This new Practical Compliance Guideline PCG 2018/3 will apply to this FBT year & onwards.

Essentially you do not have to keep a log book to support the business use of your vehicle if you meet ALL these requirements:

(a) the vehicle is provided to perform work duties

(b) employer takes all reasonable steps to limit private use of the vehicle and have measures in place to monitor such use

(c) the vehicle has no non-business accessories

(d) the vehicle had a GST-inclusive value less than the luxury car tax threshold at the time the vehicle was acquired (see what they were here; for 2017-18 it’s $65,094 for vehicles with fuel consumption greater than 7l per 100km)

(e) the vehicle is not provided as part of a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle, and your employee uses the vehicle to travel:

a. between their home and their place of work and any diversion adds no more than 2km to the ordinary length of that trip
b. no more than 750km in total for each FBT year for multiple journeys taken for a wholly private purpose, and
c. no single, return journey for a wholly private purpose exceeds 200km.

What do I need to do about this?

1. If you meet every condition above, then you do not need to do anything.

2. If you do not meet every condition above, then you should keep a log book for a continuous 12 week period to support your business use claim. More info about logbooks here.

You can purchase a paper log book from Officeworks or Newsagents, or you can use the ATO myDeductions app

Start your log book BEFORE 31 March & continue to keep a logbook into the next year so it covers the required 12 weeks

If you establish your business-use percentage using a logbook from an earlier year, you must keep that logbook and maintain odometer readings for 1 April and 31 March the following year

For exempt vehicles, travel from home to place of work is considered BUSINESS use. This is different from cars generally, where travel from home to place of work is considered PRIVATE.

3. In addition to 1 or 2, please download & fill in the vehicle summary & return it to our office by 13 April.  There’s a completed example of the form here.

The Practical Compliance Guideline PCG 2018/3 is quite easy to read, and contains simple examples to help understand these concepts & apply them practically.

** This information was first published in March 2018, however, it’s still relevant for 2019.  If you download the form to provide us with your vehicle summary you’ll see that it’s for the 2018 FBT year. If you need to do this form for 2019 (which runs from 1 April 2018 – 31 March 2019) or for 2020 (which runs from 1 April 2019 – 31 March 2020), then please change the dates.  We’ll provide a more elegant form in the future.**

Refresher – what’s FBT (or Fringe Benefits Tax)?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees – including their employees’ family or other associates. If you are a director of a company or trust, benefits you receive may be subject to FBT.

FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. You can learn more here.

Normally, our clients don’t need to lodge an FBT return because we calculate an FBT Reimbursement to eliminate the value of any benefit received. That is, we raise an FBT Reimbursement for private use of the business vehicle.

 

 

Posted by Leanne Roberts | Posted in My Accountant Qld | Tags: FBT, MAQ Clients |
26
Sep 2017

Is time management important to my profitable productive business?

For service businesses it’s easy to answer with a resounding YES!

But what about businesses that sell products?

Proper time management implies people spend time on profitable productive tasks.

More time spent on profitable productive tasks means you’ll get close to your goal.

For service based businesses this means that the people with the expertise spend most of their time doing work that results in revenue and profit.  The same applies to businesses which mostly sell products.

How to determine where you’re at

  1. List all the “service” tasks that have to be done in the business that are not necessarily customer facing
  2. Check you’ve included as many as you can. Think about administrative tasks like bookkeeping or payroll, through to the supply chain & logistics of sourcing and delivering your product.
  3. Determine if these are being done efficiently by people with the appropriate level of expertise. Ask yourself “is this task profitable productive for my business”.

What to do next

It’s easy, especially if you take a lazy approach.  Do what gives you the least path of resistance.

  1. Choose one task you’ve identified as not being done well and/or by the wrong people.  Think of ways to do this differently & be creative. Just brainstorm. You might not be able to access all these options today, but might be able to later down the track.
  2. Then choose the easiest option to implement now & go implement.

Thoughts about your options

Outsource wisely

You can outsource tasks to your staff or to external consultants. Don’t make your Sales Manager print & bind the proposal; give this task to your receptionist. Your Sales Manager should be focusing on leads, prospects & customers. Equally as the business owner you should lead the critical areas of your business, not take time unjamming copiers or running payroll.

Use technology

Don’t get bogged down in your business; keep an eye on the outside world & see how things are changing. Use time saving technology to give back time to you and your staff for more profitable activities.

Analyse Cost vs Benefit – before you implement

Run the numbers to understand the cost and the potential profit drivers to get the most from the change.   Read more about this topic here.

We can certainly assist you in this area – just give us a ring.

Posted by Leanne Roberts | Posted in Business Planning | Tags: benchmark, planning |

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benchmark FBT MAQ Clients planning strategy superannuation tax
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